Special Forces soldier allegedly uses classified mission details to bet on Polymarket and wins $400,000. Then the Pentagon issues a new ban
A question of operational security.
Defense Secretary Pete Hegseth has issued a new ban that prevents military personnel and Pentagon civilians from using nonpublic information to place bets on prediction markets. According to ABC News, the move comes after a series of incidents involving government employees and service members utilizing classified details for personal financial gain.
A memo by Hegseth explicitly forbids the use of both classified and unclassified but private information for transactions on platforms like Polymarket and Kalshi. The core concern here is operational security. Hegseth pointed out that U.S. adversaries are paying close attention to these markets.
When a service member or intelligence professional places a financial bet on a military outcome, they are essentially creating a signal that foreign intelligence services can track. By monitoring these patterns, outside actors might be able to anticipate American military movements or the timing of sensitive operations. This is a massive security risk that the Pentagon is no longer willing to tolerate.
One case that triggered the change involves Master Sgt. Gannon Ken Van Dyke
Back in April, the 38-year-old Special Forces soldier was charged by federal prosecutors and regulators. Master Sgt. Gannon Ken Van Dyke stands accused of using his position to gain classified insights into the operation to capture then-Venezuelan President Nicolás Maduro. Van Dyke allegedly placed bets totaling more than $32,500 on the outcome of that mission.
The federal complaint states that he placed these wagers between December 30 and January 2. Most of these bets occurred on the night of January 2, just hours before missiles struck Caracas. Through these actions, he reportedly walked away with more than $400,000 in winnings. Van Dyke has pleaded not guilty to charges including wire fraud, commodities fraud, and misuse of confidential government information.
Hegseth emphasized the danger of these activities in his recent memo. He noted, “Beyond operational security, financial stakes can warp judgment.” He went on to explain that a logistician with money tied to a specific strike date has a personal interest in that date. Similarly, an analyst with a position on an outcome has a direct interest in that outcome. This kind of personal stake can compromise the focus and integrity required for military duties.
“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,” Hegseth wrote, per Stars and Stripes. The Secretary of Defense added, “Not entertainment. Not a payout.”
The directive is clear that violators could face serious consequences
They may be subject to administrative punishment, disciplinary action, or even criminal prosecution under the Uniform Code of Military Justice or federal law. The order also covers transactions made indirectly through third parties, closing a potential loophole for those who might try to hide their tracks.
While federal rules already barred government personnel from using inside information for personal profit, this memo specifically reinforces those prohibitions in the context of modern prediction markets. The issue is not limited to the Pentagon. Other government entities have faced similar scrutiny regarding prediction markets.
For instance, a group of new accounts on Polymarket made highly specific and well-timed bets on whether the U.S. and Iran would reach a ceasefire in April. These bets were placed just before President Donald Trump announced the news, resulting in significant profits for the accounts involved.
The White House responded by warning staff against using private information to trade on such platforms. Additionally, Kalshi recently fined and suspended three congressional candidates who reportedly wagered on the outcome of their own elections during the month of April.
Prediction markets allow sensitive information to be monetized
Hegseth’s memo serves as a warning to all Department of Defense personnel that their financial activities are under the microscope. When asked about the new policy, a defense official stated that the Pentagon had no other information to offer beyond what was already in the memo.
The October 20 memorandum to senior Pentagon leaders and combatant commanders highlights the seriousness of the entire situation. “Make no mistake why this matters. Our enemies watch movements in these markets,” Hegseth wrote. This is a clear signal that the days of using inside government knowledge to play the markets are over for those in uniform.
Have a tip we should know? [email protected]
Follow The Mary Sue:
