Pentagon bars personnel from using nonpublic military information in prediction market bets

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Pentagon bans prediction market bets

Highlights

U.S. Defense Secretary Pete Hegseth barred all Pentagon personnel from using nonpublic military information for financial transactions or prediction market bets as of Tuesday.
The directive follows the April indictment of U.S. Army soldier Gannon Ken Van Dyke, accused of making more than $400,000 on Polymarket using classified information tied to an operation targeting Nicolás Maduro.
Authorities globally, including recent Israeli indictments in February, are increasing scrutiny of prediction market platforms amid concerns about speculative trading based on sensitive military information.

Pentagon directive targets operational and market risks

As reported by Cointelegraph, U.S. Defense Secretary Pete Hegseth says in a memo sent Tuesday to senior Pentagon and defense agencies that all Defense Department personnel are barred from engaging in financial transactions using nonpublic information. The restriction applies to both classified and unclassified information and covers wagers tied to future military events on platforms including Kalshi and Polymarket.

Hegseth says the policy is aimed at preventing security breaches and conflicts of interest inside the military chain of command. In the memo, he warns that adversaries monitor these markets and says the lives of service members can depend on keeping upcoming actions concealed. He also says financial exposure can distort decision-making if personnel stand to benefit from the timing or outcome of an operation.

Cases add pressure on prediction market oversight

The directive follows the April indictment of U.S. Army soldier Gannon Ken Van Dyke, who prosecutors allege used classified information linked to an operation to capture Venezuelan leader Nicolás Maduro to make more than $400,000 on Polymarket. Prosecutors say Van Dyke took part in planning and executing the operation and then used advance knowledge to bet on outcomes related to Maduro's removal. He has pleaded not guilty to all charges.

The issue is not limited to the U.S. In February, Israeli authorities arrested and indicted a military reservist and a civilian for allegedly using classified information to place Polymarket bets tied to Israeli military strikes on Iran. The cases add to broader pressure on prediction market platforms as authorities examine how sensitive government and military information can intersect with speculative trading.

In our earlier coverage of how geopolitical tensions are stressing sovereign borrowers, we noted that prolonged conflicts and elevated public spending are raising refinancing risks as interest rates stay high. We also highlighted that emerging and frontier markets are especially exposed because higher energy and food prices can keep inflation elevated and squeeze public finances, worsening credit outlooks.

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