The Pentagon is restricting military personnel’s use of nonpublic information on prediction markets, while lawmakers expand their scrutiny of VIP programs to six more gambling companies.
The Pentagon has responded to concerns about insider trading on prediction markets by issuing a new directive prohibiting military personnel from using nonpublic information to place trades. The move follows widely publicized allegations that a U.S. soldier profited by over $400,000 from advance knowledge of a military operation in Venezuela.
Meanwhile, congressional scrutiny of FanDuel’s VIP program has expanded to six more companies, including DraftKings, Kalshi, and Polymarket; the CFTC has intervened in plans to introduce new sports-event contracts; and Boyd Gaming and Evolution reported their third-quarter results.
The Big Story: Pentagon Restricts Military Prediction Market Trading
The Pentagon has issued a new directive prohibiting military personnel from using “nonpublic information” to trade on prediction markets.
Defense Secretary Pete Hegseth’s directive warns that trading based on sensitive military information could compromise national security and expose service members to disciplinary action or criminal prosecution.
The Pentagon also warned that the mere existence of trading activity could reveal information about military operations, even without personnel directly disclosing classified material.
“Our enemies watch movements in these markets,” Hegseth wrote, as reviewed by The Associated Press. “When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal.”
The move follows growing concerns about insider trading involving knowledge of advanced military operations. Earlier this year, a U.S. Special Forces soldier was charged with using nonpublic information on the military operation to capture Venezuelan leader Nicolás Maduro. The soldier allegedly made a profit of more than $400,000 on Polymarket.
In August, reports emerged that federal authorities are investigating more suspicious insider trading cases. That includes a U.S. servicemember suspected of ringing up a profit of more than $1 million on Polymarket on contracts tied to military strikes in Iran and Venezuela.
The Daily Wire
Congress Expands VIP Program Scrutiny to Sportsbooks, Prediction Markets
Federal lawmakers’ inquiry into FanDuel’s VIP program has expanded to include additional operators, with letters sent to BetMGM, Caesars, DraftKings, Fanatics, Kalshi and Polymarket.
Similar to requests already sent to FanDuel, Sen. Richard Blumenthal and Reps. Paul Tonko and Valerie Foushee are demanding detailed information about how the companies recruit and reward high-value customers. That includes whether AI is used to identify and target gamblers experiencing losses, citing the recent scrutiny of DraftKings’ practices.
In the Oct. 22 letters, lawmakers accused the operators of using VIP rewards and personalized incentives to encourage potentially vulnerable customers to continue gambling.
They wrote:
“It is wholly unacceptable that the gambling industry profits at the expense of its most vulnerable customers’ financial and mental well-being.”
The companies have until Nov. 5 to respond to questions about VIP enrollment, program revenue, and customers’ average gambling losses before and after receiving VIP status.
The lawmakers also want to know whether customers who attempted to reduce their gambling or close their accounts were offered incentives to continue, and whether VIP managers are trained to develop personal relationships to encourage further wagering.
They also raised concerns that similar incentives are emerging on prediction markets, which are “actively flouting safeguards established by state gambling authorities and offering their products in states where sports betting is not legal.”
CFTC Intervenes in Novig, ProphetX Sports Contract Plans
The Commodity Futures Trading Commission (CFTC) has told prediction market operators Novig and ProphetX not to list certain self-certified sports event contracts, according to Front Office Sports.
In letters to the companies, the agency says the companies made false self-certifications and requests that they explain why the contracts fall under federal derivatives laws.
The intervention concerns proposed micro contracts from Novig and scorigami contracts from ProphetX. Micro contracts allow traders to take positions on narrowly defined events within a game, while scorigami contracts concern the occurrence of unusual or previously unseen final scores.
The regulator reportedly raised concerns about potential manipulation involving Novig’s proposed contracts and questions over whether ProphetX’s scorigami contracts qualify as swaps under federal law.
Boyd Gaming Q3 Revenue Slips due to Softness in Las Vegas
Boyd Gaming reported third-quarter revenue of $990.5 million, down from approximately $1 billion a year earlier, as weaker Las Vegas operations offset growth in its regional and online businesses.
Adjusted EBITDAR declined slightly to $319.6 million from $321.8 million, while adjusted earnings fell to $121.7 million from $139.1 million. Net income totaled $124.9 million, compared with $1.4 billion a year earlier, when Boyd recorded a substantial one-time gain from selling its FanDuel stake.
Weaker destination traffic in Las Vegas affected the Orleans property and downtown Las Vegas operations. Keith Smith, president and CEO of Boyd, said that August was weaker than anticipated. However, excluding certain property closures, disposals and tax impacts, revenue in Boyd’s Midwest and South segment increased nearly 3%.
Boyd’s online segment also recorded double-digit adjusted EBITDAR growth, supported by its online casino business.
Evolution Q3 Revenue Rises 3.7% Despite Brazil Shutdown
Evolution reported third-quarter revenue of €526.1 million ($589.1 million), up 3.7% year over year, in what CEO Martin Carlesund called an “uneventful quarter.” However, Carlesund noted that for the first time since 2024, all regions reported quarter-on-quarter growth, while the company also reported year-on-year growth.
Adjusted EBITDA increased 2.7% to €345.9 million. However, the margin narrowed from 66.4% to 65.8%. Profit for the quarter declined to €243.3 million from €252.3 million.
Both segments, Live and RNG, grew year over year, with Live increasing by 2.6% and RNG by 10.1%. North American revenue grew 13.6% year over year, while Latin America and Africa recorded increases of 23.1% and 23.7%, respectively.
The company continues to monitor and adjust to Brazil’s recent ban on online gaming. Evolution said it temporarily closed its Brazilian studio, with Carlesund noting that the regulatory outcome remains uncertain.
Evolution said Brazil accounts for “well below half” of its Latin American revenue and expects growth elsewhere in the region to partially offset the impact.
Illinois Proposes Expanding Self-Exclusion to Video Gambling
In an Oct. 22 meeting, the Illinois Gaming Board unanimously approved proposed rules to add the state’s nearly 50,000 video gaming terminals (VGTs) to its voluntary self-exclusion program.
The rules would require players to verify their identities before obtaining vouchers to use video gambling machines, which would no longer accept cash directly.
The proposal also addresses cashless payments through VGT accounts and player rewards programs. Operators offering these accounts would be required to provide responsible gaming tools, such as spending limits.
The changes aim to prevent self-excluded individuals from using VGTs, which are typically located in bars, restaurants, and other licensed establishments. Before taking effect, the measures must undergo the state’s formal rulemaking process, which could take six months to a year.
Gambling Scandals: NCAA Betting Charges and NBA Guilty Plea
Former NCAA basketball players Steven Vasquez and Mykell Robinson and Matthew Martin, a former DraftKings trader, face criminal charges in Nevada over an alleged scheme to manipulate player-prop bets, according to ESPN.
Prosecutors allege the scheme involved Robinson deliberately underperforming in a 2025 Fresno State basketball game against Colorado State, while Vasquez, Martin and another ex-DraftKings employee, Samuel Silverman, who was arrested in May, allegedly placed bets on the under on his statistics with a Las Vegas sportsbook.
Vasquez and Martin have pleaded not guilty, while an arrest warrant has been issued for Robinson.
Separately, ESPN reported that Eric Earnest pleaded guilty to conspiracy to commit wire fraud in the NBA insider-betting case involving Terry Rozier and to wire fraud in the separate rigged-poker case involving former NBA player and Portland Trail Blazers head coach Chauncey Billups.
Federal prosecutors alleged that Earnest received inside information about the Trail Blazers ahead of a March 2023 game against the Chicago Bulls. However, Earnest’s attorney disputed allegations that Billups was the source of the information. Billups faces charges in the poker case, to which he has pleaded not guilty.
Prediction Markets Weekly Roundup
Ohio emerged as a focal point of prediction market regulation this week.
Polymarket sued state officials over the cease-and-desist letters sent earlier this month. Meanwhile, the Ohio Casino Control Commission warned licensees that relationships with prediction market operators could jeopardize their licenses.
The regulator told Sports Betting Dime that only Plus500US was confirmed to have complied with the state’s recent order. However, Plus500US maintained that it had never facilitated sports-event contracts in Ohio.
Elsewhere, Utah sued Kalshi, seeking to block its operations and recover millions in alleged unlawful gambling proceeds. Washington also moved to dismiss Novig’s federal lawsuit.
In Wisconsin, the state Elections Commission’s warning that people with a financial stake in election outcomes on prediction markets could lose their eligibility to vote has resulted in two lawsuits by a radio host and an open-government group.
Meanwhile, Sen. Ted Cruz is reportedly preparing legislation that would require state or tribal approval for sports-related prediction market contracts, with introduction expected after the midterm elections.
At the NEXT Predict conference, DraftKings CEO Jason Robins claimed the company’s exchange was already the third-largest prediction market by trading volume. At the same time, Underdog and Crypto.com executives said prediction markets are already mainstream, with trust being the final mainstream hurdle.
During the conference, CFTC Enforcement Director David Miller said trading on nonpublic information does not automatically violate federal law. Separately, he confirmed an investigation into suspicious oil trading surrounding the U.S. conflict with Iran.
On the commercial side, High Roller Technologies launched its ROLR prediction market, offering event contracts using Crypto.com’s infrastructure.
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