Defense Secretary Pete Hegseth issued a Pentagon memo prohibiting all Department of War personnel from engaging in financial transactions using nonpublic information, directly or through third parties. The memo warns that betting on military matters related to one's job can warp judgment, as financial stakes create conflicts of interest. A logistician with money riding on a strike date has an interest in that date, while an analyst with a position has an interest in that outcome.
Kalshi and Polymarket prohibit insider trading, but criminal charges under the Uniform Code of Military Justice serve as a stronger deterrent. The White House previously warned staff against using private information to trade on prediction markets after suspicious bets were placed by new accounts on Polymarket just before President Trump announced a US-Iran ceasefire, resulting in hundreds of thousands of dollars in profits. In another incident, a Trump teleprompter aide reportedly made $100,000 on Kalshi betting on Trump's prepared remarks.
Prediction markets have flourished under the Trump administration's light-touch regulatory approach, though the administration is also challenging state efforts to regulate these markets.
Source: Ars Technica · Summarized by HeadlinesBriefing