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SBN Trivia:

Scuttlebutt in military slang means rumor or gossip, deriving from the nautical term for the cask used to serve water and, later, a water fountain.  The term corresponds to the setting which at times becomes the focus of congregation and casual discussion. Water for immediate consumption on a sailing ship was conventionally stored in a scuttled butt: A butt or cask which had been scuttled by making a hole in it so the water could be withdrawn. Since sailors exchanged gossip when they gathered at the scuttlebutt for a drink of water, Scuttlebutt became Navy and Marine Corps slang for gossip or rumors.