“All Department of War personnel are prohibited from engaging in financial transactions using non-public information, either directly or indirectly through a third party … Violations may result in administrative, disciplinary, and, if appropriate, criminal action under the Uniform Code of Military Justice and/or applicable federal law,” Hegseth wrote.
The notice said that betting on military issues related to a person’s work can cloud judgment. “On operational security, financial institutions can cloud judgment,” he wrote. “A logistician with money riding on a strike date has an interest in that date. An analyst with a position on an outcome has an interest in that outcome.”
Kalshi and Polymarket both prohibit insider trading. But criminal charges of the kind described by Hegseth are certainly a greater deterrent than being banned from the Kalshi or Polymarket platforms.
White House issues warning after suspicious bets
This was not the first warning issued internally by the Trump administration, the Associated Press wrote yesterday.
“A group of new accounts at Polymarket made highly specific, well-timed bets on whether the United States and Iran would reach a ceasefire just before President Donald Trump announced it in April, resulting in hundreds of thousands of dollars in profits for the new customers,” the AP wrote. “The White House warned staff against using private information to trade in prediction markets the same day the report came out.”
In another incident, a Trump teleprompter aide reportedly made $100,000 to Kalshi by betting on what Trump would say in prepared remarks.
Prediction markets have flourished under the Trump administration’s light-touch approach to regulation. The Trump administration is also trying to stop state governments from regulating the markets, arguing that state laws are preempted by the Commodity Futures Trading Commission’s exclusive jurisdiction. The courts have reached different conclusions, and state governments want the Supreme Court to uphold their right to impose restrictions on prediction market games.