War Department Bans Troops from Gambling on Conflicts in New Memo

Secretary of War Pete Hegseth issued a directive on Tuesday, Oct. 20, prohibiting all Department of War personnel from using nonpublic information to place bets on prediction markets, according to a copy of the memo obtained by news outlets ^[1].

The ban takes effect immediately and applies to active-duty service members, reservists and civilian War Department employees. The directive follows a high-profile insider trading case involving U.S. Army soldier Gannon Ken Van Dyke, who was indicted in relation to insider betting during the capture of Venezuelan leader Nicolas Maduro ^[1].

Officials said the policy is intended to protect operational security and prevent the leakage of sensitive information that could endanger troops. The memo was sent to senior War Department and defense agency officials, according to multiple reports. The War Department did not immediately respond to a request for comment on the memo’s specific enforcement mechanisms.

Scope of the Ban

The directive bars personnel from betting on military operations, deployments, readiness levels and other sensitive activities, according to the memo. War Department officials said enforcement will be handled by commanders and the department’s inspector general, though specific procedures for investigating and adjudicating violations were not detailed in the unclassified portion of the document.

The directive does not specify penalties for civilian employees, who are not subject to the Uniform Code of Military Justice. The breadth of the ban reflects concerns that even seemingly mundane information about troop movements or readiness could be exploited by adversaries. The Pentagon has not released the full text of the memo, citing operational security concerns.

Rationale and Enforcement

War Department officials said the ban aims to prevent insider trading-like behavior and safeguard classified information. The directive also seeks to protect national security by reducing the risk that prediction market trades could reveal military plans to foreign intelligence services.

The case that prompted the directive involved Van Dyke, a U.S. Special Forces soldier who allegedly made more than $400,000 trading on Polymarket based on classified information about the timing of a military operation ^[1][2]. Van Dyke was charged in April 2026, and his case has drawn attention to the potential for government insiders to profit from nonpublic information on prediction markets. The War Department’s memo cites the Van Dyke case as a catalyst for the new policy ^[3].

The directive instructs commanders to investigate any suspected violations and to refer cases to the inspector general for further review. The War Department has not announced any specific audits or compliance checks, but officials said the department will monitor compliance and review the policy periodically.

Reaction from Markets and Lawmakers

Prediction market operators said they support measures to prevent insider betting but acknowledged compliance challenges. Kalshi, another regulated exchange, did not immediately respond to a request for comment. Decentralized platforms, which operate without a central authority, may face difficulties in enforcing the ban, according to industry analysts.

Some lawmakers have previously raised concerns about military personnel using confidential information for financial gain. The bill’s sponsors said the measure is intended to close a loophole that could allow insiders to profit from sensitive information.

The War Department’s directive appears to preempt congressional action, though lawmakers may still pursue legislation to codify the ban. “This policy is a step in the right direction, but we need to ensure it is enforced consistently across all platforms,” a congressional aide said, speaking on condition of anonymity. The agency has not commented on the draft bill or its potential impact on the directive.

Conclusion

The ban follows growing scrutiny of prediction markets and their potential use by government insiders. The Van Dyke case has highlighted the risks of allowing military personnel to trade on platforms that accept wagers on global events. Pentagon officials said the directive is part of broader efforts to enforce ethics rules and protect national security.

The policy takes effect immediately and applies to all War Department personnel. Violators may face disciplinary action, including court-martial or criminal referral, officials said. The agency will monitor compliance and review the policy periodically, according to the memo, and the directive remains in effect until further notice.

The ban is likely to be tested by legal challenges from personnel who argue it infringes on their personal financial activities. However, War Department officials said the policy is necessary to protect operational security and maintain public trust. The department has not announced any exemptions or waivers, and officials said the ban will be applied uniformly across all branches of the military.

References

1. Pentagon bans US forces from using military info to bet in prediction markets. https://cointelegraph.com/news/pentagon-bans-us-forces-from-using-military-info-to-bet-in-prediction-markets
2. U.S. Soldier Charged With Using Classified Information To …. https://www.justice.gov/opa/pr/us-soldier-charged-using-classified-information-profit-prediction-market-bets
3. U.S. Defense Secretary Orders Entire Military to Ban Using Nonpublic …. https://www.gate.com/news/detail/KALSHI/us-defense-secretary-issues-military-wide-order-banning-the-use-of-25142874

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