Pentagon Issues New Ban on Prediction Markets

The Pentagon has issued a new directive banning military personnel from trading on prediction markets based on nonpublic information. The order, signed by Defense Secretary Pete Hegseth, warns that trades based on sensitive military information could endanger national security. Under the directive, such trades may result in disciplinary action or a criminal investigation.

The decision follows recent allegations. Earlier this year, a US Army Special Forces soldier was charged after he was accused of using classified information about the operation that captured Venezuelan leader Nicolás Maduro to earn more than $400,000 on Polymarket. In August, federal authorities reportedly examined a US service member suspected of profiting by more than $1 million from contracts tied to military strikes in Iran and Venezuela.

In Congress, a separate debate is underway. Senator Richard Blumenthal and Representatives Paul Tonko and Valerie Foushee have expanded their inquiry into FanDuel's VIP program to include BetMGM, Caesars, DraftKings, Fanatics, Kalshi, and Polymarket. In letters dated October 22, they are requesting detailed information from the companies about how they attract and reward high-value customers.

The lawmakers argue that companies use VIP rewards and personalized incentives to keep players who are losing money and in vulnerable situations gambling. The letters also ask whether artificial intelligence is used to identify and target losing players. These questions follow earlier criticism of DraftKings' practices.