After Maduro Scandal, Pentagon Bans Military Bets on Prediction Markets

US Defense Secretary Pete Hegseth issued a new directive prohibiting service members and employees from using "non-public information" to place bets on financial prediction markets, warning of operational and security risks resulting from such transactions.

Hegseth wrote in a memo dated Tuesday, reviewed by the Associated Press: "Our adversaries are monitoring movements in these markets; when US service members, intelligence experts, or civilian employees conduct financial transactions related to military outcomes, they send a dangerous security signal."

The one-page document, previously revealed by CBS News, comes months after a US Special Forces soldier was accused of involvement in the military operation to capture then-Venezuelan President Nicolas Maduro, exploiting classified information about the mission to achieve profits exceeding $400,000 via the "Polymarket" platform.

Criminal Penalties and Conflicts of Interest
The memo emphasizes preventing forces from exploiting classified and unclassified non-public information to trade on prediction platforms such as "Polymarket" and "Kalshi," confirming that violators face administrative sanctions and criminal prosecution under the Uniform Code of Military Justice (UCMJ) or federal law.

Hegseth added: "In addition to security and operational dimensions, financial interests distort assessments; a logistics officer betting his money on the timing of a military strike has a personal interest in that timing, and an analyst with a financial position on the outcome has their neutrality affected by it."

Prior Accusations and Breaches
Last April, federal prosecutors and regulators charged Sergeant First Class Gannon Ken Van Dyke (38 years old) with exploiting his position in Special Forces to place bets worth $32,500 regarding the timing of Maduro's removal from power.

The federal complaint indicated that most of those bets were placed on the night of January 2, just hours before the first strikes on Caracas began.

The crisis of exploiting influence and undisclosed information in prediction markets is not limited to the Department of Defense; previous reports revealed activity of new accounts on the "Polymarket" platform placing precisely timed bets on reaching a ceasefire between the United States and Iran moments before President Donald Trump officially announced the agreement; achieving profits of hundreds of thousands of dollars.

These developments prompted the White House to warn its staff against using undisclosed information for trading, while the "Kalshi" company imposed fines and froze the accounts of three congressional candidates who were found to have bet on the results of their own elections.