Hegseth Warns Prediction Market Bets Could Cloud Military Judgment

In a Pentagon memo, Hegseth warns that betting on prediction markets by people with access to sensitive military information can distort judgment and endanger service members. The central concern is insider trading. When someone who knows about a planned operation wagers on its outcome or timing, that information can leak into public view, and the memo says it hands US adversaries exactly the kind of intelligence they are looking for.

The headline points to two linked risks. The first is judgment. A commander or staffer with money riding on an outcome may start to read events through the lens of a bet rather than the mission. The second is operational security. Even a small hint about when or where a mission will happen can help an opponent prepare, which puts the people carrying it out at greater risk.

Prediction markets, which let users trade contracts tied to real-world events including geopolitical developments, have grown quickly. That growth has drawn scrutiny from lawmakers and regulators over whether existing insider trading rules fit these platforms.

The source material is brief and does not spell out what the memo would require or who it would apply to, so the scope of any restrictions and how they would be enforced remain unclear.