US Defense Secretary Warns Pentagon Staff Against Trading on Nonpublic Military Information

Pete Hegseth has told US Defense Department personnel not to use confidential information for trading, including on prediction markets and sports betting platforms. For PSPs and operators in this space, the point is straightforward: when event contracts start touching military outcomes, insider-trading risk stops being a theoretical compliance note and becomes a headline issue.

1. In a letter dated October 20, Hegseth reminded department personnel that they are not allowed to conduct financial transactions based on nonpublic information. The restriction covers both direct trading and trading done through another person, and it applies to financial exchanges, prediction markets and sports betting platforms.
2. Hegseth said foreign intelligence services watch trading activity for patterns that could reveal details about upcoming US military operations. “Our enemies watch movements in these markets,” he wrote, adding that trades based on classified or otherwise nonpublic information could create signals that hostile intelligence services might analyze alongside other information to anticipate US military movements, targets and timing.
3. He also argued that betting on military outcomes can undermine discipline and distract personnel from their duties. In his words: “We are restoring lethality, discipline, and singular focus on fighting and winning our nation’s wars, and nothing should distract us from that sacred mission. Not entertainment. Not a payout.”
4. The warning comes after a federal case involving Master Sgt. Gannon Ken Van Dyke, a US Army Special Forces soldier charged in April with allegedly using classified information to make approximately $409,000 in profits on Polymarket. According to the indictment, Van Dyke placed trades worth around $33,000 on the timing of Venezuelan leader Nicolás Maduro’s departure from power.
5. Federal prosecutors allege that Van Dyke had access to sensitive information through his role in planning and carrying out the US military operation to capture Maduro. The charges remain allegations unless established in court, but the case has already put a bright light on how confidential government information can map onto prediction-market positions.

For the high-risk payments crowd, the practical takeaway is not subtle: when a vertical is built around outcomes tied to politics, military events, or geopolitical developments, the compliance questions move well beyond ordinary betting risk. The market can be liquid, but it is also one subpoena away from becoming an evidentiary record.