The Pentagon has warned personnel that using nonpublic information for financial transactions is prohibited, arguing that such conduct can compromise operational security and cloud the judgment expected from those entrusted with sensitive military information.

A memo signed last week by War Secretary Pete Hegseth says all Department of War personnel are barred from conducting these transactions directly or through a third party. The prohibition covers financial activity based on insider information obtained through government work.

“The lives of our service members often depend on the enemy not knowing what is coming,” Hegseth wrote in the memo. “The men and women who carry our flag into harm’s way deserve a Force that protects them — not one that exposes them to the enemy for personal gain.”

The directive arrived six months after a U.S. soldier involved in the capture of ousted Venezuelan President Nicolas Maduro was charged with using insider information to win $400,000 by betting on Maduro’s removal through the prediction market Polymarket.

The soldier, identified as a master sergeant with U.S. Army Special Forces, later pleaded not guilty. His criminal trial is scheduled for early December.

During the same month, people around the world used Polymarket to place bets on the rescue mission for Dude 44 Bravo. The airman had ejected from a U.S. Air Force F-15E Strike Eagle that enemy fire shot down over Iran during Operation Epic Fury.

Polymarket later removed those wagers, saying they did not meet the platform’s integrity standards. Other markets involving war events were created both before and after the Iran war began, prompting national security concerns among lawmakers and experts.

Another case involved an anonymous Polymarket account that made $550,000 through trades on the first day of strikes in Operation Epic Fury. The account wagered on U.S. strikes against Iran and the removal of Iran’s Supreme Leader Ayatollah Ali Khamenei.

Khamenei was killed by Israeli air strikes on the war’s first day. The account’s profits became another example of the financial stakes attached to military outcomes on prediction markets.

The memo was distributed to senior Pentagon leadership, combatant commanders, defense agencies, and field activity directors. It reinforces federal law prohibiting government employees from using nonpublic information acquired through their work for personal financial gain.

The ban applies across financial platforms, including betting services and prediction markets. The directive specifically identifies Polymarket and Kalshi as examples of platforms covered by the prohibition.

The memo first circulated publicly on the unofficial Facebook page Air Force amn/nco/snco. A War Department official provided Military Times with a copy and confirmed that the document appearing on social media was authentic.

According to the directive, personnel can generate observable signals when they conduct financial transactions tied to military outcomes. Adversaries can monitor those markets, while hostile foreign intelligence services can exploit the activity to anticipate American movements, targets, and timing.

“The memorandum from the Secretary of War regarding predictive markets is a reminder that engaging in financial transactions using nonpublic information, and using nonpublic information to further private interests, is prohibited and may result in punitive action,” the Pentagon official told Military Times.

“The Department takes this misconduct seriously and will take appropriate action, to include coordinating with the Department of Justice, to ensure anyone who engages in this misconduct is held accountable,” the official concluded.

Violations may bring administrative, disciplinary, or criminal action under the Uniform Code of Military Justice or applicable federal law, according to the memo. The warning makes clear that personnel cannot treat privileged military information like a personal betting edge.

Hegseth also argued that financial interests can damage judgment and weaken the “warrior ethos” when personnel become invested in particular outcomes. The concern therefore extends beyond information security to the discipline and focus demanded by military service.

“We are restoring lethality, discipline, and singular focus on fighting and winning our Nation’s wars, and nothing should distract us from that sacred mission,” Hegseth wrote.

“Not entertainment. Not a payout.”