The Pentagon has ordered service members, intelligence professionals and Defense Department civilians not to use classified or other nonpublic military information for financial gain on prediction markets, warning that even anonymous trades can reveal operational signals to foreign intelligence services.

The one-page directive, dated Tuesday and reviewed by AP and The Post, names platforms including Polymarket and Kalshi. Defense Secretary Pete Hegseth said violations could bring administrative discipline or criminal prosecution under military or federal law, whether the information used was formally classified or merely unavailable to the public.

The order addresses two risks at once. A wager can expose a coming operation when other traders or adversaries observe unusual activity, and a personal stake can distort the judgment of someone involved in planning or analysis. It does not appear to prohibit every Defense Department employee from every prediction-market trade, and the publicly reported text does not explain whether contractors are covered.

A criminal case changed the stakes

The directive follows the prosecution of Army Master Sgt. Gannon Ken Van Dyke, a Special Forces soldier who has pleaded not guilty to charges that he used classified information about the January operation to capture former Venezuelan President Nicolás Maduro. The Justice Department alleges that Van Dyke placed roughly $33,000 in event-contract bets while helping plan and execute the mission, then made about $409,881 after Maduro was captured.

The government’s indictment says Van Dyke opened a Polymarket account in late December, used a virtual private network that appeared to place him abroad and bought contracts tied to U.S. forces entering Venezuela, Maduro leaving power and the use of military force. Prosecutors allege that he held a duty of trust to protect the information and later moved proceeds through cryptocurrency and brokerage accounts. Those assertions remain allegations, and the criminal case has not established guilt.

The case supplied a concrete example of a problem that had previously looked theoretical. Event contracts are priced continuously, meaning a trade by someone with advance knowledge can move the odds before any classified document is disclosed. The visible price change can itself become intelligence.

Markets can amplify an operational leak

Hegseth’s reported memo says hostile services can aggregate and correlate market movements to anticipate U.S. targets, timing and force movements. That concern extends beyond one unusually successful account because automated traders and high-volume users can quickly copy a position, magnifying the signal.

An August ACDC analysis examined 78,496 long-shot bets placed by 12,355 wallets on settled Polymarket contracts through May 5. Researchers identified 152 highly specialized wallets active in military markets that won at least 75% of their long-shot wagers and collectively earned more than $8 million. They also found larger traders and automated accounts following those positions around U.S.-Israeli strikes on Iran.

The researchers did not identify the owners of those wallets or prove that each had inside information. Their methodology instead classified trading patterns that resembled insider behavior. That distinction is important: a suspicious success rate is a reason to investigate, not proof of a military leak. Still, public blockchains allow adversaries to observe transactions in real time, while routing wallets and offshore accounts can make the trader’s identity difficult to establish quickly.

The order is narrower than lawmakers sought

In May, a bipartisan group of House members asked Hegseth to bar all military and civilian personnel from wagering on any national-security-related topic. Their letter cited contracts involving operations in Venezuela and Iran and argued that bets placed shortly before military action could alert adversaries and create incentives that conflict with mission success.

The reported directive focuses on using nonpublic information for personal gain rather than imposing the categorical ban lawmakers requested. That approach reinforces duties already embedded in federal law, nondisclosure agreements and the Uniform Code of Military Justice, but it leaves practical questions. The Pentagon has not publicly detailed how commanders should monitor trading, how personnel must disclose accounts, or whether a service member may trade a national-security contract using only public information.

Coverage of contractors is another unresolved issue. Contractors can hold clearances and obtain operational information, but The Post reported that the memo does not specify whether they are subject to the same standard. Separate contract clauses, security agreements and federal statutes may already restrict misuse, yet an explicit department-wide rule would clarify enforcement.

Enforcement will determine the policy’s reach

Prediction markets complicate conventional insider-trading controls because contracts can be offered through regulated U.S. exchanges or cryptocurrency-based platforms serving users across borders. Trades may involve pseudonymous wallets, and military outcomes can be affected by the same officials who possess the most valuable information. Surveillance therefore requires cooperation among commanders, inspectors general, law-enforcement agencies, financial regulators and the platforms themselves.

The Pentagon’s directive establishes a clear warning that nonpublic operational knowledge cannot be treated as a private trading advantage. It does not yet show how broadly the department will investigate accounts, what reporting duties will apply or whether military-event contracts themselves will face tighter limits.

The immediate change is one of command emphasis: conduct that could once be dismissed as an unusual financial gamble is now framed as both a conflict of interest and an operational-security threat. The policy’s effectiveness will depend on whether the department can detect suspicious trades before market activity broadcasts a mission rather than months later, after profits are withdrawn and an operation is complete.