Army Personnel Warned Not to Use Insider Information on Prediction Markets

Department of the Army personnel are prohibited from using nonpublic information to place financial bets, including bets made indirectly through third parties, according to a memo from Defense Secretary Pete Hegseth.

“All Department of the Army personnel are prohibited from engaging in financial transactions, directly or indirectly through third parties, using non-public information,” Hegseth wrote. “Violations may result in administrative, disciplinary, and, where appropriate, criminal action under the Uniform Code of Military Justice and/or applicable federal law.”

Hegseth warns that prediction-market bets can affect judgment

The memo says that betting on military issues connected to an employee’s work could lead to poor judgment and create operational risks.

“Beyond operational safety, financial interests can distort judgment,” Hegseth wrote. “Logisticians who have money on the strike date are interested in that date. Analysts with a position on the outcome are interested in the outcome.”

Both Kalshi and Polymarket prohibit insider trading. However, potential criminal charges under military or federal law would be a stronger deterrent than being banned from either platform.

White House issues warning after suspicious prediction-market bets

According to the Associated Press, the Army memo was not the first internal warning issued by the Trump administration. The AP previously reported on concerns surrounding prediction-market activity.

The concerns followed reports of very specific and well-timed bets made by new Polymarket accounts shortly before President Donald Trump announced a cease-fire in April. The bets raised questions about whether traders had access to nonpublic information about a potential U.S.-Iran cease-fire and a related multimillion-dollar prediction-market contract.

“The White House warned staff against using personal information to trade in prediction markets on the same day the report was published,” the Associated Press reported. The report detailed the suspicious bets, while another AP report examined new customer incentives.

In a separate incident, a Trump teleprompter aide reportedly made $100,000 on Kalshi by betting on what the president would say in prepared remarks.

Prediction markets face growing regulatory scrutiny

Prediction markets have expanded under the Trump administration’s relatively light regulatory approach. The administration is also seeking to block state governments from regulating the industry, arguing that state law is preempted by the Commodity Futures Trading Commission’s exclusive jurisdiction.

Courts have reached different conclusions on the issue, while state governments hope the Supreme Court will uphold their authority to impose limits on prediction-market gambling.