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Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.

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Speaker 2: The place is burning down, and they pretend like there's

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Speaker 2: nothing happening.

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Speaker 3: The facts on the ground and Oregon haven't changed. There's

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Speaker 3: no need for military intervention in Oregon. There's no insurrection

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Speaker 3: in Portland. There's no threat to national security. Oregon is

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Speaker 3: our home. It is not a military target.

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Speaker 4: President Trump still maintains that Portland is burning to the

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Speaker 4: ground and is war ravaged, despite what the Governor of Oregon,

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Speaker 4: Tina Kotek, has said, and despite the fact that a

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Speaker 4: federal judge found over the weekend that there were no

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Speaker 4: facts to support Trump's claims that anarchists and professional agitators

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Speaker 4: were trying to burn the city down. Judge Karen Immergut,

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Speaker 4: a Trump appointee, issued two orders in two days. The

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Speaker 4: first block the Trump administration from deploying Oregon National Guard

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Speaker 4: troops to Portland, but the judge said the administration directly

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Speaker 4: contravened that order by calling up the California Guard, so

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Speaker 4: she issued a second order, blocking the administration from sending

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Speaker 4: any National Guard troops into Portland. Oregon's Attorney General, Dan

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Speaker 4: Rayfield described the administration's actions as whack a mole trying

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Speaker 4: to use guard units from different states to get around

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Speaker 4: court orders and the rule of law. The judge's order

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Speaker 4: was not some minor procedural point for the president to

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Speaker 4: work around like my fourteen year old does when he

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Speaker 4: doesn't like my answers. Judge Immergut's ruling found that the

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Speaker 4: Constitution leaves policing powers to state and local governments, while

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Speaker 4: granting Congress the power to call up state militias to

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Speaker 4: execute federal laws, suppress insurrections, and repel invasions. Quote. This

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Speaker 4: is a nation of constitutional law, not martial law. My

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Speaker 4: guest is constitutional law expert Harold Krent, a professor at

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Speaker 4: the Chicago Kent College of Law. So, how quite an

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Speaker 4: opinion from a Trump appoint de and she said the

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Speaker 4: administration had violated her order. It seems like this is

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Speaker 4: a direct contravention of the order this court issued yesterday.

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Speaker 4: Tell us what the Trump administration was trying to do here.

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Speaker 5: The Trump administration, somewhat parallel to Los Angeles and perhaps

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Speaker 5: to Chicago as well, is trying to send National Guards

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Speaker 5: troops into Portland in what they think is an effort

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Speaker 5: to restore order, and principally, the judge in Oregon said

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Speaker 5: that there's been no basis shown for federalizing the National Guard.

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Speaker 5: In other words, that President Trump lacks the authority under

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Speaker 5: the statutory scheme to send National Guards into Portland because

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Speaker 5: there's no insurrection, there's no invasion, there's no showing that

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Speaker 5: there's a failure general law enforcement. And so she then

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Speaker 5: decided to ensure that not only was there no troops

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Speaker 5: sent from Oregon, no troops sent from California, no troops

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Speaker 5: sent from anywhere, in order to ensure that the administration

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Speaker 5: did not try to serve invent her order. Whether or

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Speaker 5: not the government will comply with her order remains to

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Speaker 5: be seen, but we're watching carefully.

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Speaker 4: She said it was a direct contravention. But what had

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Speaker 4: happened was she ordered that they couldn't send the Oregon

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Speaker 4: National Guard troops into Portland. So the Trump administration then

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Speaker 4: moved to call up the Texas National Guard and the

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Speaker 4: California National Guard. Is that a direct contravention or were

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Speaker 4: they trying to use a loophole.

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Speaker 5: I think they're trying to use a loophole, and so

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Speaker 5: I don't think it was any kind of contemptuous behavior. Certainly,

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Speaker 5: it violated the spirit of the Oregon Courts order, but

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Speaker 5: not the letter. And indeed, I think that the Oregon

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Speaker 5: Court's decision is iffy to put it that way. It's

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Speaker 5: true that the prerequisites for federalized in the National Guard

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Speaker 5: had not been met statutorily, but the Supreme Court has

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Speaker 5: recognized a kind of inherent protective power of the president

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Speaker 5: to protect federal facilities at least, and so to the

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Speaker 5: extent that the National Guard were used not for general

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Speaker 5: law enforcement, certainly, but just to protect federal buildings in Portland,

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Speaker 5: I think the president would be on stronger ground. Now,

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Speaker 5: of course there's no factual predicate for thinking that the

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Speaker 5: federal buildings are in jeopardy in Portland or in Chicago,

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Speaker 5: but that at least would be I think put the

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Speaker 5: president on the strongest legal ground.

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Speaker 4: I mean, the judge made a factual determination. She said

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Speaker 4: the president's determination was simply unchathered to the facts. He

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Speaker 4: has claimed that the city's overrun with agitators and insurrectionists

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Speaker 4: who are responsible for burning the city to the ground,

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Speaker 4: and that Portland was war ravaged. So she's found that

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Speaker 4: that's not true. Those facts that he suggested are not true.

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Speaker 4: So then he doesn't have the power, does he.

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Speaker 5: Yeah, the President's overreached, right, and the President should have

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Speaker 5: made a much more narrow cabin decision stating that there

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Speaker 5: was a potential or a real threaten in his understanding

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Speaker 5: to federal facilities in Portland and therefore needed to dispatch

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Speaker 5: National Guards troops in order to protect those buildings. But

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Speaker 5: instead he is granted about Portland and anarchists for years

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Speaker 5: and years, and he's just refreshing those means. And of

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Speaker 5: course the court in Oregon was much more familiar with

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Speaker 5: what's going on in Oregon, said, you know, if that's

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Speaker 5: a factual basis, you're out of court.

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Speaker 4: Why do you think that Trump administration is making these

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Speaker 4: overbroad arguments about cities burning down and violence on the

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Speaker 4: streets everywhere when there's no factual basis for it, and

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Speaker 4: there's video that shows there's no basis. Any violence, if

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Speaker 4: there is any, seems to be limited to the areas

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Speaker 4: around federal buildings with ice facilities. Why not limit it

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Speaker 4: to what's provable.

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Speaker 5: I mean, there is a political question in underlying your statement,

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Speaker 5: and maybe a psychological one as well. Is President Trump

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Speaker 5: doing this to inure the American to the site of

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Speaker 5: federal troops on their streets. If so, incredibly frightening, because

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Speaker 5: it may mean that he's planning to use federal troops

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Speaker 5: for other purposes, such as, you know, during I move

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Speaker 5: the day, but during the midterms, or alternatively, is this

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Speaker 5: just something that he can help his base within by

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Speaker 5: suggesting he's strong and he cares about people, and he's

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Speaker 5: going to send troops wherever it's needed to protect against lawlessness.

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Speaker 5: I don't know which it is, but certainly this has

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Speaker 5: been a consistent team with his He wants to send

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Speaker 5: troops to be tough, to be seen as the law

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Speaker 5: and order president, even if troops aren't needed, and even

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Speaker 5: if that violates statutes, and even if it undermines the

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Speaker 5: tradition in our country of not having a standing army

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Speaker 5: or even the National Guard being used for general law

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Speaker 5: enforcement purposes.

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Speaker 4: The Oregon Ag described this as a whack a mole,

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Speaker 4: with different states Guard units being used to get around

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Speaker 4: the court's order. The judge she expressed frustration with the

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Speaker 4: Justice Department's lawyer, Eric Hamilton, saying he was missing the

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Speaker 4: point of her earlier order, and she said, quote mister Hamilton,

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Speaker 4: you're an officer of the court. Do you believe this

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Speaker 4: is an appropriate way for you to deal with mind

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Speaker 4: order or with an order you disagree with?

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Speaker 5: Yeah, I mean, to be fair, I think that the

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Speaker 5: Justice Department was reading the order narrowly, which it's entitled

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Speaker 5: to do. And the order banned the Oregon National Guard

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Speaker 5: from being federalized and didn't talk about the Texas National

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Speaker 5: Guard or the California National Guard. And maybe that was

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Speaker 5: just a failure of litigation, and that loophole has been

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Speaker 5: closed forthwith. Certainly, again, it was against the spirit of

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Speaker 5: the rulers, no question about it what the government did.

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Speaker 5: But I don't think it's contemptuous.

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Speaker 4: And explain the judge's ruling about why the deployment likely

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Speaker 4: violated Oregon's Tenth Amendment rights.

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Speaker 5: Well, the Oregon Governor isn't put in control of the

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Speaker 5: National Guard of Oregon, and so here there is we

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Speaker 5: have the president who's ordering the Oregon National Guard into

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Speaker 5: active duty, despite the fact that the governor who's in

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Speaker 5: charge of it, commander of it, has a client to

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Speaker 5: do so. Therein lies the Tenth Amendment struggle, because seemingly

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Speaker 5: the president has served the governor's authority to be, in

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Speaker 5: effect the head of the troop's National Guard, at least

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Speaker 5: within Oregon.

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Speaker 4: On Sunday, California Governor Gavin Newsom filed a separate lawsuit

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Speaker 4: to prevent Trump from sending his states National Guard to Oregon.

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Speaker 4: So the national Guard is under the control of the

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Speaker 4: governor of the state. So does the president have the

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Speaker 4: authority to take that national Guard out of the control

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Speaker 4: of the governor of the state and send them to

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Speaker 4: another state.

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Speaker 5: Yeah, I mean I think that obviously we don't have

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Speaker 5: precedents on that power, and certainly I would think in

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Speaker 5: an emergency, perhaps the authority might exist in the president

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Speaker 5: to order a state's National Guard into active duty, even

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Speaker 5: if the governor didn't want to. And this seems like

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Speaker 5: a a far stretch, And that's why the temp amendment

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Speaker 5: issue arises, because here there is a claim that the

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Speaker 5: California the National Guard is needed in a different state,

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Speaker 5: and that seems to directly cut against unless there's a

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Speaker 5: national emergency or an insurrection, the idea of ordering one

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Speaker 5: state's guard to go into another state, particularly without the

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Speaker 5: approval of the governor, seems to be directly contrary to

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Speaker 5: the regime of militias, which has long been supervised by

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Speaker 5: state governors from the revolutionary time onward.

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Speaker 4: Representative Adam Smith, the senior Democrat on the Armed Services Committee,

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Speaker 4: has said that he couldn't remember another time when one

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Speaker 4: state's national guard was deployed to another state over the

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Speaker 4: objections of both governors involved. So no precedent, it's unprecedent.

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Speaker 5: It's unprecedent here, and it seems to be directly an

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Speaker 5: affront to the Tenth Amendments, which lodgist responsibility in states

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Speaker 5: to their governors and to their elected representatives. But there's

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Speaker 5: just hasn't been a lot of precedents on point, So

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Speaker 5: obviously the court are going to have to weigh in.

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Speaker 2: Donald Trump's deranged depiction of Chicago as a hellhole, a

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Speaker 2: war zone and the worst and most dangerous city in

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Speaker 2: the world was just complete bs. He clearly has decided

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Speaker 2: to declare war on a great American city that has

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Speaker 2: the lowest homicide rate in sixty years, in a state

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Speaker 2: that has record employment and near record tourism.

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Speaker 4: That's Governor JB. Pritzker. As Illinois becomes the latest state

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Speaker 4: to sue the Trump administration over its plans to send

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Speaker 4: National Guard troops into one of its cities against the

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Speaker 4: wishes of state and local officials. I've been talking to

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Speaker 4: Professor Harold Krant of the Chicago Kent College of Law,

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Speaker 4: So how tell us what's happening in your city? Are there?

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Speaker 5: I don't think they're there yet. The Attorney General has

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Speaker 5: already filed suits. The Mayor of Chicago has made a

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Speaker 5: vaguely worded statement like we must resist with all force,

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Speaker 5: but no one knows what that means. So tensions are heightened,

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Speaker 5: and we will expect to see National Guard troops from

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Speaker 5: Texas evidently who will be coming to Chicago in nearboy

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Speaker 5: And again, yet there has been problems with some kind

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Speaker 5: of ICE enforcement. ICE has killed somebody in in Chicago,

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Speaker 5: They've arrested other people and trying to make these raids,

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Speaker 5: but there has been no complete falling apart of any

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Speaker 5: kind of ordinary law enforcement. And indeed, there's been some

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Speaker 5: evidence that ICE itself has instigated the protests by the

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Speaker 5: manner in which they are trying to conduct raids. So again,

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Speaker 5: this is I think for show. The President wants to

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Speaker 5: be seen as tough in it if he wants to

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Speaker 5: send troops into Chicago. He's, by god, he's going to

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Speaker 5: do it, and Governor Abbott of Texas is willing to comply.

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Speaker 5: So there's no Tenth Amendment violation there with using Texas

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Speaker 5: National Guard troops.

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Speaker 4: What's the basis of Illinois suit against the deployment, and.

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Speaker 5: There's several bases, but they first would say that the

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Speaker 5: statutory prerequisites are not met in terms of federalizing National Guard,

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Speaker 5: in terms of there's no invasion, there's no absence of

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Speaker 5: general law enforcement, there's no insurrection. And so then I

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Speaker 5: think the issue will likely boil down to whether there

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Speaker 5: is some kind of protective power inheriting the presidency that

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Speaker 5: can allow the president to send troops, at least for

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Speaker 5: the narrow purpose of defending federal facilities. This really gets

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Speaker 5: us back to what Judge Bryer said in the California

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Speaker 5: of litigation that if there is this protective power, it's

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Speaker 5: very limited. It's limited to protecting federal facilities, and it

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Speaker 5: cannot be used to justify a broad federal presence in

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Speaker 5: terms of general law enforcement, in terms of accompanying ice

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Speaker 5: officers on the along the way, et cetera, et cetera.

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Speaker 5: So we may get involved in that, But that's that's

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Speaker 5: down the road, because first there's a question of authorization.

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Speaker 5: And you know, again President Trump is being too broad.

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Speaker 5: He's saying there's lawlessness in Chicago, and that justifies him

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Speaker 5: using the Texas National Guard. And that's if there's a

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Speaker 5: factual predicate there to be decided. I'm sure the judges

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Speaker 5: here will hear the evidence and they're very unlikely to

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Speaker 5: back President Trump and his broad assertions.

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Speaker 4: Did he also call up the Illinois National Guard?

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Speaker 5: He has not done that yet to my knowledge, he

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Speaker 5: has threatened to, and of course Governor Pritzker has has

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Speaker 5: not only said that he would do over his objection,

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Speaker 5: but at the same time he also said that the

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Speaker 5: President Trump has not even called him to ask for permission,

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Speaker 5: So that may happen down the line. Maybe it's already happened,

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Speaker 5: but not to my knowledge, has.

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Speaker 4: The Supreme Court even come close to resolving something similar

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Speaker 4: in this sort of frame or not even close.

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Speaker 5: And there are some vague similarities of what's happened under

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Speaker 5: the Militia Acts back two hundred years ago, and there

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Speaker 5: the Supreme Court has said that there is a protective

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Speaker 5: power to some extent in the president to protect federal

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Speaker 5: officials federal facilities, but nothing on this order, nothing on

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Speaker 5: this extent. So this clash that President Trump was introduced

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Speaker 5: in Oregon, Los Angeles and in Chicago is really unprecedented,

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Speaker 5: and the course are going to have to make a

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Speaker 5: very difficult decision in saying that. It's pretty clear that

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Speaker 5: the statutory prerequisites have not been met. So I think

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Speaker 5: they'll have to grapple with to what extent there's an

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Speaker 5: implicit inherent authority at the president to protect federal officials

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Speaker 5: and federal facilities and how far that extends. So very

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Speaker 5: difficult issues for the courts to soar through, and obviously

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Speaker 5: we've just had a beginning of that with the judges

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Speaker 5: in California and Oregon.

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Speaker 4: So last Tuesday, Trump said when he was addressing the

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Speaker 4: military officers in Quantico that America is under invasion from

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Speaker 4: within and he wants to use dangerous American cities run

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Speaker 4: by Democrats as training grounds for the armed forces. Besides

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Speaker 4: being frightening, does he have any authority.

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Speaker 1: To do that?

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Speaker 5: Well, what frightens me about that statement is is this

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Speaker 5: is a training ground for what? Is this a dress

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Speaker 5: rehearsal for a full scale attack on Democratic strongholds. Is

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Speaker 5: this a rehearsal for getting us all prepared to see

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Speaker 5: federal troops during the midterm elections. I mean, what is

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Speaker 5: he actually preparing the military for. I don't know, but

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Speaker 5: obviously this definitely cuts against our traditions, our norms about

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Speaker 5: not having a standing army. And that's why we were

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Speaker 5: afraid of having a standing army, because we've wanted to

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Speaker 5: not see federal troops in the streets of all of

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Speaker 5: our cities, both because of the respect given to states

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Speaker 5: a state law enforcement and because of the dangers of

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Speaker 5: having federal troops in civilian rules.

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Speaker 4: There's a hearing date in the Illinois case on Thursday.

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Speaker 4: We'll see what happens then. Thanks Hall. That's Professor Harold

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Speaker 4: Krant of the Chicago Kent College of Law. At least

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Speaker 4: a third of senior career leaders have left the Justice

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Speaker 4: Department since the start of President Donald Trump's second term,

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Speaker 4: taking with them centuries of combined expertise. That's according to

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Speaker 4: a Bloomberg Law analysis. The departures, both voluntary and involuntary,

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Speaker 4: represent an unprecedented level of departures in recent memory. With

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Speaker 4: the divisions enforcing civil rights, immigration, and environmental laws among

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Speaker 4: the hardest hit. They include at least one hundred and

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Speaker 4: seven career Justice Department senior managers in the span of

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Speaker 4: eight months. That's out of roughly three hundred and twenty

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Speaker 4: career leadership positions immediately below presidential appointees included in a

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Speaker 4: government directory. The loss of so many senior managers, many

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Speaker 4: of whom have spent their entire careers rising through the

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Speaker 4: department's ranks, could take generations to rebuild. The Justice Department

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Speaker 4: is also losing many more trial attorneys and other career employees.

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Speaker 4: Joining me is Bloomberg Law reporter Suzanne Monnak. Suzanne tell

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Speaker 4: us about all these departures.

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Speaker 6: We've seen this an unprecedented amount of attrition of the

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Speaker 6: career workforce this year really across the government, but we've

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Speaker 6: really seen it in a significant number as the Department

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Speaker 6: of Justice. We used a federal director posted by the

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Speaker 6: Office of Personnel Management that has, you know, hundreds and

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Speaker 6: hundreds of career managers at the Justice Department. We focused

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Speaker 6: on those who went through the career appointed process, and

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Speaker 6: that's where we found that over a third of those

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Speaker 6: who were in place in January and those career leadership

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Speaker 6: positions are no longer there, and these include really broad

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Speaker 6: types of positions whose include supervisors, you know, lead attorneys,

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Speaker 6: managing attorneys, people in higher level positions. That's some senior

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Speaker 6: executive service, but some other high level positions as well,

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Speaker 6: who've been there for years and years, some of them

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Speaker 6: who you know, keep work running at the Justice Department.

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Speaker 4: Were these voluntary departures, were they fired?

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Speaker 6: It's been a real mix. There have been examples of

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Speaker 6: career managers at DJ who have been fully fired, some

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Speaker 6: of whom are now contesting those terminations. A number of

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Speaker 6: them chose to leave either. Some may have taken the

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Speaker 6: deferred resignation policy that fork in the Road offer that

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Speaker 6: was available across the government. Others may have just left

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Speaker 6: for another job. And some were kind of left under

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Speaker 6: what I might I was more dressed. Some people were

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Speaker 6: forcibly reassigned or demoted, for example, to positions that they

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Speaker 6: didn't want to be in, and so then felt kind

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Speaker 6: of moved to leave the department. So, while technically not fired,

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Speaker 6: were removed from their positions. One prominent example of that

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Speaker 6: was the Sanctuary Cities Task Force that sort of became

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Speaker 6: a place where we saw you know, some longtime career

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Speaker 6: people get forcibly reassigned into and at this point, all

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Speaker 6: of those people who were reassigned into that task force,

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Speaker 6: which was you know, for the stated purpose of cracking

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Speaker 6: down on so called sanctuary jurisdictions who don't want to

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Speaker 6: cooperate with federal immigration authorities, all of the people in

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Speaker 6: that task force have since left.

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Speaker 4: These are the career officials who get a job at

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Speaker 4: the Department of Justice, work their way up, and stay

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Speaker 4: at the Department of Justice.

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Speaker 6: Yes, it is very uncommon to see this amount of

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Speaker 6: attrition when political administrations changed. I spoke to a number

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Speaker 6: of former officials for this story, and you know, many

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Speaker 6: described through people as the types of people who stay

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Speaker 6: across political administration, which is kind of their very purpose.

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Speaker 6: When a new administration comes in, they're going to appoint

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Speaker 6: a lot of people who are their choices. There's going

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Speaker 6: to be a lot of political appointees. But the real

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Speaker 6: role of the career civil servants, you know, the career

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Speaker 6: work force, the civil servants are to kind of, you know,

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Speaker 6: help keep things moving. You know, there's going to be

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Speaker 6: a bunch of new people who don't know what they're doing,

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Speaker 6: but you'll have that career workforce in place always to

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Speaker 6: you know, understand how how the department runs.

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Speaker 4: Yeah, you talk to someone who was a political appointee

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Speaker 4: who said, we took a lot of our direction from

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Speaker 4: the career staff to do our jobs.

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Speaker 6: Absolutely, I think that that's exactly the type of example,

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Speaker 6: at least when a new political appointee comes in, you know,

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Speaker 6: they may be very qualified, but they're just going to

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Speaker 6: be new to that work potentially, and if they don't

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Speaker 6: have that exact background themselves, and you know, political appointees

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Speaker 6: I spoke to former political pointe is really said that

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Speaker 6: they relied on that career workforce to have that expertise

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Speaker 6: so that you know, they could go to someone and

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Speaker 6: be you know, ask them, you know, how something works

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Speaker 6: and how to do something, and just to kind of

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Speaker 6: know that they have experienced people working for them.

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Speaker 4: Tell us how many PEO people left or part of

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Speaker 4: their reason was because of the executive order calling to

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Speaker 4: prioritize accountability among the Senior Executive Service.

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Speaker 6: Sure, so that was an executive order at the beginning

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Speaker 6: of this administration that kind of gave us a little

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Speaker 6: bit of a signal that the Trump administration was going

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Speaker 6: to be taking a hard look at the senior executive

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Speaker 6: service that maybe they you know, were distrustful of that

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Speaker 6: group of people, even though you know, historically that's just

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Speaker 6: been a group of people who've been here in high

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Speaker 6: level career leadership potitions that are nonpartisan for many years.

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Speaker 1: You know.

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Speaker 6: Obviously, you can't say for sure how many you know,

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Speaker 6: exactly how many people might have left because they read

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Speaker 6: that order and you know, worried for their career trajectory,

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Speaker 6: you know, But I think the Trump administration has done

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Speaker 6: a lot, you know, very broadly that has made career

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Speaker 6: managers you know, think twice about how long they might

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Speaker 6: be able to stay in their roles, whether that's pivoting

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Speaker 6: priorities of the department in terms of like litigating priorities,

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Speaker 6: or just you know, generally making workers feel unstable and

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Speaker 6: like they're going to be laid off. I mean, we've

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Speaker 6: seen broad reductions and force throughout the government. This year.

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Speaker 4: It was the Civil Rights Division that was hit the hardest.

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Speaker 4: Seventy six percent of career managers departed.

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Speaker 6: Yes, that's what we found them. Going through all of

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Speaker 6: the career manager directory, we found that that division within

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Speaker 6: the Justice Department had the highest share of career managers

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Speaker 6: leaving this year that was similarly a mix. So many

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Speaker 6: of those people had been demoted and left after that,

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Speaker 6: some did leave on their own, and that was an

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Speaker 6: example of a division that really did take a hard

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Speaker 6: turn in a different direction ideologically this year. I mean,

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Speaker 6: the Civil Rights Division has always somewhat been vulnerable to

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Speaker 6: those types of changes as clinical administrations come and go,

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Speaker 6: but we really saw quite a significant departure that former

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Speaker 6: employees have told me was very different from the way

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Speaker 6: it's been in the past in terms of changing ideological priorities.

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Speaker 6: For example, instead of focusing on historically marginalized populations, which

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Speaker 6: was along the focus of that division it was created

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Speaker 6: during the Civil rights movement, we're now seeing a focus

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Speaker 6: on gun rights and anti Christian bias. For example.

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Speaker 4: What about the trial attorneys you know that are handling

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Speaker 4: the cases.

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Speaker 6: So the project that we put together does not include

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Speaker 6: trial attorneys, and that's only because we don't have access

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Speaker 6: to a perfect federal directory with a list of their

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Speaker 6: names to draw a statistical and conclusion from that. But

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Speaker 6: they that has been a huge source of attrition. I mean,

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Speaker 6: certainly more so than at the manager level. We have

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Speaker 6: seen trial attorneys basically hemorrhaged out of the Justice Department

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Speaker 6: this year. And while this number includes both trial attorneys

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Speaker 6: and managers just across the Justice Department, the department itself

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Speaker 6: has disclosed and budget documents that around forty five hundred

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Speaker 6: employees total have taken to Ford resignation offers this year.

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Speaker 6: As a little bit of a look at the amount

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Speaker 6: of people who have left.

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Speaker 4: Sixty two percent of the managers in the Executive Office

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Speaker 4: for Immigration Review left. I'm curious about why that particular

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Speaker 4: office when there's so much emphasis now on immigration.

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Speaker 6: That may be the very reason. I think that sometimes

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Speaker 6: when we see it's the offices, at least in our analysis,

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Speaker 6: that sometimes focused on some of those more hot button

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Speaker 6: policy issues that this administration has really focused on and

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Speaker 6: putting its own stamp on where we saw the most attrition. So,

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Speaker 6: while you know, I can't speak for those who decided

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Speaker 6: to leave, but we saw a lot of immigration judges

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Speaker 6: being pushed out this year.

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Speaker 4: How many people are challenging their firings.

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Speaker 6: It's hard to get an exact number because challenges that

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Speaker 6: the Merit Systems Protections Board, which would handle those types

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Speaker 6: of cases, are not public. But we have found a

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Speaker 6: number of examples of people doing that, and I think

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Speaker 6: some of the challenges from people who were within the

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Speaker 6: senior executive service might be, you know, tougher cases for

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Speaker 6: the federal government to defend. And we've even seen at

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Speaker 6: least one federal court litigation and filed against a number

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Speaker 6: a handful of Justice Department employees to say that they

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Speaker 6: were terminated unffair.

437
00:25:54,760 --> 00:25:59,600
Speaker 4: I mean, now, let's say the next administration comes in

438
00:26:00,200 --> 00:26:03,639
Speaker 4: is different. Can the Justice Department rebuild its staff and

439
00:26:03,920 --> 00:26:06,840
Speaker 4: sort of pick up where it left off before Trump

440
00:26:06,880 --> 00:26:07,879
Speaker 4: came into office.

441
00:26:08,080 --> 00:26:10,959
Speaker 6: They can certainly try. Former officials I spoke to them

442
00:26:11,000 --> 00:26:12,639
Speaker 6: said that it's going to be quite a challenge that

443
00:26:12,680 --> 00:26:15,600
Speaker 6: they've to lose at least a third of the career

444
00:26:15,640 --> 00:26:17,680
Speaker 6: staff in the span of I mean at this point

445
00:26:17,680 --> 00:26:20,040
Speaker 6: eight or nine months, is a massive hit to a

446
00:26:20,080 --> 00:26:25,040
Speaker 6: department's institutional memory, to their expertise. I think the Trump

447
00:26:25,080 --> 00:26:27,840
Speaker 6: administration might say that they're looking to get those types

448
00:26:27,880 --> 00:26:30,800
Speaker 6: of people out. They refer to certain government employees as

449
00:26:30,840 --> 00:26:33,240
Speaker 6: you know deep state actors, and they talk about wanting

450
00:26:33,280 --> 00:26:36,000
Speaker 6: to pivot the direction of the department, and I think

451
00:26:36,040 --> 00:26:40,840
Speaker 6: that's something we've seen from senior political administration officials during

452
00:26:40,840 --> 00:26:44,280
Speaker 6: the second administration, But certainly, I think indisputably, even if

453
00:26:44,320 --> 00:26:46,160
Speaker 6: the goal is to pivot the direction, that's a lot

454
00:26:46,160 --> 00:26:49,240
Speaker 6: of hiring for this current administration to do, a lot

455
00:26:49,280 --> 00:26:51,120
Speaker 6: of spots to fill, and it's a lot of spots

456
00:26:51,119 --> 00:26:54,960
Speaker 6: and advanced roles from people who maybe were supervising a

457
00:26:54,960 --> 00:26:58,119
Speaker 6: section that they've previously been an attorney in for many years.

458
00:26:58,160 --> 00:27:01,080
Speaker 6: Now trying to fill that spot going to be a

459
00:27:01,160 --> 00:27:02,600
Speaker 6: challenge really for any administration.

460
00:27:03,040 --> 00:27:05,560
Speaker 4: Are they having a hard time hiring new people to

461
00:27:05,680 --> 00:27:06,480
Speaker 4: fill slots.

462
00:27:07,520 --> 00:27:09,720
Speaker 6: It's a little too soon to say. So much of

463
00:27:09,760 --> 00:27:13,320
Speaker 6: these departures have been in the last few months, and

464
00:27:13,359 --> 00:27:15,280
Speaker 6: of course, you know, with the end of the fiscal

465
00:27:15,359 --> 00:27:18,480
Speaker 6: year now those who took the different resignation offer will

466
00:27:18,520 --> 00:27:21,960
Speaker 6: officially be removed from the payroll. So we you know,

467
00:27:22,280 --> 00:27:24,919
Speaker 6: we're still seeing a lot of that hiring ongoing. You know,

468
00:27:25,000 --> 00:27:27,320
Speaker 6: we certainly see that they are actively trying to hire.

469
00:27:27,359 --> 00:27:29,960
Speaker 6: And the Civil Rights Division, for example, we've seen the

470
00:27:30,040 --> 00:27:32,919
Speaker 6: lead political appointee leading the office, you know, posting on

471
00:27:32,960 --> 00:27:35,840
Speaker 6: social media, we're hiring, We're hiring. So we are seeing

472
00:27:35,840 --> 00:27:38,520
Speaker 6: an active effort, but I think it's just a little

473
00:27:38,560 --> 00:27:41,399
Speaker 6: too soon to tell at what speed they're going to

474
00:27:41,400 --> 00:27:44,320
Speaker 6: be able to do so. For career jobs, usually there's

475
00:27:44,680 --> 00:27:46,919
Speaker 6: a bit of a merit based process that has to

476
00:27:46,920 --> 00:27:48,880
Speaker 6: be involved to get these people put in place. It's

477
00:27:48,880 --> 00:27:50,720
Speaker 6: not something that can be done in the day.

478
00:27:51,119 --> 00:27:54,120
Speaker 4: It's a question I keep asking. Thanks so much, Suzanne.

479
00:27:54,400 --> 00:27:59,280
Speaker 4: That's Bloomberg Law reporter Suzanne Monnac. A litigation funder, is

480
00:27:59,359 --> 00:28:04,639
Speaker 4: filing law lawsuits against prediction market platform Calshee in six states,

481
00:28:05,119 --> 00:28:09,080
Speaker 4: using an eighteenth century gambling law in an attempt to

482
00:28:09,240 --> 00:28:14,480
Speaker 4: clawback losses from predictions gone wrong. The suits allege that

483
00:28:14,560 --> 00:28:19,080
Speaker 4: Calshi is violating state and federal law by allowing residents

484
00:28:19,119 --> 00:28:23,960
Speaker 4: to place illegal, unregulated wagers on events such as sports

485
00:28:24,000 --> 00:28:29,600
Speaker 4: and elections. Veritis Management and its chief executive, Maximilian Amster,

486
00:28:30,040 --> 00:28:34,720
Speaker 4: are behind entities that filed suits in Ohio, Kentucky, Illinois,

487
00:28:34,760 --> 00:28:40,400
Speaker 4: South Carolina, Massachusetts, and Georgia. The suits referenced state versions

488
00:28:40,440 --> 00:28:44,560
Speaker 4: of the anti illegal Gambling Statute of Anne, which lets

489
00:28:44,680 --> 00:28:48,400
Speaker 4: losing third parties sue winners for the values of losses

490
00:28:48,560 --> 00:28:52,320
Speaker 4: plus fees. Joining me is Professor M. Todd Henderson of

491
00:28:52,400 --> 00:28:56,560
Speaker 4: the University of Chicago Law School tell us about this

492
00:28:56,760 --> 00:28:59,760
Speaker 4: prediction market platform and these lawsuits.

493
00:29:00,760 --> 00:29:05,920
Speaker 1: So cal She is a company that offers prediction markets

494
00:29:06,600 --> 00:29:11,040
Speaker 1: on a variety of things. And these prediction markets have

495
00:29:11,720 --> 00:29:15,680
Speaker 1: a pretty simple feature, which is they will write a

496
00:29:15,720 --> 00:29:19,200
Speaker 1: contract that says something like, there's a state of the

497
00:29:19,240 --> 00:29:22,560
Speaker 1: world in the future, Trump becomes president, the Chiefs win

498
00:29:22,640 --> 00:29:25,600
Speaker 1: the super Bowl, the Fed lowers interest rates by a

499
00:29:25,600 --> 00:29:28,680
Speaker 1: certain amount, and if that state of the world comes true,

500
00:29:28,720 --> 00:29:31,480
Speaker 1: this contract will pay one dollar, and if this state

501
00:29:31,520 --> 00:29:33,880
Speaker 1: of the world does not come true, they will pay zero.

502
00:29:34,440 --> 00:29:37,600
Speaker 1: And then they will offer those contracts for sale, and

503
00:29:37,760 --> 00:29:40,560
Speaker 1: those contracts will have a price. People will trade them,

504
00:29:40,880 --> 00:29:44,760
Speaker 1: and the idea is that that price will reflect something

505
00:29:44,920 --> 00:29:47,840
Speaker 1: like the market's probability sense of whether this thing is

506
00:29:47,840 --> 00:29:50,160
Speaker 1: going to come true. So if a Trump is going

507
00:29:50,160 --> 00:29:54,480
Speaker 1: to be elected president, contract is trading for fifty six cents.

508
00:29:54,800 --> 00:29:57,520
Speaker 1: That implies a probability that Trump is going to be

509
00:29:57,560 --> 00:30:00,360
Speaker 1: elected president with about a fifty six percent ability, And

510
00:30:00,400 --> 00:30:02,000
Speaker 1: if you think it's much lower than that, you can

511
00:30:02,080 --> 00:30:04,040
Speaker 1: sell that contract. You sort of short it like you

512
00:30:04,040 --> 00:30:06,600
Speaker 1: would in the stock market. So they offer these contracts

513
00:30:06,640 --> 00:30:09,160
Speaker 1: for sale and they're just a market like the New

514
00:30:09,200 --> 00:30:12,920
Speaker 1: York Stock Exchange. That enables buyers and sellers to come

515
00:30:12,920 --> 00:30:15,160
Speaker 1: together and write the particular contracts, just like the New

516
00:30:15,200 --> 00:30:18,120
Speaker 1: York Stock Exchange list Companies for sale and so KALs.

517
00:30:18,120 --> 00:30:21,400
Speaker 1: She's offering these prediction markets in a variety of different places,

518
00:30:22,400 --> 00:30:25,840
Speaker 1: and people have the view and this goes back way

519
00:30:25,880 --> 00:30:29,800
Speaker 1: before these lawsuits that these are gambling, and there's been

520
00:30:29,840 --> 00:30:33,920
Speaker 1: some real hostility in the federal government towards these prediction markets.

521
00:30:34,360 --> 00:30:38,200
Speaker 1: The regulators of these things, like the CFTC has been

522
00:30:38,320 --> 00:30:40,920
Speaker 1: quite hostile to them. There were some limited carve outs

523
00:30:40,920 --> 00:30:44,480
Speaker 1: which we could talk about, but the prediction markets have

524
00:30:44,800 --> 00:30:47,840
Speaker 1: sort of blazed ahead and offered them in a variety

525
00:30:47,840 --> 00:30:51,320
Speaker 1: of states, especially in places where gambling is not legal,

526
00:30:51,720 --> 00:30:57,240
Speaker 1: like Ohio. And there is an Ohio statute that says,

527
00:30:57,280 --> 00:31:00,640
Speaker 1: you know, not only is gambling not allowed here, but

528
00:31:00,920 --> 00:31:04,320
Speaker 1: that people who are not parties to a particular wager

529
00:31:04,440 --> 00:31:07,719
Speaker 1: can sue to enforce our anti gambling ban. And so

530
00:31:07,760 --> 00:31:09,760
Speaker 1: that's what these that's what these suits are. They've got

531
00:31:09,880 --> 00:31:15,360
Speaker 1: litigants which are trying to enforce Ohio's anti gambling ban

532
00:31:16,280 --> 00:31:18,640
Speaker 1: through a meme set up by the Ohio legislature for

533
00:31:18,720 --> 00:31:22,080
Speaker 1: third parties. Again, someone not betting whether Trump's going to

534
00:31:22,120 --> 00:31:24,120
Speaker 1: win or the chiefs or whatever have you. But a

535
00:31:24,120 --> 00:31:26,440
Speaker 1: third party is suing to enforce that ban. So that's

536
00:31:26,480 --> 00:31:27,280
Speaker 1: what these suits are.

537
00:31:28,120 --> 00:31:31,520
Speaker 4: So is it plaintiffs lawyers that are suing on behalf

538
00:31:31,760 --> 00:31:34,080
Speaker 4: of clients who are the plaintiffs?

539
00:31:34,520 --> 00:31:37,800
Speaker 1: Well, no, not, as I understand it. So as I

540
00:31:37,880 --> 00:31:42,080
Speaker 1: understand the statute, it's quite clever, and they have an

541
00:31:42,120 --> 00:31:46,080
Speaker 1: analog going back into our British ancestors. I think it's

542
00:31:46,120 --> 00:31:48,560
Speaker 1: the Statute of ann from seventeen to something or other.

543
00:31:48,720 --> 00:31:51,000
Speaker 1: But the general gist of this is that, you know,

544
00:31:51,040 --> 00:31:53,800
Speaker 1: gambling is illegal in a lot of places, and so

545
00:31:53,920 --> 00:31:57,280
Speaker 1: two people enter into a wager that is illegal under

546
00:31:57,280 --> 00:31:59,840
Speaker 1: state law. So let's just say I've got a bookie.

547
00:32:00,160 --> 00:32:02,840
Speaker 1: I live in Columbus, Ohio, and I say to my bookie,

548
00:32:02,960 --> 00:32:05,040
Speaker 1: I'd really liked it bet on Ohio State to win

549
00:32:05,080 --> 00:32:08,720
Speaker 1: this weekend. You know what's the odds. My bookie tells me,

550
00:32:08,760 --> 00:32:10,480
Speaker 1: I make the bet. There's somebody on the other side

551
00:32:10,520 --> 00:32:14,120
Speaker 1: of that transaction. And let's say that I lose the

552
00:32:14,160 --> 00:32:17,239
Speaker 1: bet and my bookie wants to collect from me, and

553
00:32:17,320 --> 00:32:20,760
Speaker 1: I say, sorry, you can't collect from me. Well, my

554
00:32:20,800 --> 00:32:23,520
Speaker 1: bookie is not going to go into court because the

555
00:32:23,560 --> 00:32:27,440
Speaker 1: contract underlying contract is illegal and courts are not going

556
00:32:27,480 --> 00:32:32,680
Speaker 1: to enforce illegal contracts. So knowing that my booky's going

557
00:32:32,680 --> 00:32:35,160
Speaker 1: to resort to well, let's just call them other means

558
00:32:35,360 --> 00:32:39,480
Speaker 1: it could be you know, kicking me out of the pool.

559
00:32:39,520 --> 00:32:41,640
Speaker 1: I can't use them as my booky again anymore. That'd

560
00:32:41,680 --> 00:32:46,320
Speaker 1: be easy. Maybe uses intimidation or violence against me. That's

561
00:32:46,320 --> 00:32:49,000
Speaker 1: a phenomenon that happens in any kind of black market.

562
00:32:49,720 --> 00:32:53,520
Speaker 1: So in that world where people who are parties to

563
00:32:53,560 --> 00:32:56,880
Speaker 1: illegal contracts will not sue to enforce them. It's a

564
00:32:56,920 --> 00:32:59,680
Speaker 1: drug deal. My drug dealer gave me, you know, baking,

565
00:32:59,680 --> 00:33:02,080
Speaker 1: so instead of the cocaine that I wanted, I'm not

566
00:33:02,120 --> 00:33:04,760
Speaker 1: going to sue him in court because I would be

567
00:33:04,800 --> 00:33:08,440
Speaker 1: revealing myself to be doing something illegal. So I think

568
00:33:08,480 --> 00:33:10,840
Speaker 1: the premise of the statute is that that's also true

569
00:33:10,880 --> 00:33:14,880
Speaker 1: for gambling and here prediction markets. And so the plaintiffs

570
00:33:14,920 --> 00:33:17,840
Speaker 1: are not going to come forward and sue, or at

571
00:33:17,920 --> 00:33:21,720
Speaker 1: least arguably so this plaintiff is a third party, they

572
00:33:21,760 --> 00:33:24,680
Speaker 1: have nothing, they're total strangers to this case. But the

573
00:33:24,720 --> 00:33:28,400
Speaker 1: statue gives them what's called standing, just the right to

574
00:33:28,480 --> 00:33:32,240
Speaker 1: sue even though they haven't been harmed. Normally you have

575
00:33:32,280 --> 00:33:34,720
Speaker 1: to be harmed to bring a lawsuit. But what their

576
00:33:34,800 --> 00:33:36,800
Speaker 1: statue does is sort of set them up as a

577
00:33:36,840 --> 00:33:40,120
Speaker 1: kind of private attorney general. You know, the attorney general

578
00:33:40,200 --> 00:33:42,760
Speaker 1: could bring a suit to shut down the prediction market,

579
00:33:43,320 --> 00:33:47,920
Speaker 1: but we could also outsource that to private plaintiffs lawyers

580
00:33:48,120 --> 00:33:50,120
Speaker 1: to bring the suit on behalf of them. It's a

581
00:33:50,120 --> 00:33:53,360
Speaker 1: little bit like a class action lawsuit in securities fraud

582
00:33:53,440 --> 00:33:55,800
Speaker 1: or something like that, where the lawyers are basically the

583
00:33:55,840 --> 00:33:58,640
Speaker 1: people bringing the case. In that case, you know, they

584
00:33:58,680 --> 00:34:01,720
Speaker 1: do find a plaintiff who who suffered some damage. Here,

585
00:34:01,920 --> 00:34:04,720
Speaker 1: it looks like the statue doesn't require that because of

586
00:34:04,760 --> 00:34:07,560
Speaker 1: this problem about you know, outing yourself as being a criminal.

587
00:34:08,320 --> 00:34:09,279
Speaker 4: It seems odd to me.

588
00:34:09,520 --> 00:34:13,399
Speaker 1: Yeah, it's I should say. One thing that's a very

589
00:34:13,400 --> 00:34:16,160
Speaker 1: cool historical kind of footnote. There was a case in

590
00:34:16,200 --> 00:34:18,319
Speaker 1: England around the time the statue was passed called the

591
00:34:18,400 --> 00:34:21,840
Speaker 1: Highwayman's case. And a highwayman was a sort of robber

592
00:34:21,880 --> 00:34:24,000
Speaker 1: who would you know, hold you up on the on

593
00:34:24,080 --> 00:34:27,040
Speaker 1: the road between you know, Stratford on Avon in London,

594
00:34:27,560 --> 00:34:32,680
Speaker 1: and two criminals had a deal and one of them

595
00:34:32,680 --> 00:34:35,600
Speaker 1: backed out on you know, maybe sharing the proceeds from

596
00:34:35,600 --> 00:34:38,000
Speaker 1: this job that they did. And one sued the other

597
00:34:38,520 --> 00:34:41,799
Speaker 1: and the judge in the court in London ordered both

598
00:34:41,840 --> 00:34:43,680
Speaker 1: men to be hung. And so that was a kind

599
00:34:43,680 --> 00:34:47,040
Speaker 1: of extreme example of you know, do not bring your

600
00:34:47,680 --> 00:34:50,320
Speaker 1: we're both criminals, but we have a contract dispute to court.

601
00:34:50,880 --> 00:34:53,239
Speaker 1: And in that world, something like the statute de Van

602
00:34:53,320 --> 00:34:55,640
Speaker 1: makes a ton of sense because we do want to

603
00:34:55,680 --> 00:34:58,480
Speaker 1: deter like the king or the US government wants to

604
00:34:58,520 --> 00:35:01,400
Speaker 1: deter the bad, say whether it's robbing people in the

605
00:35:01,480 --> 00:35:04,200
Speaker 1: highway or engaging in illegal gambling. But we can't rely

606
00:35:04,360 --> 00:35:07,120
Speaker 1: on plaintips to bring those suits because they'll be complicit,

607
00:35:07,160 --> 00:35:08,440
Speaker 1: and so we need to have a third party.

608
00:35:08,760 --> 00:35:11,480
Speaker 4: And so the third party is the one who recovers

609
00:35:11,520 --> 00:35:13,360
Speaker 4: what they call ill gotten gains.

610
00:35:13,920 --> 00:35:17,399
Speaker 1: I believe. So I'm not an expert on this particular statute.

611
00:35:17,440 --> 00:35:20,480
Speaker 1: I find it completely amazing as someone who teaches a

612
00:35:20,520 --> 00:35:23,320
Speaker 1: law of economics, and you know, it's genius kind of

613
00:35:23,360 --> 00:35:26,840
Speaker 1: statute to mobilize people. It is different than the normal

614
00:35:27,120 --> 00:35:30,719
Speaker 1: kind of bounty that we pay. There are other examples.

615
00:35:31,120 --> 00:35:35,759
Speaker 1: There's a doctrine called key tam qui tam and in

616
00:35:35,840 --> 00:35:40,759
Speaker 1: federal government law that if you are someone who you know,

617
00:35:40,800 --> 00:35:44,640
Speaker 1: let's see, Lockheed Martin is overcharging the federal government for

618
00:35:44,680 --> 00:35:47,759
Speaker 1: the latest stealth fighter, and you work at Lockheed Martin,

619
00:35:47,880 --> 00:35:50,440
Speaker 1: you know they're sending bills that are too high. You

620
00:35:50,520 --> 00:35:53,879
Speaker 1: can tell the government, and the government will sue. And

621
00:35:54,280 --> 00:35:56,240
Speaker 1: you know, let's say they collect one hundred million dollars,

622
00:35:56,280 --> 00:35:58,879
Speaker 1: you get your Lion charity and it's some twenty five

623
00:35:58,960 --> 00:36:02,000
Speaker 1: thirty percent of that. So we pay someone a bounty

624
00:36:02,120 --> 00:36:05,319
Speaker 1: to kind of uncover what we think the government might

625
00:36:05,360 --> 00:36:07,759
Speaker 1: not otherwise be able to uncover. So you can think

626
00:36:07,800 --> 00:36:09,839
Speaker 1: of this statue in high It has been a little

627
00:36:09,840 --> 00:36:12,880
Speaker 1: bit like a key tam suit, except instead of alerting

628
00:36:12,920 --> 00:36:16,080
Speaker 1: the government, right, you could have a system where the

629
00:36:16,120 --> 00:36:18,360
Speaker 1: people who know about the illegal betting go to the

630
00:36:18,360 --> 00:36:20,440
Speaker 1: Attorney General of Ohio and say, I know this stuff's

631
00:36:20,480 --> 00:36:24,040
Speaker 1: going on. Instead of that and taking some percentage like

632
00:36:24,040 --> 00:36:27,000
Speaker 1: a plane of lawyer normally would, they can get the

633
00:36:27,000 --> 00:36:29,319
Speaker 1: whole thing, and the whole thing is the incentive for

634
00:36:29,360 --> 00:36:30,759
Speaker 1: them to bring the suit in the first place. Now,

635
00:36:30,760 --> 00:36:33,080
Speaker 1: I should say, what's a little bit strange about this

636
00:36:33,200 --> 00:36:37,160
Speaker 1: case is it's not exactly a surprise to the Attorney

637
00:36:37,200 --> 00:36:40,480
Speaker 1: General of Ohio that CAW she is offering prediction markets

638
00:36:40,520 --> 00:36:44,080
Speaker 1: in Ohio. So we really didn't need a third party

639
00:36:44,480 --> 00:36:48,000
Speaker 1: to bring this case because everybody knows that CAW she's

640
00:36:48,040 --> 00:36:50,960
Speaker 1: doing this, and so that makes it a little bit strange.

641
00:36:51,400 --> 00:36:54,400
Speaker 4: Is it a litigation funder that's that's driving suits?

642
00:36:54,640 --> 00:36:59,799
Speaker 1: That's my understanding is litigation finance, which you know, we're

643
00:36:59,840 --> 00:37:03,360
Speaker 1: the world of the strange. Let's go even stranger that

644
00:37:03,480 --> 00:37:08,920
Speaker 1: they're the sewer because litigation finance itself is quite controversial.

645
00:37:09,440 --> 00:37:11,799
Speaker 1: They're using a stash van from the seventeen hundreds that's

646
00:37:11,800 --> 00:37:14,160
Speaker 1: been put into a Hio law Well back in the

647
00:37:14,160 --> 00:37:18,160
Speaker 1: seventeen hundreds through to about you know, ten years ago,

648
00:37:18,640 --> 00:37:23,680
Speaker 1: every common law jurisdiction banned lawyers from engaging in the

649
00:37:23,760 --> 00:37:25,680
Speaker 1: kind of practice that these lawyers are engaging, and that

650
00:37:25,800 --> 00:37:29,439
Speaker 1: is a litigation finance arm who will kind of buy

651
00:37:29,480 --> 00:37:32,360
Speaker 1: a claim from someone and bring it. And so this

652
00:37:32,480 --> 00:37:34,520
Speaker 1: is very new. You know, when I was in law

653
00:37:34,520 --> 00:37:37,879
Speaker 1: school so many years ago, lawyers weren't allowed to advertise,

654
00:37:38,280 --> 00:37:40,279
Speaker 1: and of course we've crossed that line and now we've

655
00:37:40,320 --> 00:37:43,600
Speaker 1: got lawyers who are raising money from investors to invest

656
00:37:43,680 --> 00:37:47,680
Speaker 1: in lawsuits and in some jurisdictions. Now, you know, non

657
00:37:47,760 --> 00:37:50,200
Speaker 1: lawyers can own law firms, so they can raise money

658
00:37:50,280 --> 00:37:53,080
Speaker 1: again to sue people, and so that's another kind of

659
00:37:53,120 --> 00:37:55,680
Speaker 1: complication that people might worry about.

660
00:37:56,320 --> 00:38:02,440
Speaker 4: And so they're suing not only Ohio, but kentuckyise South Carolina, Massachusetts,

661
00:38:02,520 --> 00:38:07,000
Speaker 4: and Georgia. If these suits are successful, then does that

662
00:38:07,080 --> 00:38:11,160
Speaker 4: mean these prediction market platforms won't be able to operate

663
00:38:11,200 --> 00:38:12,520
Speaker 4: in those states?

664
00:38:12,840 --> 00:38:15,640
Speaker 1: Well, I'm not in the speculation. I mean, I have

665
00:38:15,719 --> 00:38:19,839
Speaker 1: no idea. Damages are probably pretty substantial. And again I'm

666
00:38:19,840 --> 00:38:21,320
Speaker 1: not an expert on the statute, so I don't know

667
00:38:21,360 --> 00:38:23,920
Speaker 1: if there's limitations on the damages or what the damages

668
00:38:23,920 --> 00:38:26,759
Speaker 1: would be, or their caps. And I should say, you know,

669
00:38:27,400 --> 00:38:29,719
Speaker 1: I kind of have two views about this. On the

670
00:38:29,760 --> 00:38:34,279
Speaker 1: one hand, the prediction markets who are offering things like

671
00:38:34,360 --> 00:38:37,840
Speaker 1: sports betting, Okay, so now let's just stick with the

672
00:38:37,880 --> 00:38:41,520
Speaker 1: Super Bowl. I'm a Steelers fan, so I want to

673
00:38:41,520 --> 00:38:44,279
Speaker 1: bet that the Steelers are going to win the Super Bowl. Well,

674
00:38:44,320 --> 00:38:48,080
Speaker 1: I can do that in some places through legal sports books.

675
00:38:48,840 --> 00:38:51,920
Speaker 1: I can go to Las Vegas. If I'm in certain places,

676
00:38:51,960 --> 00:38:54,520
Speaker 1: I can go on to DraftKings or bets Fair or

677
00:38:54,680 --> 00:38:57,520
Speaker 1: ESPN BAT or whatever where those things are legal and

678
00:38:57,560 --> 00:39:01,759
Speaker 1: I can place that bet. Presumably the states where I

679
00:39:01,800 --> 00:39:04,279
Speaker 1: can't do that don't want me betting on whether the

680
00:39:04,280 --> 00:39:06,759
Speaker 1: Steelers are going to win the Super Bowl. And now Kyle,

681
00:39:06,840 --> 00:39:10,080
Speaker 1: she comes along and says, you know, Ohio, Kentucky, Illinois

682
00:39:10,120 --> 00:39:15,399
Speaker 1: in places, Oh, we're not gambling, We're predicting, And at

683
00:39:15,440 --> 00:39:20,280
Speaker 1: some level you say, Okay, this is absurd. These prediction markets,

684
00:39:20,320 --> 00:39:25,080
Speaker 1: which have a really very clever origin, and I've written

685
00:39:25,320 --> 00:39:27,680
Speaker 1: papers about how cool they are and how useful they

686
00:39:27,680 --> 00:39:30,640
Speaker 1: can be to the public and for businesses to predict

687
00:39:30,680 --> 00:39:34,680
Speaker 1: things and scientists and defense and all sorts of areas.

688
00:39:34,800 --> 00:39:37,040
Speaker 1: I think they should be much more widely used. But

689
00:39:37,160 --> 00:39:39,680
Speaker 1: using them to bet on sports doesn't make a ton

690
00:39:39,760 --> 00:39:42,600
Speaker 1: of sense, because we already have sports betting, and that's

691
00:39:42,640 --> 00:39:46,040
Speaker 1: something that's easy to describe, and we could just, you know,

692
00:39:46,120 --> 00:39:50,160
Speaker 1: recharacterizing it as prediction market is a kind of arbitrage

693
00:39:50,160 --> 00:39:52,880
Speaker 1: around the law that is I think a bad one. So,

694
00:39:52,960 --> 00:39:57,360
Speaker 1: for instance, imagine that a prediction market arose and said,

695
00:39:57,520 --> 00:40:00,800
Speaker 1: we'll let you bet on whether or not Navidia profits

696
00:40:00,840 --> 00:40:04,600
Speaker 1: will be higher next quarter than this quarter. Well, we

697
00:40:04,640 --> 00:40:07,239
Speaker 1: already have that market that's called the stock exchange, and

698
00:40:07,320 --> 00:40:10,440
Speaker 1: so we don't need a prediction market for that. So,

699
00:40:11,520 --> 00:40:14,560
Speaker 1: you know, offering that prediction market would just be arbitrage

700
00:40:14,600 --> 00:40:16,680
Speaker 1: around you know, a bunch of sec rules and things

701
00:40:16,719 --> 00:40:20,239
Speaker 1: like that, and it's not adding something new. So I

702
00:40:20,239 --> 00:40:25,200
Speaker 1: could imagine the prediction market kind of compromise being you

703
00:40:25,239 --> 00:40:28,480
Speaker 1: can offer prediction markets in places where it's not gambling

704
00:40:28,560 --> 00:40:31,759
Speaker 1: on things that are predictions that are valuable, predictions that

705
00:40:31,800 --> 00:40:35,640
Speaker 1: are not sports, and maybe not the stock markets. Those

706
00:40:35,680 --> 00:40:38,200
Speaker 1: are different markets. So if you're predicting on whether or

707
00:40:38,239 --> 00:40:44,839
Speaker 1: not it's going to rain in Ohio, well, farmers might

708
00:40:44,920 --> 00:40:48,000
Speaker 1: really want that information, and that market might be better

709
00:40:48,080 --> 00:40:51,120
Speaker 1: than the weather people's forecasts, and so that would be

710
00:40:51,120 --> 00:40:53,839
Speaker 1: a new thing. It's developing new information, and it's it's

711
00:40:53,920 --> 00:40:56,359
Speaker 1: creating a market where there really isn't one that could

712
00:40:56,360 --> 00:40:59,240
Speaker 1: be really useful, or predicting political outcomes or all kinds

713
00:40:59,239 --> 00:41:01,279
Speaker 1: of you know, is ice going to come to this

714
00:41:01,840 --> 00:41:04,600
Speaker 1: town or whatever? Those things could all be very valuable

715
00:41:04,640 --> 00:41:08,600
Speaker 1: production of social information that isn't just a pure regulatory arbitrage.

716
00:41:09,120 --> 00:41:13,640
Speaker 1: So I'm both quite bullish about the use of prediction markets.

717
00:41:13,680 --> 00:41:15,200
Speaker 1: I've written about this. I think we should use them

718
00:41:15,200 --> 00:41:18,840
Speaker 1: for a lot more stuff. Companies use them internally to

719
00:41:18,960 --> 00:41:22,080
Speaker 1: great success, and I think the world is poorer for

720
00:41:22,160 --> 00:41:26,040
Speaker 1: it that we don't engage markets to predict stuff. Instead,

721
00:41:26,080 --> 00:41:29,680
Speaker 1: we rely on blowhard academics or people on TV or

722
00:41:29,680 --> 00:41:32,760
Speaker 1: whatever to do that. So I want to deploy markets

723
00:41:32,760 --> 00:41:36,640
Speaker 1: in new places. But I think the offering sports betting

724
00:41:36,719 --> 00:41:38,800
Speaker 1: through a prediction market, just because you call it something

725
00:41:38,840 --> 00:41:40,360
Speaker 1: else doesn't make it different.

726
00:41:41,400 --> 00:41:43,640
Speaker 4: These suits have a long way to go, so we'll

727
00:41:43,680 --> 00:41:46,839
Speaker 4: see what happens. Thanks so much for joining me. That's

728
00:41:46,880 --> 00:41:51,080
Speaker 4: Professor M. Todd Henderson of the University of Chicago Law School,

729
00:41:51,600 --> 00:41:53,920
Speaker 4: and that's it for this edition of The Bloomberg Law Show.

730
00:41:54,239 --> 00:41:56,640
Speaker 4: Remember you can always get the latest legal news on

731
00:41:56,680 --> 00:42:00,920
Speaker 4: our Bloomberg Law Podcast. You can find them on Apple podcast, Spotify,

732
00:42:01,120 --> 00:42:06,160
Speaker 4: and at www dot Bloomberg dot com, slash podcast Slash Law,

733
00:42:06,560 --> 00:42:09,160
Speaker 4: and remember to tune into The Bloomberg Law Show every

734
00:42:09,200 --> 00:42:13,120
Speaker 4: weeknight at ten pm Wall Street Time. I'm June Grosso,

735
00:42:13,239 --> 00:42:14,840
Speaker 4: and you're listening to Bloomberg