Defense Secretary Pete Hegseth issued a memorandum on Tuesday, October 20, 2026, prohibiting all Department of Defense personnel from using nonpublic information to wager on U.S. military operations. The ban applies to both military service members and civilian employees, specifically targeting the use of prediction markets such as Polymarket and Kalshi. The policy covers both classified and unclassified information that is not available to the general public.
The directive follows recent legal actions involving federal employees and prediction markets. In April 2026, Army Master Sgt. Gannon Ken Van Dyke was arrested after allegedly using classified information to bet on the capture of Venezuelan President Nicolas Maduro. Prosecutors stated Van Dyke wagered approximately $33,000 on Polymarket within hours of the operation's announcement in January 2026, resulting in winnings exceeding $409,000. In July 2026, a White House teleprompter operator, Gabriel Perez, was placed on leave and ordered to pay $172,000 for allegedly betting on the content of President Trump's speeches.
Secretary Hegseth stated in the memorandum that such financial transactions create "signals" that foreign intelligence services can aggregate to anticipate the timing, targeting, and movement of U.S. forces. He noted that violations of the new policy could lead to administrative discipline or criminal prosecution under federal law and the Uniform Code of Military Justice. The Pentagon confirmed the authenticity of the memo on Thursday, October 22, 2026, following its initial report by CBS News.
The scale of the issue was highlighted by the prosecution of Master Sgt. Gannon Ken Van Dyke, whose $33,000 wager translated into a $409,000 payout—a figure equivalent to more than 12 times his initial bet. For an individual service member or civilian staffer, the impact of a violation now includes specific threats of court-martial or federal criminal charges, potentially resulting in permanent loss of employment, fines like the $172,000 penalty levied against Gabriel Perez, or imprisonment. The policy aims to eliminate the "signals" Hegseth described, which national security experts warned could allow foreign actors to identify and target American personnel before an operation begins.
The ban sets a formal precedent for the Department of Defense following similar restrictions recently enacted by the U.S. Senate for its members and by governors in California and Illinois for state employees. The Commodity Futures Trading Commission, which regulates prediction markets, has vowed to increase enforcement, though reports indicate the agency remains understaffed. The provision was also included in a draft of the annual defense policy bill released by the House Armed Services Committee in late May 2026. While the memorandum takes immediate effect, the legislative version of the ban continues through the monthslong congressional approval process for the next fiscal year's defense budget.