Congress is reviewing new limits on prediction market trading by US service members and Pentagon civilian staff. The proposal is part of draft text for the fiscal 2027 National Defense Authorization Act and focuses on trades tied to sensitive information.
The measure would block covered personnel from trading when they have material nonpublic information linked to a market. It would also apply when that information could be obtained through official duties.
Defense staff could face new rules
The draft provision would cover members of the Army, Navy, Air Force, Marine Corps and Space Force. It would also cover civilian employees of the Department of Defense.
The ban would not stop every prediction market trade by military personnel. It targets trades where the person has relevant nonpublic information, or could get that information through their role.
The Defense Secretary would have 180 days after enactment to issue regulations. Those rules would also need to include penalties for violations.
Sensitive information sits at the center
The proposal focuses on markets where government or military information can move prices before the public knows the facts. That could include contracts tied to military action, defense decisions, foreign policy events or other government activity.
Prediction markets such as Kalshi and Polymarket allow users to buy and sell contracts tied to real-world outcomes. Those products can reward insiders who trade on sensitive information before it becomes public.
The risk is higher inside the military. Service members and defense staff may know about operations, contracts or policy decisions before those details are released.
Soldier case raised pressure
The draft language follows scrutiny of alleged insider trading on prediction markets. One closely watched case involves a US soldier accused of using nonpublic military information to trade on Polymarket contracts tied to events in Venezuela.
That case gave lawmakers a direct example while they reviewed existing rules. It also put military access to sensitive information at the center of the prediction market debate. The provision would put the issue into Defense Department policy instead of leaving it only to market rules or commodities enforcement. It would also set a clearer internal rule for troops and Pentagon employees.
NDAA process will decide next steps
The National Defense Authorization Act is the annual defense policy bill used to set Pentagon programs, rules and funding priorities. Draft provisions can still change as the House and Senate work through committee votes, floor action and final negotiations.
If the prediction market language survives that process, the Defense Department would have to write the detailed rules after the bill becomes law. That would decide how the ban is enforced and which trades fall inside the restriction.
