An Arizona abortion clinic that didn't tell a pregnant woman about the physical characteristics of her 8-week-old embryo before prescribing abortion pills has been found liable in a case brought by the ex-husband of the pregnant woman, who didn't want her to get an abortion.
The ex-husband, Mario Villegas, was awarded $67,500 in a civil lawsuit accusing the clinic of violating an informed consent law that an Arizona court declared unconstitutional earlier this year.
'A Dangerous Precedent'
The Lawyering Project, which represented the doctor and clinic being sued by Villegas, had warned that the case could "establish a dangerous precedent in Arizona concerning embryonic personhood and chill the provision of abortion care."
"A pre-viability embryo or fetus is not a person," says its website in a summary of the case, "and a physician cannot be subject to a wrongful death action for providing high-quality abortion care to a patient who wants an abortion."
In an August 2024 order, Judge Bryan B. Chambers of the Arizona Superior Court in Gila County agreed with the defendants that Arizona's wrongful death statute does not, as written, apply to the death of embryos. The court is "unwilling to expand the common law definition of 'person' as applied to the wrongful death statute to include all unborn children whether viable outside the womb or not," Chambers wrote.
But that doesn't mean he tossed Villegas' lawsuit entirely. And in a judgement released July 22 but largely unnoticed untilthis week, Chambers wound up holding that Villegas is entitled to $5,000 in statutory damages and $62,500 "in compensatory damages for his psychological, emotional, and physical injuries."
No one in the case alleges that Villegas' ex-wife—referred to in court documents as M.S.V.—was tricked, coerced, or generally uninformed about the abortion. The case turns on technicalities and Arizona's onerous, biased (and now barred) requirements for what abortion doctors must tell patients in order to obtain informed consent.
'Deprived of the love….of his child'
M.S.V's abortion took place in July 2018, when she was around eight weeks pregnant. At the Camelback Family Planning clinic in Phoenix, she was provided with information at least 24 hours before she could come back for the abortion pills, and she signed various consent forms, including one affirming that she was "comfortable with [her] decision to terminate this pregnancy," according toProPublica.
Around two years later, in July 2020, Villegas—now divorced from M.S.V.—sued the clinic and physician Gabrielle J. Goodrick, alleging medical malpractice and wrongful death. Villegas "has been deprived of the love, affection, comfort, and companionship of his child," his initial complaint stated. He "has been deprived of his constitutionally protected right to parent Baby Villegas."
Villegas sought to have himself appointed the personal representative of the estate of the aborted embryo, and a probate judge agreed.
In an amended complaint, Villegas added that "the estate has been deprived of the net income Baby Villegas would have earned during her lifetime" and sought damages for that, too. (Villegas took the liberty of assuming the embryo was a girl, even though the abortion would have been too early in the pregnancy to tell.)
"Across the U.S., people have sued for negligence in the death of a fetus or embryo in cases where a pregnant person has been killed in a car crash or a pregnancy was lost because of alleged wrongdoing by a physician," noted ProPublica in a 2022 article about the case. "But a court action claiming the wrongful death of an aborted embryo or fetus is a more novel strategy, legal experts said."
Informed Consent or Compelled Speech?
Ultimately, the case came down to Arizona's informed consent law, not fetal personhood.
That law—declared unconstitutional in February 2026—said that doctors must obtain informed consent before performing abortions (which is normal) and then added that this consent only counts if clinics obtain it in highly particular (and medically unnecessary) way and tack on a lot of loaded language and anti-abortion rhetoric.
It says that "at least twenty-four hours before the abortion, the physician who is to perform the abortion or the referring physician" must inform a patient woman "orally and in person" about topics such as "alternatives to the procedure or treatment" and "the probable anatomical and physiological characteristics of the unborn child at the time the abortion is to be performed." Doctors were also required to tell a woman seeking an abortion that if she went through with the pregnancy, various forms of assistance may be available.
Villegas alleged that even though his wife technically consented to the abortion, it didn't count because the information wasn't provided by the same doctor who prescribed her the pills, and because doctors didn't warn her about the potential "loss of the 'maternal-fetal' attachment bond inherent in birthing a child" and didn't explain alternatives to abortion or the 8-week-old embryo's physical characteristics.
He also complained that the printed form M.S.V. was given "changed the statutory term 'the probable gestational age of the unborn child' to 'the probable gestational age of the pregnancy,' which misstates Arizona's legislative determination that every pregnant woman is carrying a human child."
M.S.V. testified in court "that nothing would have changed her mind about obtaining the abortion," as Chambers put it in his judgement. And no one alleges that the clinic simply failed to discuss some risks and other relevant information with her before the procedure. It simply failed to use the loaded language preferred by the state.
But "the statute does not require proof that M.S.V. would have made a different decision had she been fully informed," wrote Chambers in his judgement. And even if some of the rules of informed consent were followed, "nothing in [Arizona law] suggests that substantial compliance with the consent provisions is all that is necessary."
Fortunately, the informed consent law at the heart of this case has been struck down, so future doctors don't have to worry about being sued for failing to say "unborn child."
But there's still something chilling about the way all this played out. M.S.V. had argued to court that she was tricked into pregnancy—she thought her ex-husband "was fixed," because he'd had a vasectomy, though it was since reversed. Chambers said this did not negate her consent to sex with him, since M.S.V. "was not deceived about the nature of the act. At most, she was deceived about a potential consequence (pregnancy risk)."
In M.S.V.'s telling, she did not exactly give informed consent to the sex that led to pregnancy, but she did give informed consent to the abortion procedure. In neither situation, however, do M.S.V.'s claims about her own consent seem to have mattered much at all.
In the News
The Transportation Security Administration (TSA) shows "significant weakness" when it comes to protecting passenger data, according to the Department of Homeland Security Office of Inspector General.
A TSA authentication vendor "was able to access and extract sensitive passenger information, including driver's license and passport images, during system troubleshooting and enhancements, without TSA's knowledge," the report says. More:
TSA lacked clear policies, did not track when this data was extracted, could not verify that extracted information was properly deleted, and did not notify passengers when their biometric and biographic information may have been stored. As a result, although passenger information was generally protected during routine operations, weaknesses in vendor oversight created a risk that sensitive personal information could be retained or exposed.
As the OIG's audit underscores, this technology presents privacy risks associated with unsecured data, unauthorized access, and data breaches. The government's use of this technology also creates a mass surveillance system and facilitates the creation of warrantless biometric records for unconsenting parties.
[…] Given that facial recognition technology is prone to mistakes, combined with the OIG's audit revealing significant privacy weaknesses, it is imperative that travelers remember that opting out is possible. TSA's own website emphasizes that travelers who wish to decline to have their photo taken for facial comparison can do so without any delay, disruption, or recourse.
More Sex & Tech
• You could make a full-time beat out of covering cops' misuse of Flock cameras these days. The latest: "A former Joliet police lieutenant is now facing felony charges for misusing the city's Flock camera system," per CBS News. And, in Sharonville, Ohio, "a police lieutenant was indicted Tuesday after he allegedly used Flock camera systems…29 times between Dec. 19, 2024, and April 20, 2026, to track a person's whereabouts" for personal reasons, Fox 10 reports.
• Airbnb says hosts can't make you wash and dry your own dishes anymore:
I just got an email from Airbnb laying out new ground rules for what hosts can demand of guests, and THANK GOD.
At my last Airbnb, I had to strip the beds, wash every dish, clean the kitchen, haul the trash out to the road, and there was still a $100 cleaning fee! https://t.co/tfQGqQKsRo
• Another case challenging the use of Flock cameras to get convictions. In Texas, Charles Brownlee—sentenced to 60 years in prison for armed robbery—is asking a federal appeals court to throw out his conviction, "arguing that the AI-powered camera system gives law enforcement more surveillance power than the Constitution allows," per The Texas Tribune.
• A California law that takes effect in 2027 "will require large companies to make a good-faith effort to link customers to a human by phone within 15 minutes," notesThe San Francisco Standard. "But it has a carveout for companies that never offered phone support in the first place. It remains to be seen whether the legislation will hold any sway over the AI firms leading the charge to replace human agents."
• Jacob Sullum delves into a convoluted lawsuit filed against Students for Life by a Texas woman who opposes a Texas anti-abortion law.
• In the latest incident to blur the line between the FBI catching criminals and creating them, an FBI task force catfished a high school maintenance worker using an AI-generated image of a 15-year-old, then used Clearview AI facial recognition tools to identify him and Flock to track his car.
Today's guest is Tarek Mansour, the 30-year-old billionaire co-founder and CEO of Kalshi, the prediction market platform where users can trade on the outcomes of everything from elections and economic forecasts to sporting events and the weather. As prediction markets surge in popularity, Kalshi is facing legal challenges from states that argue it's operating an illegal gambling business. But Mansour insists that prediction markets are fundamentally different from casinos and sportsbooks and that efforts to restrict them threaten a powerful new source of information about the future.
Nick Gillespie talks with Mansour about Kalshi's battles with state regulators, why he believes the gambling industry is trying to stifle competition, and how prediction markets can help businesses manage risk. Mansour explains why ordinary people can sometimes forecast economic trends more accurately than Wall Street professionals. They also discuss Mansour's journey from growing up in Lebanon to building a multibillion-dollar American company and his concerns about rising inequality and the declining enthusiasm for entrepreneurship. Mansour argues that capitalism needs to give more Americans a stake in its success without sacrificing the innovation that makes it possible.
0:00—How prediction markets differ from casinos
4:55—Do prediction markets serve a public good?
8:18—Markets, price discovery, and the economy
11:36—Why does Kalshi ban insider trading?
14:06—CFTC and federal regulation
17:26—How Kalshi differs from Polymarket
22:30—Do prediction markets have a corrosive effect?
25:03—Kalshi's ban on athlete harassment
26:49—Arizona and New York lawsuits
31:30—State versus federal regulation
33:45—Why is Kalshi exploding in popularity?
35:57—Mansour's background and the American Dream
39:55—Wealth gap narratives and an inclusive economy
42:39—Will a Democratic Congress hurt Kalshi?
45:17—Mansour's prediction for Kalshi
47:48—Will state lawsuits require a Supreme Court decision?
This is an AI-generated transcript. Check all quotes against the audio for accuracy.
Nick Gillespie: This is The Reason Interview With Nick Gillespie. I'm talking today with Tarek Mansour. He's the co-founder of Kalshi, the prediction market platform that allows people to win or lose money, or invest or not money, on everything from election results to weather outcomes to who will win Dancing With the Stars and, of course, all sorts of sports. Thank you so much, Tarek.
Tarek Mansour: I'm excited.
You're 30 years old, you're a billionaire, and you are a big believer in prediction markets as truth machines. I want to talk about that in a minute. But first, Kalshi gives money to a lot of nonprofits, including Reason Foundation, the nonprofit that publishes this podcast. There are no conditions on this interview.
Tell me first, what is a prediction market, in the simplest terms possible, and why is it different than a sportsbook?
I think a prediction market, in the simplest terms possible, it really is like the stock market. We're matching buyers and sellers in an open marketplace that is competitive. The thing that they're trading is not a small, specific subset that Johnny Wall Street cares about, whether it's a stock or a bond or a credit default swap or all these kinds of sophisticated things. It's simple questions about the future.
Right. So everything is yes or no?
And some things are actually more like, is it going to go up or down? And there are more structures now. But I think a prediction market is just a generalization of the stock market. One way to think about the stock market is actually a prediction market on the prices of stocks on companies.
And you make money not on whether or not you bet right or wrong. You're not the house. You run the platform, so it's like you own the casino. And you're not staking anything…
No, it's exactly the opposite. We're exactly like owning the stock market. We're like the New York Stock Exchange, right? The New York Stock Exchange is not in the business of pricing a stock or setting the prices. They're in the business of matching buyers and sellers.
And so you may have an opinion that something's going to happen, and somebody else may think that something is not going to happen. And we match the two of you to settle that disagreement of opinion via trade.
Historically, that's about stocks. Someone thinks Apple stock is going to be worth more than the current price, more than $100 per share, and someone thinks it's not actually going to be, that it's overpriced. They make a trade as a way to settle that difference of opinion.
The difference in a prediction market is you're doing it on whether Brexit is going to happen or not. And you may think that it's very likely that Brexit happens, and someone else, your counterparty, may think that it's not very likely it's going to happen.
And let's say the market right now is trading at a 40 percent chance, 40 cents on the dollar. You may want to buy, and the other person wants to sell, and we match the two of you. And I take 0.7 percent. So if you put in $100, the other person puts in $100, I take 70 cents.
And now, very quickly, explain why that's different from a sportsbook, like why you're not Fanduel….
Here's how I'll explain it, and I'll get back to exactly the sportsbook analogy.
So when the first version of financial markets came around, and very few people know this, people think that the first financial market was the stock market, but actually it wasn't. It was the commodities market.
The first real example of a financial market was the rice futures exchange in Japan. And then in the U.S., it's really become very popular at the end of the 19th century. It was farmers, they were trading on the price of grain using grain futures, and then over time, it evolved to oil futures, etc.
And at the time, it was really interesting because when I tell you about grain futures right now, you don't think gambling. You think boring, mainstream financial markets.
But at the time, the states were suing the Chicago Board of Trade, saying this is gambling. And what was the claim? It was saying, "Well, farmers are betting on the price of grain. They're speculating, and so it looks and feels like gambling. What's the difference?"
And at the time, they didn't have sportsbooks or casinos. They had the bucket shops, which were different from the Chicago Board of Trade.
So what were the bucket shops? A bucket shop was a place where the shop, which was functioning like a casino, set the prices. They would say, here's the price of grain, and here's what I'll let you buy, and here's what I'll let you sell.
And then the purpose was basically, it was a casino. Farmers would come in, bet against the bucket shop, and then they would lose money. And if you made a little bit, if you were a smart, sophisticated trader, they would ban you. You know, the card counters get banned from the casinos.
It continues to happen on sports betting.
In sportsbetting or casinos, right? Like, if you're a smart, sharp trader, you get limited. And if you maybe have some addiction issues or you lose consistently, you get promos, and you keep coming back. That is the gambling business model. That is the end.
And when people were claiming that the exchange was gambling, at the time, the Supreme Court ruled in favor of the Chicago Board of Trade.
And the basis was very simple. It's like, yes, some people are speculating, which looks and feels like betting, sure. But the mechanism is different, and there's a public good that comes out of it.
The mechanism is a free, neutral platform that lets people trade against each other. And what it needs and incentivizes, it incentivizes the card counters, the smart traders, because the public good that it brings is the informational knowledge that it gives to people.
Talk a bit about this, because this is key to your argument, and we'll get into the regulatory structures and the cases against you, but that prediction markets serve a public good because they give more information about what is likely to happen or how actors are going about their business. How does that happen?
In particular, at a place like Kalshi, you can bet on whether it's going to rain tomorrow or how much. How does that in any way create information that is useful?
Yep. So our weather forecast, so when people are trading on whether it's going to rain tomorrow or not, what happens is you get price discovery.
Some people think the odds of rain are a little bit higher than the market, so they buy it, which moves it a little up. And then some people think it's lower, and it moves it a little down. And that continuous thing is how a stock moves. That's why we call it price discovery.
Price discovery is essentially, there's a quote from a Supreme Court decision in 1905. It's really neat. It's like this idea that speculation is the self-adjustment of society to the probable.
Which is like it's the self-adjustment of the market, the wisdom of the crowds, to what we think is going to happen.
There were papers actually a week or two ago that compared our weather forecast, like the forecast from the prediction markets on the weather, to the most accurate national blended average of weather station forecasts, and we were 10 percent more accurate.
I mean, just very quickly, how does that happen? Because Joe Schmo betting on the weather, he doesn't have satellite information.
So let me give you a little bit of history.
Prediction markets, I think the founder of prediction markets is Friedrich Hayek, the economist. He used to call them information markets, not prediction markets.
And what was the sort of central thesis? At the time, he was saying we have a knowledge problem. The knowledge problem is that our decisions in society, whether it's D.C., whether it's executives, are centralized.
It's you and I sitting in a room and making a very critical decision about the future of the country. But the information that's relevant to that decision is actually very decentralized. It's sitting with a bunch of different people, hundreds of thousands, millions of people distributed across the board.
So we need a magnet. We need the mechanism to bring that information from everyone so we can make better decisions over time.
That's what markets do.
That's exactly what markets do. Market prices are a very good aggregator of information.
Ok, so then the idea is that somehow the people who are betting on the weather have some kind of meaningful knowledge that otherwise would not be—
And by the way, people are not even usually, for example, for the Senate race right now, they don't buy Democrat or Republican and then hold it till maturity. They buy if they think the price is underpriced, and they sell if it's overpriced. They're constantly trading these things.
But the key thing here, when I started the company in 2018, a few years before that, Philip Tetlock did…
At the University of Pennsylvania.
He's actually at MIT.
Oh, I'm sorry. Ok.
And it's about superforecasters. And the whole thing, he was trying to figure out the science of forecasting. What are these people who are good at forecasting?
And he pitted a bunch of elites on geopolitics, the big pundits, and he pit them against a bunch of random dudes, basically, and had them predict geopolitical events. And guess which group did better? The random dudes.
And it was amazing because it tells you a little bit that actually there is a lot of wisdom in this idea of the wisdom of the crowds. The average people, if you add them all up, and all their bits and pieces of information, you end up getting a way better solution and result than the small group of elites.
And this gets reflected, I mean, the way Hayek talks about it in "The Use of Knowledge in Society" and throughout all Austrian school of economics, is markets and prices are discovery systems that transmit information.
That's exactly what it is.
And prediction markets are like transmitting information about a much broader… We used to care about— farmers used to care about what the price of grain is going to be. Why?
And I go back to the farmer. Imagine we had banned grain futures as gambling at the time. There's a very clear net impact on society today, which would be what? Why would it be important?
That price discovery that was happening was giving the farmer predictability on what the price is going to be of grain in September. So now I'm in March, I know how much I can invest, how much I can plant.
If you take that away from them, what would they do? They would plant less. They would just, because with less predictability, you can invest less. And so actually, our food supply would go down. That's how critical grain futures are.
So that makes total sense. And then just to press on this a little bit, as a libertarian, I like markets and everything. I like prediction markets, etc. But what is the positive social externality, other than people being able to express themselves or entertain themselves, with like betting on Dancing With the Stars?
Well, I think to me, some people may disagree on the lines, but a lot of people care about that. And I'll give you a lot of examples.
At a high level, it seems like we agree with the premise that getting smarter, even if it's a little smarter, about what's going to happen will enable us to make better decisions and allocate resources more effectively and manage risk more effectively, right?
Now, what's interesting is actually I always think of this as like, you want more markets on more things because like—
It's more information.
It's more information. It's just that simple.
And I'll give you an example. This was the same argument that was made. So there were two types of commodity derivatives that were banned. Onion futures, which I can tell you the story, there was a wild story.
The second one is box office futures. Box office futures, in 2010, there was an exchange that was trying to bring them to light, which is an idea to do price discovery on how successful a movie is going to be beforehand.
Guess who killed it?
I'm assuming the movie companies.
The big ones. Why? Because they wanted less information. And the argument was at the time, well, it's frivolous. What is the purpose of knowing if a movie is going to be successful? It's a frivolous thing…
And this is called a Keynesian beauty contest or something, where you're betting on what you think other people will say is going to happen or something.
Yeah, I mean, but in this specific one, it's more like they were saying, "Look, knowing if this movie is going to be successful or not, that seems frivolous. It's not like grain futures. We should ban it."
But they actually had an ulterior motive, and there's a reason they did not want price discovery, for two reasons.
Because one, if the market can predict ahead of time how successful a movie is going to be, it'll be harder for them to juice the three or four weeks of box office they get in a bad movie before the word gets out. And there was a second reason. If you have a market that will tell you upfront, actually, "This team is doing a good job, even though it's a small team with a smaller brand," you may attract more investment to the smaller studios, which was going to bring more competition to the space. You will get more efficient….
I mean, markets are democratizing, ultimately, or they push against centralization.
More information is always better, and oftentimes monopolies and incumbents want less information because, you know, the markets usually reduce…
Well now let me… I want to get to the regulatory structure you're currently under, plus what various states are trying to fit you into, a different kind of regulatory structure. But just on this moment, let's stop for a second.
If more information is always better, why do you ban insider trading? Because there is an argument that insider trading is absolutely the best information, and it changes prices very quickly and makes markets clear more—
And libertarians, that's the argument, and the free market side of me always tells you that you want more. You want as much as possible.
And you want, like, when Practical Magic 2 is coming out, you want people in the studio who have seen it, who know it sucks, to change, you know, to…
I would argue yes, in theory. I'll say where in practice.
But maybe right before, I want to just make, because you asked me about the gambling distinction, which we'll get to with insider trading.
The gambling business model is one where the thing they incentivize for their customers is fun and entertainment and to keep losing. That's why they give you the suites and the drinks, and they keep you losing.
Prediction markets, what they incentivize is going out there, like markets, seek knowledge, seek truth, and then come to get rewarded for it in the open market. That is why there is a fundamental difference.
And it doesn't matter what the topic is. It could be grain futures. It could be weather. It could be economics. It could be sports. It doesn't really matter. The structure, the former structure, is what really matters.
Now, on the other argument, I agree with you. It's like, well, the insiders, should they be allowed to trade? And the way I always answer the question is, why is insider trading banned in the stock market? Because in theory, we would get more accurate prices in the stock market.
And there's a very practical reason, and this is how markets should be regulated. And I strongly believe that. That's why we took a pro-regulatory-first approach to this.
Because markets can only exist if there are fair rules of the road and the competition is fair and equitable across all the participants. So I think actually…
And people need to believe that the market are not…
Otherwise, they stop trading.
Free markets, in my view, if you take the opposite of free markets, it's this idea that there's a privileged, closed circle that has access to specialized information. Right? And the key thing in the line I was drawing is, if the information is something you can access by doing research and work and putting in the effort, no matter who you are, then it's fair game.
But if it's information that you only will have privileged access to because, I don't know, you work in government or you're an executive at a team, then it's unfair. Then it creates an unfair dynamic that over time dries up liquidity and makes actually the market less efficient because nobody will trade. People won't trade.
So this helps explain, you noted you co-founded Kalshi in 2018. You went to the Commodity Futures Trading Commission to get licensed and regulated at the federal level. So when people say, "Oh, you guys are completely unregulated," that isn't accurate. But you're…
It's completely inaccurate.
Yeah. How does the CFTC regulate what you do? And then we'll get into how and why states might be trying to change that.
Yeah, I mean, I think they're two entirely different… There's a reason why the states are trying to change that, and we'll talk about that. It's fundamental protectionism.
So the beauty of the Commodity Exchange Act, why did it come? It actually got created after this whole fight that the Chicago Board of Trade was having with the states. And Congress, in '74, enacted the Commodity Exchange Act to actually preempt two types of laws: state insurance laws and state gaming laws.
And there's a reason why. Because on an open exchange, in grain futures or on Kalshi, there are two types of activity: speculation, which looks and feels like gambling, or hedging, which looks and feels like insurance.
The difference between those two is they're being done on an open market.
And why do you need the federal statute? Why didn't they let the Chicago Board of Trade be done state by state? It's because it didn't work. And here's the easiest way to explain it. Imagine we siloed the New York Stock Exchange, the stock market, state by state, where in New York, you can only buy Apple stock from New Yorkers.
Imagine we had 50 different New York stock exchanges, different prices, different rules, fragmented liquidity.
What would happen? Worse prices, a bunch of deadweight loss, lower liquidity. You probably won't be able to, if you're in Kansas, you won't be able to buy as much stock as you want.
It is a completely anti-market kind of structure.
What you want is a federal, uniform set of rules that apply across all 50 states that promote and foster this sort of multilateral, peer-to-peer idea. Someone in California is trading with someone in Texas, and you want as much information as possible. You don't want to silo information. That's the anti-market view.
And what does regulation mean, and why is it important for us, first, for us to really get regulated as commodities? It's because the rules that apply to trading on oil futures or interest rate swaps or politics on Kalshi are largely the same.
So what do you want to prevent against? You want to prevent against insider trading, prevent against market manipulation, so doing things that move the market price unnaturally for profit. You want to add sensible guardrails around knowing who your customers are and money laundering and that sort of thing.
And I believe in this, and I think this is where the regulation is very important. It's like all these products, whether it's grain futures or sports betting or prediction markets or trading options on Robinhood, most of the use is fine.
And it's not about people winning or losing. I think the competition, some people are going to win, some people lose.
But there's some degree of irresponsible use. I do believe in that. And I believe in individual freedom. People should be able to choose, but I think there should be some regulations on irresponsible use so that companies are not targeting those types of behavior.
The sportsbooks constantly target those types of…
Yeah, so let's just, real quickly, how do you guard against insider trading? I mean, you ban it, but how do you know whether insider trading is happening? How do you know whether or not somebody who has a problem is continuing to use Kalshi? How do you find out?
Yeah, so insider trading, I mean, it's the ever question for a stock market. How do you know? And it's largely a very similar mechanism.
So one, you have to verify all customers. It's like onboarding onto Schwab, opening a brokerage account. You have to…
Are you covered by know-your-customer rules?
Yeah, yeah, yeah. As a regulator.
And that is distinct from something like Polymarket, which is based offshore, and they're struggling with the idea that there may have been a member of the U.S. military who bet on Maduro being removed because he was part of the operation, which is kind of a classic case of insider trading.
It certainly is insider trading, for sure.
Because insider trading is like, are you trading on material nonpublic information? So do you have a piece of information that you're not supposed to disclose legally? And trading is a form of disclosure. You can't go say it, so you…
Ok, so you follow KYC, but then, yeah, and then how? So how do you…?
And then you have the same systems as the New York Stock Exchange, which basically flag suspicious patterns.
I mean, insider trading or market manipulation, the patterns are always weird. You always have an account that is trading hundreds of dollars, and now they're trading thousands of dollars all of a sudden on an asymmetric shot. What's happening, right?
And the last piece is you enforce. So when you find someone, we have, as a self-regulatory organization, we can impose fines all the way to referrals for criminal prosecution.
And the last piece that's so interesting about the prediction market, so I think it's even unique compared to some of the financial markets, all of our trades are public. It's all fully transparent.
So our customers, because why is insider trading bad? There's someone who gets harmed when someone commits insider trading. It's the person on the other side. That person is extremely incentivized to whistleblow, usually.
And so, George Santos basically tried to commit insider trading on Kalshi a few months ago. We had 100 whistleblower complaints within a few minutes because traders immediately tell us, "Oh, this is weird," and they can all see it publicly.
And that's actually kind of a curse because the press talks about insider trading cases on prediction markets all day because they're so easy to flag.
That's actually a blessing, if you really think about it, because it's so obvious. It's so clear.
So let's talk about…
You're committing a crime in broad daylight, right?
Yeah. So the state of Arizona, I mean, there's about 20 jurisdictions, I guess states, also some Indian tribes and things like that, that are bringing suits against Kalshi.
Arizona, earlier this year, launched a criminal indictment that you're running an illegal gambling operation. New York state, we're talking in New York, and you guys are headquartered in New York, right? It's saying that you are basically, I guess it's not a criminal indictment, but they think you owe them billions of dollars because you're essentially a gambling operation.
What do they get wrong? And what do they get wrong about your structure?
I mean, let me read to you something that I've sort of been looking at recently that I've been sort of really into.
I'll read you one of the court opinions, and here's how it sort of goes:
"We are clearly of opinion that dealing in these markets is void by the common law, for, among other reasons, that it is contrary to public policy. It is not only contrary to public policy, but it is a crime. A crime against the state, a crime against the general welfare and happiness of the people, a crime of religion and morality, and a crime against all legitimate trade and business. This species of gambling has become emphatically and pre-eminently the national sin. In its proportion and extent, it is immeasurable."
And they go on and on about how horrible this activity is.
This is the Illinois Supreme Court. It is from actually 1888. And it's about grain futures, not prediction markets.
And I think the same thing is playing out.
And is this simply, I mean…
It really is as simple because we have the same structure.
And the topic never mattered under the federal law. But states misunderstood it, and they just looked at grain futures at the time as like… Because people don't understand markets. Markets have always been something that people…
They're counterintuitive.
And I always think, imagine we had banned grain futures back in the day. We would have ruinous consequences. It's today one of the bedrocks of the U.S. economy. We would not be able to function without grain futures.
And everybody benefits. I mean, there are individual winners and losers, but you get a more stable supply of food, better planting, better forecasting.
I think about 100 years from now, when there's going to be the next generation of entrepreneurs coming around and expanding the universe, they're going to be looking at this and thinking, "Imagine we didn't have a good gauge on where elections are going to land, on where geopolitics are going, the weather, the climate, the hurricanes."
And you're starting to see today, our fastest-growing segment is actually businesses hedging on Kalshi.
How do they do that?
You can take a position because you want to make money, speculate, but a lot of people take positions because they want to reduce their risk toward an event.
So the same way that grain farmers would short the price of grain so that if the price of grain goes down in six months, they would offset their revenue loss, we see a lot of businesses do the same.
So one example, we have now hundreds of businesses that do the same, it's like sports bars hedge against their home team losing every game.
Why? Because if the team wins tonight, I will make $2,000 in revenue. If it loses, I'll make $800 in sales. And my cost is the same because I have to stock up on inventory. So it's $1,200, $1,200 no matter what.
So when the Knicks win tonight, I make $800. The Knicks lose tonight, I lose $400.
Unpredictability like that is very bad for small businesses. So they buy no on the Knicks. So they short the Knicks winning in a way that essentially compensates their P&L so they're up $300 no matter what.
And why is that important? Because predictability, it's a bit like how the airlines hedge their price fluctuations, predictability helps with investment, helps them make their decisions.
Quick question before we get to why the states are bringing these suits the way they are. Does the financialization, or does the prediction marketizing of everything, does that have a corrosive effect, say, on sports?
In leagues, and this goes back to the 1919 World Series in Chicago, the Chicago White Sox famously had some players who threw it. But when everything is being bet on, everything is being speculated, does that end up undermining something fundamental?
So one, it shouldn't be everything. Two, I just want to be clear, we are not adding anything to sports. Sportsbooks have existed, like DraftKings and FanDuel, and if you see all the cases of players doing bad things, they're actually on the sportsbooks.
Can I ask what percentage of your revenue, or…?
I mean, it's like 65, 70 percent now, but it's going down. So it was 96 percent nine months ago. So it's going down very quickly because sports is a great way to educate people about probability. They get it. It'sMoneyball. Our customer is the Moneyball type.
And then over time, they do politics and economics, and everything else is growing.
But I want to make a key point about this, which is very important. The notion that prediction markets all of a sudden now allow people to bet or trade on sports, it exists already. The question is, do you prefer it in an open and fair marketplace where everything is transparent, or do you prefer it in a closed marketplace where everything is opaque? That is the question.
And then I'm a pro-regulation guy, so I think there's war, terrorism, assassination, violence, wildfires, things that create moral hazards, that should not be traded on. We should not have markets on those things because the incentive is, it's too easy to go and create a fire.
But we also, as a market, we don't go… Most of the issues that you see is things…So we have standards that are more strict than the states' gambling rules around things not being very easily manipulated in the Commodity Exchange Act.
So we don't, for example, do markets on whether the next play is going to be a ball or a strike. The sportsbooks do these, and that's actually the vast majority of cheating cases, etc.
And that's also why we believe that regulation is very important, because when you set the right guardrails on what markets should be in, what markets should not be in, and how do you police those types of activities, and when you find someone that does it, how do you punish them very heavily? The last thing I'll say is we actually ban athletes from trading on anything that relates to their leagues.
I'm sorry, anything at all, or just on…?
Anything in their leagues. Yeah, the same way we ban politicians or members of Congress from trading on things that relate to Congress.
Yeah.
All of that goes into our…
That's like the only place where Congressmen can't bet on what they're about to legislate.
They can do it on the stock market, but not on Kalshi.
Kalshi was a sponsor of the U.S. Open, which is kind of interesting, and there's a growing acceptability.
And the NHL and MLB, and you're going to see a lot of other leagues.
But you've also recently you said that you are going to limit people who are abusive toward sports figures.
Yes.
Explain that, because now are you saying, as a condition of entering contracts on Kalshi, you're going to limit the speech of people? Or how does that work?
That's a great question. I mean, look, I think there are certain bad cases where, and by the way, it's not just about sports. It exists in really anything.
But I think the idea that someone… We always want to be careful about regulating the bad behaviors out of the system. And I believe that. I'm a very free markets guy, but I do believe in sensible guardrails. I do. And we may disagree on that point.
My view is the highway should be wide enough for people to compete and thrive and do all the great things you're going to do. You have to have a fence at the end of the highway to make sure people are not driving themselves off the cliff.
And I think it needs to be very delicate and needs to be very careful. You don't want to make the highway one car at a time because that's terrible. And so in this specific case, you have issues sometimes where people get over their skis and they go and harass…
Yeah, I mean, if you lose $2,000 or $10,000 or $200 because somebody dumps the fifth set at the U.S. Open, you're probably going to yell at the person who lost.
Yeah, yelling is one thing. Harassing and following them online and doing all the weird stuff that sometimes… And by the way, we haven't seen any evidence of that happening on Kalshi. That has historically happened on the online sportsbooks and some of the other mechanisms. I just want to be ahead of it. I don't like that idea.
Ok, so then here, is there any… When the state of Arizona says, "Ok, you're like a gambling operation, you're like the Mafia coming in and you're running this billions of dollars," New York is doing something similar.
In New York state, I think on a typical sportsbook, they take 51 percent of gross revenue. They make a lot of money by taxing and regulating this, and obviously they want money from you. Is there any other reason that they're doing this?
The casino lobby. I mean, the casino lobby is… The foundational thing is a few things.
So when an incumbent gets threatened competitively from a challenger, what does the incumbent usually do?
Go to the government.
It's litigate, then legislate, and then finally, when you realize that this is here to stay, you innovate, right? That's the basic 101. It's always been par for the course.
And why? Because incumbents, inevitably, when you get big enough, you want less competition. That's what you really want. And that's what's been playing out here.
And by the way, it's not just about sports. We launched perpetual futures recently, and CME, the Chicago Mercantile Exchange, the Board of Trade, sued us over it.
And usually the policy argument is never, "I'm losing some revenue due to competition." It's like you come up with a bunch of reasons, like, "Oh, it's too risky. It's too whatever," so they can get policymakers riled up.
And they usually have very orchestrated lobbies and comms functions that do these sorts of things.
But if we look at it foundationally, first, it's interesting. We have zero evidence of cannibalization between what we are doing and the gaming companies, but also the sportsbooks. Why? Because my core customer is a trader. It's the guy who has 17 monitors and like is doing math and stats, and that's 70, 80 percent of my volume. That person is banned in the sports world.
Ok, yeah.
Right? Because they're making money.
I mean, so do you think people are using Kalshi to make money, or is it a form of entertainment? Because casinos and sports betting is really entertainment…
Do you think some people use options in the stock market as a form of entertainment, like on Robinhood?
But there's a great, actually from Illinois, that was more recent actually, like a week or two ago, which is saying that just because something— financial, these prediction markets are swaps, they're financial instruments, they just happen to be fun.
And that's not… Fun is not a problem because when you look at the grain futures market, I always go back because the parallels are so clear, 95 percent of the transactions are speculative.
Sometimes I get farmers having fun. They're gambling, speculating on something.
But the key thing here is that you can win on Kalshi. The bulk is people who are doing sophisticated things, and it's a more sophisticated market.
What is the percentage overall of winners versus losers?
It's a zero-sum game. It's like the stock market or active trading in the stock market.
I'll ask you this question this way: How many hedge funds outperform the S&P every year?
Yeah, I mean, in a given year, I don't know how many.
What do you think is a number, roughly?
Uh, 50 percent?
50? It's like 20.
Ok.
It's amazing. Like 20 percent of hedge funds win. Yeah, like 20 to 30 percent—
And then over time, none of them do.
No, there are, I mean, there are big winners like Citadel and Renaissance. That are like really big winners.
Why? Because competition. Competitions are hard, right? Imagine that number was 50. What should that tell us? If it was 50-50, 50 percent win, 50 percent lose, it would just be a game of chance. There's no skill in this thing.
Anything that has skill, like how many people win the NBA Finals in their careers? It's a very small subset because competitive environments require skill, and when that happens, you're going to have…
So how are you…?
So the answer is actually, if 80 percent of hedge funds lose on the stock market, our numbers are closer to 60, 65 percent of people losing, which is actually more of an equalizer.
Because the one thing we see on Kalshi is actually a much larger diversity of people end up being winners. If you look at our top performers, 79 percent of them went to public school. Our top traders, they're 2x more likely to have worked in retail than worked on Wall Street.
It's kind of amazing if you think about it.
Our best inflation forecaster is a random guy in Kansas who's never traded in the financial markets, just likes…
How does he do it, then? Do you know?
He's read about the economy for 20 years, loves reading about it, very, very calibrated. He's been thinking about it a lot.
And this goes back to Hayek and Tetlock. It's the idea that information and knowledge sits anywhere. They're not sitting with the elites.
They compared the Wall Street forecasts, the Bloomberg, on inflation, economy, GDP growth, unemployment, against the Kalshi forecasts for those things, which is Main Street—- Wall Street vs. Main Street.
And the result was actually Main Street was more accurate than Wall Street, and it's also real time. We move in real time.
So is your strategy, obviously you're fighting lawsuits, but is it ultimately like you're going to come up with a number that you say to New York state and Arizona, and you say, "We're not going to give you 51 percent of gross revenue," but do you keep working until you get to a point where they're like, "Ok, we'll live with it"?
I mean, I like to take the optimistic view of things, which is I think there are some people who just don't understand it. So part of it is we're just sitting down and explaining what I just explained.
Right, right.
Because the superficial view on prediction markets, like any markets, it's always the same. Society has always had an affect reaction to prediction markets. It comes around, and they're like, "That feels like gambling. It feels wrong.
It's either random or it's rigged," right?
Exactly. It's either random or it's rigged, and it's financialization of stuff.
Not because they're bad or good, just because they are hard to understand. And when you explain it more and it gets a little bit more normalized, people, "Oh, that's actually pretty cool."
And you always see it. When I start with a meeting and I end with a meeting, the opinions on this go, "Oh, actually, it can make us think about the future a little bit better. It could depolarize us because now people are thinking more instead of saying stupid things on Twitter."
Clearly, you're not describing any meetings that you've had with the New York State Department.
Well, I mean, look, I can't speak about specific meetings, but my point is, over time, it requires education. There are parts that don't understand, parts that, yeah, there are lobby groups and casinos that are pushing really hard to protect their turf. Or I don't even think they're protecting it. They're not getting cannibalized. I think their view is like, "Oh, it's a big industry. We should have it, too." It's a little bit that sort of thing.
The thing that they're misunderstanding is that this cannot exist state by state.
Why not?
Because, you know…
Ok, because gambling does. And I know you make a big distinction.
With gambling, you go against the house, and you bet against the house. It's localized. That's fine.
But I'm a peer-to-peer market. You don't want the Californians to trade only against Californians, and Texas…
Again, why is New York… Do you prefer a national New York Stock Exchange or 50 different…?
I'm a citizen of the world. So, yeah.
But the point is, exchanges are peer-to-peer, and they require liquidity. They require a large diversity.
It's like Marketplace, Airbnb. Imagine eBay. You can only buy the bag that you want from people in the same state. That doesn't make any sense. You want diversity. The more diverse the participation, the more information, the more it works.
Why do you think prediction markets, and obviously there have been prediction markets probably for as long as humans have had language…
You know what the first one was, right?
I don't.
Pope elections.
Oh, ok.
In the 1400s.
Ok. Yeah, and well, Intrade, which was a predecessor, which was another business, or got run out of business in 2013, was very good at predicting who was going to be pope.
But why does it seem to be exploding now in popularity? Is it that the tech got better? Is it that people have more money?
I think it's two things. One, we approached it from a regulatory-first approach. I always wanted to create a financial market and broaden it into more things.
Prediction markets are just the financial markets. They're just on a different topic. That's it. People are complexifying this.
But the second thing is, when I started in 2018, I think the demand is because, I think it's the polarization that's happening in the country.
And we feel like there's more information than ever, but less truth than ever. Because the filters, the things that are filtering our information, are biased. They're partisan, they're extreme, they're polarized.
The social media algorithms, and you see, you look at two different Twitter feeds and they look entirely different. People have different conceptions of the truth, of what's happening on the ground.
Because if you write seven paragraphs of thoughtful analysis on Twitter, you get two likes. If you write something crazy, like something racist or something ludicrous, just straight-up stupid, you get 10,000 likes.
Because it's clickbaity. It's like the 10-second Reel on Instagram.
I was like, there will need to be, there was going to be a lot of demand for a source of information where the filtering mechanism is very transparent and it's very aligned with truth.
And that's markets.
We used to always joke, when I did my master's at MIT, and I was doing a Ph.D. or working on Wall Street are mostly the same thing, except that you have to be right on Wall Street. You have to do analysis in both.
But my point here is about the incentive structure of the prediction market. It's very, very simple. The seven-paragraph thoughtful analysis probably makes money, and the stupid, extreme takes probably lose money. And all you have to trust is that people like making money and they dislike losing money. That's it.
It's interesting to me that, Kalshi, you were born in California, but you grew up in Lebanon. Your co-founder was born and raised in Brazil.
Can we read anything into that, that these are the two founders, people from countries that are peripheral to, in a way, certainly to America, but kind of to the global economy?
I just think it's naive. It's like the American dream.
I mean, my mom, when we… So I was born in California, moved back to Lebanon. My mom, I grew up with a single mom, and she's kind of a tiger mom. Not kind of. She was very much a tiger.
It would be a lion, right, in Lebanon?
In Lebanon, it would be a lion.
But the whole thing was, like, "You have to go back to the U.S. because that's a country that will, if you have good ideas and you're smart and you work hard," and she knew I was always, like, a math nerd…"You're going to make it, it will reward you for doing that."
And she was right.
She was a ballerina, but also a lot of similar sort of thinking in our household.
And we showed up here, and we're so excited. There are so many different things you can build, and you can challenge the status quo. It's a country that lets you challenge the status quo in a way that no other country lets you.
And that's amazing. That's something we should really cherish, and like keep….
Do you worry about that? I mean, again, we're in New York, which elected a democratic socialist as mayor. You have Donald Trump Jr. as a special adviser. Who you hired, or you announced, a week before the inauguration of Donald Trump Sr. in a second term…
That's not right. That's actually what happened.
Ok. Well, I mean, the press release went out, I think
I don't know, but we actually had done it before the elections. It was not a political decision.
Well, what I'm getting at, though, is that MAGA, Donald Trump has nationalized the economy or socialized it in ways that were unthinkable since FDR.
So on both sides of the aisle, we seem to be pulling away from free market ideology or belief in free markets or belief that America is a place where you can define yourself.
But the people on the left say, "No, you're defined by who your parents were, what race you belong to, what gender or sexual minority." People on the right want to kick out people like you, right? I mean, they don't want Middle Easterners coming to America, even if you're an American citizen.
So, I mean, look, I…
So are you worried about the America that you've moved back to?
Yes, I am worried. I don't think it's necessarily a political thing. I just think it is a structural thing that's happening in the economy that we have to kind of contend with.
I'm 30, so I was going through school like 10 years ago, and when I was going through school, there was still this energy. People were excited. They were pumped. They wanted to build, they wanted to do things, they wanted to start companies.
And my cousin now is going to Columbia, and you don't feel that energy anymore. That, to me, is the most concerning part.
Where did it go?
I think part of it is there is structural changes happening that society is battling, where there's AI, there is wealth disparity that's being created that is extreme.
And then that is also not… When I think about free markets, I always say the foundation of free markets is everybody needs to have a shot in the competition, right? Everybody needs the same rules, the same rights, and the same obligations.
And if people stop believing that, the competition is tilted. The competition is not a level playing field. I think that's kind of an opposite view to fair markets.
And I'm not here to say, look, the solution is simple. But I think we would argue that capitalism is a good thing, but what we need to contend with and be aware of is that a lot of people are not part of it. They don't feel like they're part of it.
And that's a reality. That's a truth on the ground that we cannot just…
Is it that they're not part of it, or is it that they don't feel they're part of it?
It's equivalent, though.
Yeah. I mean, because one of the arguments about social media, which clearly has a lot to do with this type of stuff, is that the median household income, the median individual income in America, is at all-time highs. It keeps going up, despite the financial crisis, despite COVID, despite geopolitical Sturm und Drang.
But people feel like, "I'm not getting as much as Donald Trump Jr. has, so I feel ripped off," even if they're doing better. I mean, is it important to know what the narrative is and what the facts on the ground are?
And frankly, I do think, because I don't want this to sound partisan, I do think it's bipartisan. I think people on both sides…
Yeah, no, I agree with you completely.
And we engage. Kalshi has engaged. People have talked about Don. We have advisers on the other side of the aisle, Democrats, across the board. And I frankly talk equally to Republicans and Democrats. And there is a lot of thought on both sides about how do we deal with this?
And my view is we may be being a little bit too ideological about capitalism versus socialism.
And to me, it's more like, I think most people would agree that we want a free, competitive economy. We want people to have a shot. We want people to feel part of the system.
And my view is a little bit more practical. It's like, "Look, if the wealth inequality is too out of whack, we need a little bit of a dampening mechanism. Just bring it back."
Is that mechanism, is it heavy taxation? Is it regulation that prevents the formation of new businesses? Is it…?
I don't think we should ever prevent or slow down innovation or prevent the formation of new businesses. My view is more that we need to think about ways to bring the people who feel they're out of the system into the system.
There are simple, kind of naive ways to think of it. I always think, could you have the most successful companies in America, or the rising top 200 tech companies, take a small 1 or 2 percent of their stock, voluntarily?
And I do believe, actually, you sit down with a big enough group of founders and give it to, let's call it whatever, you can define a set of households in America and put it in their children's accounts.
And the thing I love about that idea is all of a sudden people feel, they understand, actually, ok, AI, space, tech, fintech, all these different things that feel completely distant and far removed from you right now, they're tangible.
And it's actually, oh, it moves up over time. And as we're creating value as a society, we're doing the thing that America does: innovate, push the boundaries, take risks. There's tangible value that basically accrues over time.
And to me, it's like we don't need to… Capitalism, it's too much ideology versus, how about the middle ground? Let's make sure we bring people along. And it's not going to hurt the very top that much to do a little bit on the margin.
So you're facing a huge amount of regulatory uncertainty. There's also a huge amount of political uncertainty that's kind of bigger than that.
My view is all companies, tech companies, are facing a lot of that. AI as well…
Well, and technological uncertainty, all of this kind of stuff. But for the midterms, is there an outcome that is better for Kalshi or worse?
I'm frankly, not sure. The idiom is like, "Well, what are you going to do when the Democrats take over?"
And I don't know. Frankly, the internal view is, to me, we've built relationships on both sides. I found actually there's a big group of people on both sides that actually are largely are where we are, which raises my second point.
Who are some of the Democrats? I mean, I think I know some of the Republicans, but many of them are anti-prediction market. But who are some of the…?
I know, it's many. I mean, I think there are some on both sides of the aisle, but I think there's a big group on both sides that is actually pro.
But without naming names, to me, the thing that we're really focused on is what we've been focused on from day one.
We're a company that spent the first four years of our company getting regulated upfront, which is very unusual for Silicon Valley. It's very, very unusual.
And I always say I'm pro-sensible regulation. Banning something is not a form of regulation. It's actually the ultimate deregulation because you're moving it offshore, and you're just closing your eyes and letting it go crazy. And that's what happened with crypto. We banned a bunch of stuff onshore, it went offshore, and people lost their money.
To me, it's always be sound on policy, truly. Try to actually, let's put the ideology aside. Let's actually get it right and communicate that over and over and educate what is right.
And I always say there are certain types of markets that shouldn't exist because those are moral hazards that could create issues. Like the military strike market should not have existed. And we never did it because we're regulated in the U.S., but no one should be able to do it.
Number two is ban insider trading. We have to, because if there's a privileged set that has access that the rest of America does not have, that ruins the markets over time. It destroys trust in the system. We don't want that.
And three, sensible guardrails. There's going to be irresponsible use for any of these products, whether you're trading options on Robinhood or crypto on Coinbase.
Or you're going to the neighborhood bar. You want somebody to send you home when you've had too much.
That's right. Most people who drink alcohol, it's fine. It's great, actually. It is a social lubricant. I mean, there's a small percentage, sub-1 percent, that end up destroying their lives. You want to regulate that out of the system. I believe in that.
And it's like any technology. You have upsides, the steam engine, and then you have your carbon dioxide emissions. Regulation reduces the emissions and optimizes the upside.
And it's always delicate. It has to be delicate and balanced. But it's usually not the best thing for getting a bunch of clicks on social media, right? That's the…Policymaking is boring.
So about 15 years ago, or I think it was 2013, Intrade, an Irish-based prediction market, was regulated out of existence in the U.S.
They were unregulated.
Ok. Well, they were, but they had a CFTC license.
No, they didn't.
Oh, ok.
So we're the first to have gotten the CFTC…That's the difference.
That's the difference. Thank you.
But what would you put the odds on of you, in five years, Kalshi being bigger than ever and in a clear regulatory market, or…?
I think they're very high. They're very, very high. I mean, we have 30 million customers in the market, right? I mean, it's very big.
And again, the choice is, if you were to ask me whether prediction markets exist in five years, that's 100 percent.
Yeah, of course.
Because it's not a question of whether they're going to exist or not. It's just whether we're going to regulate them the right way.
You think they will be legal and public and transparent.
Certainly, yes. I mean, I think it's because they're here. I think the question is now, do we regulate it? Do we add the sensible guardrails? Do we just drive it offshore and close our eyes?
But I think usually, again, time is with us because even if you compare it today versus six months ago, way more people understand it. There's much less energy than before.
And the one thing I'll say, the media, you know this, the media just loves the scandals. When the insider trade happened on Maduro, that was like a three-month cycle. It was never-ending, right?
That's what all people would hear about it. And they wouldn't say Polymarket, they'd say prediction markets. They would lump us in.
But it's going to take some time for people to understand that actually, that was a one-off. There are like 30 million customers who are using these things. And yes, there's some bad in any system, and we're going to have to regulate it, but the positives are exciting.
Because to me, you're seeing now, we have thousands of businesses that rely on this.
I mean, people in the Keys around hurricane season start calling in and buying yes on hurricanes in their town because insurance companies don't insure their homes anymore. We have so many insurance use cases that are proliferating right now on sports, on weather, on esoteric things.
Like, there's this bill. I don't know if you saw the story about the goat herder in California. There's a bill in the legislature that was being passed that was going to move. He has 3,000 goats, move goat-herding wages from $70,000 to $40,000, which is going to drive him out of business.
He started calling insurance companies to underwrite this risk. They're like, "We're not going to. I mean, this is crazy."
And so he came to us, and we set up a market. Within two or three hours, the market said there's a 10 percent chance of it happening. Then he bought a $50,000 hedge that would pay out $500,000 if the bad thing happens, and it happened.
So now he has the war chest to go and diversify his business and stay afloat and all that. More of that is basically going to happen.
I guess a final question is, are the lawsuits against you at the state level or at the nonfederal level, is that going to require a Supreme Court decision, do you think?
You know, I just think, for us…
Because the Supreme Court has, I mean, some of these suits are proceeding, so you have a legal argument, which strikes me as pretty solid, but I'm not a lawyer. But is it going to take a Supreme Court decision? I don't know what this is all…
I think maybe. I mean, I think that we'll see. I think there are a lot of things that are in flux because some of the courts where we lost, it was based on a rule that has been changed now.
There are a number of new rules that are regulated that the federal agency, the CFTC, has put forth now. So that's kind of changed. It invalidates a lot of these opinions for good reason.
So it's a bit of a reset that's going to happen.
How important is the actual head of the CFTC to your future?
It's very important, but these things, it's like a push and pull, and some people may disagree with this regulator, right?
My point is that Congress explicitly gave the authority to the CFTC to regulate market structure this way, no matter what the topic is. That's really the law.
And they even say if something is gaming, which you can say the sports game is a game, the CFTC can decide what to do with it. That's the law, and they can decide to allow it and regulate it in a certain way.
You may disagree with the regulations. Some people tell me, well, maybe they're not stiff enough on this or not stiff enough on that.
But that's why you have the separation of powers. Congress delegated their authority to the agency. If you're unhappy with the agency, there may be a shift in two years. There'll be another agency that might be more strict or more loose.
And that's the natural, it's par for the course, natural course of history.
But to me, it's like, as we learn and as data surfaces, as we understand these things better, the better for us. Because the truth and the data is on our side. The best way to tell a good story is to have a good one, and I think we have a good one.
All right. We're going to leave it there. Tarek Mansour of Kalshi, thanks so much.
Nick Gillespie appears on the left. Kalshi CEO Tarek Mansour appears on the right. An image of a roulette wheel appears in the center square. Bold text across the top of the screen reads "Why Kalshi is NOT a Casino."
Since 1871, a federal statute has authorized Americans to sue state and local officials for violating their constitutional rights. But since 1982, thanks to the court-invented doctrine of qualified immunity, such claims have been allowed only when they allege violations of "clearly established" law.
Because courts often require plaintiffs to meet that standard by citing precedents involving closely similar facts, qualified immunity can prove insurmountable even for victims of outrageous abuses. But as two recent cases illustrate, there are limits to this license for misconduct, meaning officials may still be held accountable when they flout longstanding constitutional principles, even when they do so in novel ways.
In 2022, Mario Rosales and Gracie Lasyone sued two Alexandria, Louisiana, police officers, Samuel Terrell and Jim Lewis, alleging that they had pulled Rosales over without legal justification. The cops ordered Rosales and Lasyone, his girlfriend, out of the car and detained them for 21 minutes, during which they grilled the couple about illegal drugs, frisked Rosales, and instructed him to empty his pockets.
Terrell and Lewis sought refuge in qualified immunity. But last month, the U.S. Court of Appeals for the 5th Circuit ruled that Rosales and Lasyone had plausibly alleged several Fourth Amendment violations, including a stop based on a "fabricated traffic violation," an improperly prolonged detention, and unjustified searches.
In reaching that conclusion, the 5th Circuit relied mainly on a 1968 decision in which the Supreme Court said police may detain someone only if they reasonably suspect he is involved in criminal activity and may frisk him only if they reasonably suspect he is "armed and dangerous." Assuming the facts alleged in the lawsuit are true, the three-judge panel unanimously held, Terrell and Lewis had failed both of those tests.
When the officers stopped Rosales, the principles that the 5th Circuit applied had been the law of the land for more than half a century. Terrell and Lewis nevertheless argued that "any constitutional violation arising from the traffic stop was not clearly established," which gives you a sense of the chutzpah that qualified immunity invites.
Police commonly pull drivers over, ostensibly for traffic violations, in the hope of implicating them in drug crimes. A case that the U.S. Court of Appeals for the 8th Circuit considered this month involved a much more unusual scenario: a judge who locked two children in jail cells because he was frustrated by their resistance to a parental custody decision.
During a 2019 hearing in Taney County, Missouri, a divorced couple agreed that the mother would have primary custody of their two children, then 12 and 14. But contrary to that agreement, the children did not want to go home with their mother, which led to an argument in the courthouse lobby.
Judge Eric Eighmy intervened, telling the children they had to leave with their mother and repeatedly warning them that they could end up in foster care if they refused to do so. When that did not work, Eighmy jailed them until they became more cooperative.
"The time spent in the holding-cell area was between twenty and forty minutes," the 8th Circuit noted. And since Eighmy did not have probable cause to believe the children had committed any offense, "much less one that justified placing them in a holding cell," the court said, their confinement clearly violated the Fourth Amendment.
If so, Eighmy argued, he had no way of knowing that. The 8th Circuit panel unanimously disagreed: "As we put it over a decade and a half ago, long before the events in this case, 'it is clearly established that a warrantless arrest, unsupported by probable cause, violates the Fourth Amendment.'"
Notably, the 8th Circuit did not think the bizarre details of the case counted in Eighmy's favor. "We are not concerned about the lack of a prior case" with "fundamentally similar" facts, it said. "Indeed, given how clear the law is, it would have been surprising to find one."
Last July, President Donald Trump imposed 50 percent tariffs on various Canadian goods, a list he subsequently expanded to include additional imports, some of which he banned outright. His legal justification was Section 338 of the Smoot-Hawley Tariff Act, which Congress approved in 1930. Section 338 authorized tariffs in response to discriminatory trade practices. But in the 96 years since it was enacted, no president had ever used it to impose tariffs.
Why is that? According to a lawsuit that the Liberty Justice Center (LJC) filed on Tuesday in the U.S. Court of International Trade (CIT), the answer is clear: Section 338 was superseded by subsequent legislation that likewise targeted discriminatory trade barriers, beginning with the Reciprocal Trade Agreements Act of 1934 and culminating in Section 301 of the Trade Act of 1974. Section 301, the current remedy, includes requirements that Trump apparently sought to dodge by invoking Section 338 instead.
That maneuver is illegal, the LJC argues. "Congress already gave the executive branch a tool for responding to unfair foreign trade practices: Section 301, which requires an investigation, public comment and other safeguards," says Jeffrey M. Schwab, the LJC's director of litigation. "The administration cannot skip those protections by reaching for a 1930 statute that no president had ever used to impose a tariff."
Why not? "Where provisions in two acts are in irreconcilable conflict, the later act, to the extent of the conflict, constitutes an implied repeal of the earlier one," the lawsuit says. "Where a later act covers the whole subject of an earlier one and is clearly intended as a substitute, it operates similarly as a repeal. And a specific policy embodied in a later federal statute controls the construction of an earlier one even absent express amendment."
Even if Section 338 somehow survived congressional approval of contrary laws, the LJC adds, Trump's tariffs exceed the authority it grants. And if Trump's interpretation of Section 338 were correct, the lawsuit says, the provision would violate the nondelegation doctrine, which bars Congress from delegating its tariff power to the president without providing "an intelligible principle" to guide and constrain his exercise of it.
Trump's Section 338 tariffs, in short, are "the Administration's latest attempt to exercise, through a statute never designed for the purpose, the tariff power that the Constitution assigns to Congress." That pattern should be familiar by now.
Shortly after taking office in 2025, Trump claimed to have discovered a previously unnoticed delegation of extensive tariff authority in the International Emergency Economic Powers Act (IEEPA), a 1977 law that does not mention import taxes and had never been used to impose them. That claim was rejected by every court that considered it, and last February the Supreme Court ruled that IEEPA does not authorize tariffs at all.
Trump responded to that decision by immediately announcing similarly broad tariffs under Section 122 of the 1974 Trade Act, which addresses "fundamental international payments problems" caused by "serious United States balance-of-payments deficits." In May, the CIT ruled that the new tariffs were illegal because Trump had failed to "identify balance-of-payments deficits within the meaning of Section 122."
Trump then switched to Plan C, invoking Section 301 of the Trade Act, which authorizes tariffs in response to a foreign "act, policy, or practice" that is "unreasonable or discriminatory" and "burdens or restricts" U.S. commerce. He claimed that provision justified tariffs on 86 trading partners, accounting for nearly all U.S. imports, because they had failed to "impose and effectively enforce a prohibition on the importation of goods produced with forced labor." The CIT is currently weighing challenges to those tariffs, including an LJC lawsuit.
Trump's Section 338 tariffs have now added to the CIT's caseload. The LJC represents Gellert Global Group, an importer that was hit hard by those taxes after Trump added cheese to the list of disfavored Canadian goods. The lawsuit asks the CIT to certify a class of importers, numbering in "the hundreds, if not the thousands," that likewise have been clobbered by Trump's 50 percent tariffs.
Since Trump obviously is aware of Section 301, why did he resort to a never-used, seemingly obsolete provision to justify the tariffs on imports from Canada? As the LJC notes, Section 301 requires an investigation by the Office of the U.S. Trade Representative, "consultation with the foreign country concerned, notice, public comment, a hearing, and determinations within statutory deadlines." It also requires "that action be equivalent in value to the burden imposed, that duties be preferred over other import restrictions, and that actions terminate after four years absent a request for continuation and review."
Can Trump avoid those constraints by invoking Section 338 instead? The LJC thinks not: "Congress did not intend to leave in place a parallel authority that would allow the President to impose the same remedies, for the same conduct, free of every one of those safeguards."
Section 338 has been "impliedly repealed," the LJC argues. "At a minimum, Section 301 controls where, as here, the President seeks to respond to foreign practices within Section 301's scope, and the President may not impose duties in response to such practices while disregarding the procedures and limits Section 301 imposes. Because the President did not proceed under Section 301, the Section 338 Tariffs are unlawful whether or not Section 338 survives."
Even if you ignore subsequent legislation, the LJC argues, the Canadian policies that Trump cited when he announced the tariffs do not qualify as "discrimination" under Section 338. "Canada's motor vehicle surtax and its provinces' alcohol purchasing decisions are responses to tariffs that the United States imposed on Canada, not discrimination by Canada against the United States," it says. Trump also complained that Canada treats European cheese imports more favorably than U.S. cheese imports. But "when Congress enacted Section 338, a preference granted under a reciprocal agreement was not 'discrimination.'"
Section 338 "addresses discrimination: measures that single out United States commerce for worse treatment than the commerce of the world at large," the lawsuit says. "It is not a general authorization to impose tariffs whenever the President disagrees with a trading partner's policies, or whenever a trading partner responds to tariffs the United States has imposed on it."
Trump also was unfazed by Section 338's requirement that the president set duties to "offset" the costs imposed by discriminatory practices, which implies proportionality. Rather than attempt that, the LJC notes, Trump imposed "the statutory maximum rate of 50 percent without tying it to any measured burden."
As interpreted by Trump, the lawsuit warns, Section 338 authorizes the president to "impose tariffs of up to 50 percent on any products of any country that extends better treatment to any other country in any respect—including through any of the hundreds of preferential trade agreements to which the United States is not a party—or that responds to tariffs the United States has imposed on it." Yet Section 338 "contains no clear statement authorizing that power," contrary to the "major questions" doctrine, which applies to assertions of executive authority with "vast economic and political significance."
If Section 338 conferred the sort of unfettered authority that Trump is claiming, the LJC says, it "would supply no intelligible principle constraining the exercise of Congress's power to lay duties." His reading "would convert a narrow, fact-dependent provision into an effectively unrestricted delegation of Congress's tariff power," which would be "an unconstitutional delegation of legislative power."
This case "is not about the president," says LJC CEO Sara Albrecht. "It is about the presidency. No president should have the power to pull a dormant statute off the shelf and use it to impose sweeping tariffs or import bans without the limits Congress required."
Last March on Instagram, Students for Life President Kristan Hawkins posted a photo showing her and two other members of the Virginia-based group standing outside Space Center Houston. According to the captions, Hawkins and her fellow activists, one of whom was holding a mobile phone, were "ordering abortion pills undercover."
A lawsuit filed last week in Harris County, which includes Houston, describes that Instagram post as "nothing more than a publicity stunt." The lawsuit, which aims to deploy a Texas abortion law championed by Students for Life against the organization, is also a publicity stunt. But while it may be effective by that measure, it faces legal challenges that will be hard to overcome.
The lawsuit, which a Texas woman who opposes her state's abortion ban filed under the pseudonym Maria Puerto with help from the reproductive rights group Amplify Legal, is supposed to highlight the vagueness and broad scope of House Bill 7, a 2025 law that authorizes private civil action to enforce state restrictions on "abortion-inducing" drugs. But Puerto's attempted act of legal jiu-jitsu seems too clever by half, relying on a dubious reading of the statute to seek "monetary compensation" it does not authorize and thereby punish anti-abortion activists for constitutionally protected advocacy.
H.B. 7, also known as the Woman and Child Protection Act, says "a person may not manufacture or distribute an abortion-inducing drug in this state" or "mail, transport, deliver, prescribe, or provide an abortion-inducing drug in any manner to or from any person or location in this state." Those prohibitions, it says, "may be enforced only through a qui tam action" against a "person" who "violates" or "intends to violate" them.
Any "person" other than a state or local official can qualify as a "relator" authorized to bring such an action. The relator can seek injunctive relief and "an amount of not less than $100,000 for each violation," plus "costs and reasonable attorney's fees." A successful relator generally receives $10,000 of that "amount," with the rest going to a "charitable organization" of his choice.
As a "person" who is not a government official, Puerto meets H.B. 7's minimal test for standing. And although H.B. 7 precludes lawsuits against pregnant women who obtain "an abortion-inducing drug," Puerto says Hawkins and the other activists "are not pregnant and were not pregnant" at the time of the Instagram post. So far, so good. But although the lawsuit asserts that Hawkins et al. "openly and flagrantly violated" the law's prohibitions, it does not explain how.
A photo accompanying a recent Mother Jonesprofile of Hawkins shows her and her social media coordinator, Lydia Taylor Davis, outside Space Center Houston during their "abortion-pill 'sting' stunt." Another Mother Jones photo shows Hawkins holding a mobile phone displaying what Puerto's lawsuit describes as "an order confirmation."
Judging from the Mother Jones account, it is not clear whether that description is accurate. "The scheme rapidly went off the rails," Amy Littlefield writes. "The plan was to purchase pills from a couple of services, with Hawkins posing as a male abuser while Davis pretended to be a 16-year-old—all to try to portray mail-order suppliers as reckless and dangerous. For reasons even she couldn't explain, Hawkins chose the fake name 'Wanda' as her male-abuser alter ego. But when Davis input her information, she hit a snag."
Davis was trying to order pills from the Massachusetts Medication Abortion Access Project. But according to Littlefield, that organization "had blocked Davis in its system after Students for Life teased the sting operation on social media." Hawkins "attempted to save the stunt by placing her own order, but 'Wanda' accidentally gave her age as 15," which was below the supplier's minimum age, Littlefield says. "Now a security guard was wandering over to tell them they couldn't film. Having set out to show that telemedicine services don't screen their clients, they inadvertently proved the opposite."
Puerto "will need proof that the Students for Life leaders actually obtained or intended to obtain the pills," abortion law scholar Mary Ziegler notes in Slate. "The activists may argue that the post was not in earnest, and that no one involved ever seriously intended to bring pills into Texas."
Even assuming that Hawkins et al. successfully ordered abortion pills, that conduct by itself does not fit the language of H.B. 7, which applies to people who "distribute" such drugs or who "mail, transport, deliver, prescribe, or provide" them "to or from any person or location in this state." That language encompasses out-of-state suppliers, which raises obvious concerns about extraterritorial application of Texas law. But on its face, the prohibition does not cover someone who simply orders abortion pills.
Puerto's lawyer, Amplify Legal attorney Molly Duane, argues that Hawkins et al. could be covered by the statute's reference to transportation. "What the statute says is that transporting abortion drugs from one location to another within the state is a violation of H.B. 7," Duane toldThe Texas Tribune. "By the plain language of the statute, this would seem to be a violation. This is the problem with writing such a confusing and vague law."
Under that theory, however, Hawkins, Davis, and the two other activists named in the lawsuit violated H.B. 7 only if they 1) successfully ordered abortion pills, 2) took delivery of them, and 3) subsequently moved them to another location within Texas. The lawsuit alleges only that they "ordered abortion pills, apparently multiple times." According to The Texas Tribune, Duane and Puerto "are hoping that the lawsuit will eventually surface more about what the defendants did with the abortion pills once they ordered them."
The lawsuit faces another obstacle. H.B. 7 does not apply to "speech or conduct protected by the First Amendment." Hawkins et al.'s efforts to show how easily state abortion bans can be circumvented certainly seem to fall into that category. "Students for Life may stress that the case targets their political speech about abortion," which is "protected under the First Amendment," Ziegler notes.
Those are not the only puzzling aspects of the lawsuit. Puerto, a 26-year-old single mother of two young children, emphasizes that she "had no choice but to continue" those pregnancies because she did not "have access to transportation or the economic resources to pay for travel out of state." The lawsuit devotes 11 paragraphs to describing the burdens imposed by her state's denial of "true reproductive rights," which she argues justifies some sort of compensation.
All of this seems legally irrelevant under H.B. 7, which does not require a relator to allege damages of any sort, let alone damages stemming from the abortion ban it aims to reinforce. "With nowhere else to turn for assistance," the lawsuit says, "Ms. Puerto is seeking financial compensation" from Hawkins et al. "in the amount of $459,782—the average cost of raising two children from birth to age 18 in the state of Texas."
Although H.B. 7 sets a minimum award of $100,000, the lawsuit notes, "there is no cap on the monetary compensation owed a relator." But the law does not describe H.B. 7 awards as "monetary compensation" for injuries allegedly suffered by the relator.
The statute's only reference to "compensatory damages" deals with lawsuits filed against H.B. 7 relators under "clawback provisions" of other states that have tried to thwart such litigation. In response to a "clawback" action, the law says, an H.B. 7 relator can seek "compensatory damages, including money damages in an amount equal to the judgment damages and costs, expenses, and reasonable attorney's fees spent in defending the action." By contrast, the bounty for proving a violation of the restrictions on abortion pills is simply "an amount."
The lawsuit itself, emphasizing the lax standards for filing a claim under H.B. 7, notes that Puerto "did not suffer an injury traceable to [the defendants'] ordering of abortion pills that can be remedied by a court." But it suggests that an award to Puerto would be appropriate given the defendants' anti-abortion activism.
The lawsuit notes that Students for Life "proudly advertised" its support for H.B. 7. Puerto complains that Hawkins et al. "ignore the immense harms and multiple deaths already attributed to Texas's cruel abortion bans" and "demean the six million Texans of reproductive age who have had their ability to decide whether and when to begin or expand a family stripped away by these bans." Whatever you make of that charge, the defendants' activism is constitutionally protected and therefore cannot support a cause of action in civil court.
"Texas is a strange place filled with vigilante statutes" that "seek to turn Texans against each other," Duane told The Texas Tribune. "But if anyone should be benefiting from these legal regimes, it's people like our client." While "putting those two things together…might be unusual," she said, "this is the situation that Texas has put its citizens in."
Depending on your perspective, you may or may not sympathize with Duane's reasoning. But it seems unlikely to pass muster as a matter of law.
Matt Gaetz resigned from the U.S. House of Representatives in November 2024, shortly before the House Ethics Committee released a report accusing him of having sex with a 17-year-old girl in 2017, when he was 35, and "regularly pa[ying] women for engaging in sexual activity with him." The probe was widely discussed as a sex trafficking probe, but the ethics committee "did not find sufficient evidence to conclude that Representative Gaetz violated the federal sex trafficking statute," per its report.
Now two women have filed a civil lawsuit accusing Gaetz of sex trafficking.
The suit, filed in the U.S. District Court for the Middle District of Florida, says that Gaetz and two other men (Joel Micah Greenberg and Christopher Dorworth) broke federal anti-trafficking laws by using "their public office, power, and wealth to prey on the economic vulnerability" of Jane Doe 1 and Jane Doe 2.
Gaetz, who now hosts The Matt Gaetz Show on One America News Network, said many of the suit's allegations against him are false. "The lawsuit relies almost exclusively on a Congressional Committee report that didn't allow me to confront my accusers," he said. "Now I will finally have that chance."
On X, Gaetz posted an image of three women in bikinis seated next to bottles of beer and looking at the ocean and wrote "Jane Doe Strikes Again! Two adult women sued me today alleging they were sex trafficked to the Bahamas. I'm shocked nobody responded to their repeated cries for help, posted to instagram."
Jane Doe Strikes Again! Two adult women sued me today alleging they were sex trafficked to the Bahamas. I'm shocked nobody responded to their repeated cries for help, posted to instagram. https://t.co/HPvX2xypzs
This does not seem like especially helpful behavior from a public relations perspective, to say nothing of whether it's legally wise to for Gaetz to be posting to social media about the suit against him.
But Gaetz's point isn't entirely off base. The actions described in the suit against him are hardly what most people would consider sex trafficking.
Jane Doe 1 and Jane Doe 2 were adult women willingly advertising on Seeking Arrangement, a site aimed at connecting young women with rich men for mutually beneficial relationships. And by their own account, that is what went down. They were taken on trips and paid thousands of dollars while hanging out, partying, and having sex with Gaetz and his friends.
Needless to say, advertising on a sugar baby website does not make you fair game for forced prostitution or sexual assault. But nowhere in the lawsuit are forced prostitution or sexual assault alleged.
Instead, we get sentences like this: Gaetz and the other defendents "led [Jane Doe 1] to believe they could solve her financial problems as long as she kept performing sexual acts for them and their associates," states the suit. But "the money never came as a single payment that would have solved Jane Doe 1's financial issues."
So…it's sex trafficking because he didn't pay her enough at one time? I don't think that's how the law works.
Overall, it's a stretch to say that Gaetz's actions as described in this suit fall under the scope of the federal Trafficking Victims Protection Reauthorization Act. Under federal law, sex trafficking must involve an element of force, fraud, or coercion, and/or must involve commercial sex involving someone who is under age 18.
In this case, both alleged victims were in their 20s at the time of the alleged trafficking. No element of force or fraud is claimed. And the type of "coercion" alleged seems more appropriate for a college debate than a courtroom.
There was no suggestion that harm would come to the women or their families, that a job or housing would be lost, or that failure to engage in sexual activity with Gaetz and his friends would result in some sort of other (physical, reputational, legal, etc.) harm befalling them. There was nothing on Gaetz's end that would seem to arise to "coercion" under federal trafficking statute, which defines it as involving "threats of serious harm to or physical restraint against any person," a scheme to make someone believe that serious harm will befall them if they don't comply, or abuse or threatened abuse of the legal process.
The suit contains a lot about Greenberg—a former tax collector who is in prison after pleading guilty to charges that include sex trafficking—and comparatively little about Gaetz. It seemingly attempts to make up for the lack of direct allegations against him by noting findings from the Ethics Committee, even though that committee specifically said it could not find evidence of sex trafficking.
Gaetz is accused of having sex with Jane Doe 1 at a party while Jane Done 1 was on MDMA. But the suit does not accuse Gaetz of foisting drugs on her, simply saying "controlled substances circulated at the party, and Jane Doe 1 took MDMA during the evening." Nor does it say that anyone forced Jane Doe 1 to be at the party or to have sex with Gaetz.
Gaetz is also accused of paying Jane Doe thousands of dollars—never directly after sex or as a direct quid pro quo, but during the same time period during which he was having sex with her. The payments were labeled things like "Being my friend," "Being awesome," "Here," and "Just because," the suit says.
And Gaetz is accused, along with the other defendants, of paying to fly Jane Doe 1 and Jane Doe 2—whom Greenberg met through the sugar baby website and introduced to Gaetz—"to Venice Beach, Miami, Las Vegas, the Florida Keys, the Bahamas, and New York City" and paying for their hotel rooms. The suit does not say that they were forced or coerced on these trips, merely that the trips exposed them to "men they would never otherwise have met, and every part of that access, from the flights to the hotel rooms, was paid for by men, including the Defendants, who expected sex in return."
The women's lawyer told the Associated Press that there was "an exploitative power imbalance," because on one side you had a congressman and some other powerful men and on the other "young financially vulnerable women in their early twenties."
Morally speaking, that might be relevant. And for a congressman, it may have been grounds for sanction. But the fact that these women were younger and less financially successful does not make a relationship between them and Gaetz de facto "coercive" or illegal.
Age gaps in relationships—even substantial ones—are not outlawed. And relationships in which an older man is attractive precisely because he has more money and power than the younger female involved, and offers to spend it lavishly, are not uncommon. The idea that this violates federal criminal law simply showcases how distorted our ideas of sex trafficking have become.
In the News
Children have a fundamental right to access the internet, says India's Supreme Court. The Free PressJournalreports:
"The safety of our children and their freedom are not at odds with each other. Our children are entitled to both," the court observed.
The bench explicitly recognised the right to access and use the internet as a fundamental right under Article 21, which protects life and personal liberty, read with Article 19(1)(a), which guarantees freedom of speech and expression.
Meanwhile, in the U.S.: "A federal appeals court panel has ruled that Florida's 2024 law restricting access to social media for teens is likely constitutional and can continued to be enforced while the legal challenge continues," notes the Florida Phoenix.
We were promised REPEATEDLY that age-verification law was narrow, and would ONLY apply to porn. But— as we warned —it was always a ruse.Since conservatives got their ruling in FSC v Paxton, they've pushed to age-gate anything and everything. It's not going to stop with social media or chatbots.
'Appropriate safeguards.' A small change in the language of the Apple App Store's app review guidelines could portend big changes. Via9to5Mac:
Under Section 1.2, which covers user-generated content, the guidelines now read (changes in bold):
Apps that enable users to create, generate, upload, share, or otherwise contribute content present particular challenges, including intellectual property infringement, nonconsensual intimate imagery, and anonymous bullying.
Apple's new terms add that "Developers who fail to implement appropriate safeguards or fail to remediate identified violations after notice may be considered in violation of the Developer Code of Conduct."
The change is being reported as a crackdown on "nudification" apps, and that certainly seems to be part of it. But the language about going after "developers who fail to implement appropriate safeguards"—combined with the broad warning about user-generated content—could signal a broader intent to crack down on social media platforms and other types of apps that don't implement ID verification or engage in more intense content moderation.
On Substack
Don't sacrifice due process to outrage. We can't let anger over allegations of gang rape at Cornell convince us to re-implement old Title IV policies that disregard due process, writes Robert Shipley of the Foundation for Individual Rights and Expression:
There's a groundswell of demand to "do something" in the wake of the sexual assault claims at Cornell. But amid the outrage and concern over the incident, it's critical to remember that one attempted remedy we actually know will not work is to return to a campus justice system in which the burden of proof is on the accused and basic civil liberties are cast aside. That social experiment has already been run. It failed.
Title IX, the law against sex discrimination in federally funded education programs, was passed in 1972. Debates at the time focused on how it would affect single-sex colleges and college athletics. Explicitly aimed at sex discrimination, the text of the law itself mentions neither sexual assault nor sexual harassment. Those became matters for Title IX gradually over the next couple of decades, as courts determined that sexual assault and sexual harassment were both forms of sex discrimination, and therefore covered under Title IX.
The Jane Doe lawsuit against Cornell and the accused students (as well as a fraternity, a sorority, and a local bar) hit national news at nearly the same time that the Trump administration officially removed the Biden-era regulations from the Federal Register. While almost certainly not related, some have connected the two, citing the Cornell incident to argue that regulations surrounding Title IX need to be changed again to reduce due process protections for the accused.
Not to pick on Sam here, but this is a useful point to highlight some of the impossibility of trust & safety work. Meta actually used to have a program *exactly* like this, BUT it became a central feature of Frances Haugen's Facebook Files as an example of Meta being evil.I'll explain…
• A new pair of high-tech sunglasses from Meta "can read your mail, describe the person in front of you, tell you what is on a restaurant menu, and help you find your way home," writesReason's Reem Ibrahim. "For the approximately 700,000 Americans who are blind, it is potentially life-changing."
• "The Supreme Court of Canada has upheld a decision ordering new trials for two people facing human trafficking and sexual services offences, after concluding they should have been able to cross-examine a complainant about the commercial aspect of her prior sex work," reportsThe Canadian Press. "The case looked at the application of section 276 of the Criminal Code, known as the rape shield law, which limits use of evidence about a complainant's sexual history in court proceedings."
• Markets in everything:
This website lets you attend the wedding of complete strangers
Couples list their weddings and users can buy a ticket to attend https://t.co/8b7EawyFod
• The People First Transportation Alliance has been campaigning against robot taxis in D.C. "But just who is behind the group remains unclear, even as it has sought to sway the outcome of a contentious issue with vast sums of money and thousands of jobs at stake across the country," reportsThe Washington Post.
Walking through East Cleveland, Ohio, feels a touch like you've wandered onto the set of a postapocalyptic film noir. Grand, gilded homes announce themselves on neighborhood streets, some crowned with turrets, many with windows punched out like missing teeth. Often, no one is home, because no one lives there. It is safer than 1 percent of U.S. cities.
That question is not really a legal one, at least not in the most technical sense. But it is the driving force behind a thorny case a federal court recently resuscitated: Fambrough v. City of East Cleveland, a saga concerning a man whose vehicle became an obsessive target of the East Cleveland Police Department (ECPD) after he used it to campaign for a mayoral challenger.
Some of the facts are in dispute. But the basic gist is as follows: William Fambrough, long a politically engaged East Clevelander, campaigned for Juanita Gowdy—a challenger to then-Mayor Brandon King—by broadcasting messages around the city with his sound truck. That ultimately came to an end after law enforcement impounded the car, cited him for parking and noise violations, and prosecuted him for the latter.
Fambrough sued, alleging the complex legal odyssey set into motion over his step van amounted to First Amendment retaliation, an unreasonable seizure under the Fourth Amendment, and a violation of the 14th Amendment's proscription against selective enforcement. The U.S. Court of Appeals for the 6th Circuit rejected some of those claims. But it resurrected claims against King and his chief of staff, Michael Smedley—depriving them of qualified immunity, the legal doctrine that inoculates state and local government officials from facing lawsuits if their alleged misconduct was not "clearly established" as illegal in prior case law. It also revived Fambrough's retaliation claim against the city.
As the 6th Circuit summarizes: King "says he received a phone call from a resident who complained about Fambrough's sound truck and someone else's box truck being parked in a residential area," so he told someone to take care of it. Scott Gardner, then the city's chief of police, "was concerned about selectively enforcing" the parking ordinance—which prohibits parking a truck in front of residential property, except for loading or unloading—because it is indeed almost never enforced. This was the beginning of a long pursuit, which ultimately saw a swarm of officers dispatched to Fambrough's house in August 2021 to confiscate the vehicle, allegedly resulting in $6,000 in damage. Fambrough also had to pay $528 in fees to get the damaged truck back.
"All the attention City officials gave Fambrough struck Gardner as unusual," the 6th Circuit notes. "The mayor's office wasn't this attentive even in homicide cases. And considering that the City had around only 50 police officers at the time and had 'serious crime problems,' Gardner thought it was odd to devote this much attention to permitting and parking issues." Based on available data, East Cleveland's violent crime rate is 1,409 per 100,000 residents, about four times higher than the national average.
Yet Gardner ultimately got on board. Smedley phoned him on August 9 "extremely upset," according to Gardner, and told the police chief he was "incompetent" for failing to "take care of" Fambrough's sound truck. Smedley wanted the "utmost enforcement as possible." So Gardner sent an email. "Please, find this vehicle and tow it," he wrote to all of ECPD. "Cite the operator with disturbing the peace and loud music. Please contact me as soon as this is complete to claim a surprise." A surprise!
Police succeeded. "On its face, the email told officers to tow Fambrough's truck regardless of whether it was parked illegally," writes the 6th Circuit. "And the Noise Ordinance authorizes seizure only of 'the sound device used,' and only upon conviction. So Gardner's instruction to tow the truck wasn't authorized by municipal law." The court still held that the seizure did not violate the Fourth Amendment. It also gave Gardner qualified immunity, ruling it is not clearly established that someone who acts as a conduit for someone else's alleged retaliation—which here came from the mayor's office—is a "responsible party."
Heather McCollough, the city's assistant law director, subsequently prosecuted Fambrough for allegedly violating the noise ordinance. According to a sworn declaration from Fambrough's attorney, McCollough outlined some of Fambrough's offenses on a call: that he "made complaints about the police department" and filed "public records requests," among other issues. Notably, it is legal to do those things. McCollough was typically willing to resolve minor noise complaints, she added, but not so much in this case, because Fambrough needed to "stand down." (He ultimately pleaded no contest to disorderly conduct, a reduced charge.)
Institute for Justice
"Only after [Fambrough] began supporting Gowdy's election was the weight of the law thrown against him," the 6th Circuit writes in its analysis of potential municipal wrongdoing. "And the City's police officers didn't uncover Fambrough's violations of their own accord. Instead, City decisionmakers sent them to Fambrough's home each time to enforce the Parking Ordinance. So the timing of the parking-related enforcement actions supports an inference that Fambrough's political speech was the motivating factor—as does the fact that the City rarely enforced the Parking Ordinance against anyone else despite having plenty of opportunities to do so." Incredibly, a photo of another truck can be seen down the street on the same day law enforcement came to fetch Fambrough's vehicle. (The law also includes pickup trucks, so the city arguably has a lot of enforcement to do if it sincerely believes this law matters.)
King allegedly set the chain of events into motion while Smedley took the driver's seat. "Smedley's pattern of incessantly calling and berating Gardner," the 6th Circuit adds, "clashes with the idea that Smedley was chiefly concerned with minor permitting, noise, or parking issues." After all, if that were true, why would the problem appear to begin and end with one person?
Over five years have passed since the ordeal. Although Fambrough is now potentially closer to getting in front of a jury, he has yet to actually state his case, still burdened by the onerous process government actors invoke to kill such suits before the community can assess the merits. King, meanwhile, won that election. He left office in May 2025, however, after he was found guilty of one count of theft in office, four counts of having an unlawful interest in a public contract, three counts of representation by public official or employee, one count of filing a false disclosure statement, and one count of soliciting improper compensation.
School choice in Ohio has taken a big hit. On Thursday, a panel of the state's 10th District Court of Appeals unanimously ruled the state's Educational Choice Scholarship, or EdChoice, program unconstitutional.
Vouchers Hurt Ohio (VHO), a coalition of public school districts, banded together in 2022 to sue the state over the EdChoice program, which uses public funds to finance scholarships for K-12 students to attend private schools. Under EdChoice's "Traditional Plan," which has been around since 2005, students can receive annual scholarships as high as $6,166 for elementary and middle school and $8,408 for high school. The scholarship's "Expansion Program," which state lawmakers created in 2013, awards maximum scholarship amounts identical to the Traditional Plan, "but scale based on a family's income," according to EdChoice, an educational freedom nonprofit. The organization says the scholarship program supports more than 100,000 Ohio families.
The VHO argues that the EdChoice scholarship program drains funding from the public school system, depriving Ohio students of much-needed resources.Its website states "private school vouchers create a system of state-funded discrimination" and that school choice is a "myth." Interestingly, the Court of Appeals of Ohio's 10th Appellate District largely concurred.
The court's ruling came down to Article VI, Section 2 of the Ohio Constitution, which says that the state must secure a "thorough and efficient system of common schools."
The panel held that the EdChoice voucher program violates this mandate by funding a "competing system of uncommon schools." Writing for the court, Judge David Leland took the argument further, contending that EdChoice schools "actually end up depriving families of choice." He cited private schools' selective admissions process and urban concentration, calling the defendants' appeals to choice "a fundamental misnomer," because the choice to admit students rests with the schools, not the families.
Keith Neely, an attorney at the Institute for Justice who represents families using EdChoice in the case, argues that the program funds families rather than a competing school system.
He also challenges the court's rationale that the state's obligation to fund public schools implicitly prohibits them from funding other forms of education. "I think that's just fundamentally wrong as a matter of constitutional interpretation and also just as a matter of public understanding," he tells Reason.
The court "seemed to take the view that any dollar spent on other educational programs like scholarships is a dollar that could be spent on public schools instead, but that's not how budgeting works," he says.
Neely says that public education funding is separate from the scholarship program and that every funding decision has tradeoffs. If the court finds that EdChoice's school voucher program violates the state's obligation to fund public schools, what stops it from reaching the same conclusion for other programs, like the Jon Peterson Special Needs Scholarshipor the Cleveland Scholarship program, which provides private school tuition scholarships for K-12 students living in the Cleveland Municipal School District?
Neely also points toSimmons-Harris v. Goff(1999), where the Ohio Supreme Court partially reversed a lower court's ruling and found that school choice was constitutional under the same public-education clause. The court invalidated the Cleveland scholarship program in question, finding that it was "improperly enacted by the legislature," according to the Institute for Justice. However, the Ohio Legislature later reenacted the program.
The families using the EdChoice scholarship program—as well as the state's attorney general—plan to appeal to the Ohio Supreme Court, and Neely is optimistic that history will repeat itself in this case. He tells Reason, "When you look at what the Constitution says, and you look at what the court said in Simmons-Harris, I think the only conclusion that the Ohio Supreme Court can walk away with is that programs like the Educational Choice Scholarship program are constitutional." Families will be able to keep their scholarships while the litigation is pending.
This case is just one battle in anationwide war on school choice. A recent report from Reason Foundation, the nonprofit that publishes Reason,found that 80 percent of public-school students live in states with "weak or ineffective open enrollment laws." These laws "allo[w] students to transfer to public schools other than their residentially assigned one, provided space is available," writes Jude Schwalbach, senior policy analyst at Reason Foundation. Several states are also holding out against theEducation Freedom Tax Credit, a new federal tax credit that offers a dollar-for-dollar tax refund for donating to K-12 scholarship programs.
The court's decision reflects the broader rationale fueling that opposition: that education dollars going to anything other than public schools are taken from ordinary students. For decades, policymakers have invested in that premise, yetstudent outcomes have little to show for it. The real myth isn't school choice; it's that giving families more options means betraying students' education.
The Georgia officer responsible for killing a 1-year-old miniature donkey, HeeHaw, has filed a motion to dismiss the lawsuit against him, claiming the body camera footage proves he "reasonably believed the donkey posed an imminent threat to a fellow officer." But even if it doesn't, the officer argues he is immune from liability.
In the early morning hours of August 30, Hannah Michelle Israel was at her Cedartown home in western Georgia when she received a distressing phone call. A supervisor with the Cedartown Police Department "tersely informed [Israel] that a donkey on her property had been 'dispatched,'" according to her federal lawsuit. After some clarification, she learned that police had not only entered her enclosed private property in the middle of the night without permission while looking for a missing person, but also shot and killed her miniature donkey in the process.
Israel immediately set out to search for her beloved pet, HeeHaw, only to find her bottle-raised donkey's lifeless body alone in her field. Israel told ABC7 News the incident has left her "traumatized and shocked." She continued, "I honestly can't even believe he's not here…There's no words."
Demanding accountability, Israel filed a lawsuit in the U.S. District Court for the Northern District of Georgia in September against the shooting officer, Officer Trenton Ryan Garner, for violating her Fourth Amendment rights and submitted a separate demand for $1 million from the City of Cedartown.
Last week, Garner responded by asking the court to dismiss the case, arguing in part that he did not violate Israel's constitutional rights when he entered her property. Under the open fields doctrine, there is no reasonable expectation of privacy in one's pastureland, even if enclosed. Further, the motion argues, exigent circumstances existed in the search for a missing 12-year-old girl.
As far as HeeHaw is concerned, Garner claims he acted reasonably by using deadly force and argues the footage clearly shows HeeHaw "charging" and posing an "imminent threat to a fellow officer."
However, the footage, posted by the Civil Rights Lawyer Raw, may not be so clear-cut. Garner's body camera was off at the time of the shooting but had a "rolling buffer of video," a recording without audio of the 30 seconds preceding activation of the camera, according to court documents. During the silent portion, two officers and a bloodhound are in front of Garner with flashlights in a dark field. A small donkey, roughly 3 feet tall, appears and slowly moves toward one of the officers. The officer backs away slowly, but the donkey moves closer and picks up speed. Garner pulls his gun and fires. The donkey turns and runs before falling over.
Whether Garner reasonably believed HeeHaw posed an imminent threat to his fellow officer may be up for debate.
When the audio kicks in, a fellow officer asks, "Why'd you shoot it up?" "I don't know," Garner responds rather nonchalantly before telling dispatch he had to shoot a donkey because "it was trying to attack." If another officer on the scene wasn't sure why Garner used deadly force, perhaps the decision wasn't so reasonable after all.
In her lawsuit, Israel accuses Garner of needlessly killing HeeHaw "maliciously…and recklessly, with deliberate indifference…for [Israel's] constitutional rights." The suit continues: "No reasonable officer in…Garner's position would have believed that such force was necessary or justified."
But whether Garner acted reasonably or not by shooting HeeHaw, qualified immunity may still shield him from accountability. Qualified immunity is a legal doctrine that protects government actors from lawsuits alleging rights violations, unless the right is clearly established. In practice, that means plaintiffs must be able to point to a previous court ruling in a case with the same circumstances to show that the right was obvious to government officials.
The bar can be quite high to show a right is clearly established. For example, in March, the Supreme Court reversed a 2nd Circuit decision in a case involving an officer who was sued for using a rear wristlock to arrest a protester. The 2nd Circuit denied qualified immunity, reasoning that a previous case from 2004 clearly established that rear wristlocks used to arrest anti-abortion protesters constitute excessive force. But the Court disagreed, stressing that "principles stated generally, such as that 'an officer may not use reasonable and excessive force,' do not suffice."
And while there may be ample cases involving officers shooting pet dogs, cases involving miniature donkeys are in short supply. If the court finds that there is no clearly established rule that specifically prohibits officers from shooting a miniature donkey moving toward a fellow officer in the dark, the court may end up dismissing the case and sidestepping both the reasonableness and constitutional questions entirely.
Haaretz: "If there is one thing clear from Netanyahu's recent behavior and declarations, it's that there is no ploy, no manipulation, no lie he wouldn't use, if it keeps him out of a cell"
The Trump administration's attempts to fast-track construction of the president's long-promised border wall through Texas' remote Big Bend region have ground to a halt amid fierce opposition, protests, and legal challenges from landowners and conservation groups.
A federal judge on Wednesday released an opinion explaining her decision to issue a preliminary injunction blocking border wall construction through the Big Bend area. U.S. District Judge Kathleen Cardone found that the plaintiffs, which included the Center for Biological Diversity and several longtime residents of the region, had shown a substantial threat of irreparable harm if the construction project is allowed to continue.
The Trump administration wants to spend $7.5 billion building additional security infrastructure along a 500-mile stretch of the U.S.-Mexico border running through the Big Bend region, which includes Big Bend National Park. The federal government began sending threatening letters to property owners announcing its intent to acquire necessary pieces of their land this summer, and it waived several environmental regulations, allowing it to put bulldozers on the ground inside the national park by September.
However, numerous groups and local landowners say the border wall project will alter their way of life and permanently scar one of the most rugged and pristine landscapes in the country. The project attracted bipartisan criticism and protests.
Cardone also found that the plaintiffs were likely to succeed on their claims that Department of Homeland Security (DHS) Secretary Markwayne Mullin exceeded his authority when he issued environmental waivers for the project.
The injunction is a temporary reprieve for property owners such as David Keller, an archaeologist and part-time river guide on the Rio Grande River. The original plans for the border wall expansion would have cut through Keller's 10-acre property near Redford, Texas, putting a 30-foot-tall wall on the levee that sits between the river and the rest of his land.
Keller says the Trump administration gravely underestimated how much anger its tactics and attitude would generate.
"It's a level of arrogance—they're just used to being able to bulldoze over people," David Keller says. "They were moving forward as if they weren't expecting any resistance, but boy, they're due for a wakeup call. And they're having it right now."
Keller is a plaintiff in a separate lawsuit against the DHS by Conserve Big Bend, a coalition of landowners, conservationists, river tour guides, researchers, and other affected parties.
Keller says he's loved wild, open country since he was a child, and as soon as he saw the region in the 1990s, he decided he would find a way to live and work there, which he's done for the past 25 years. "It's visually magnificent," Keller says. "It's incredible. It's like no other place I'd ever seen. It's one of the last unspoiled places remaining in the lower 48."
Keller says it's where he plans on being buried, too, although these days he's unsure whether to say "plans" or "planned." The proposed border construction is an existential threat to the life he's built, he says, and if the wall goes up, he'd likely move.
"I didn't come down here to live in a cage," Keller says.
The proposed border wall would not only block access to the river for farmers, ranchers, and outdoors enthusiasts along the river, as well as block the view into Mexico, it would wreck "the whole feeling of the place, the historical cross-border culture that we've developed," Keller says.
So far, the federal government has not tried to seize any private property in the Big Bend region through eminent domain, although it sent letters to property owners this summer requesting access to survey their land and warning them that it held the option to invoke eminent domain if they did not quickly sell.
Both Keller's and the Center for Biological Diversity's lawsuits argue that the department's justification for building and expediting additional border infrastructure in the Big Bend Region are factually and legally incorrect. The DHS determined that the sector of the border is an "area of high illegal entry."
However, despite making up roughly a quarter of the entire U.S.-Mexico border, the Big Bend sector only accounted for between 0.3 percent and 2.2 percent of total border-wide arrests over the past 30 years.
Cardone cited the low apprehension numbers in her finding that Mullin exceeded his authority to issue the waivers.
"The unrebutted evidence shows that the Big Bend Sector is, by far, the sector with the lowest rate of migrant apprehensions along the entire U.S.-Mexico border, both in terms of gross totals and apprehensions per mile of border," Cardone wrote. "Therefore, if the Big Bend Sector is an area of high illegal entry, so is every other sector, and the waiver authority would apply to the entire U.S.-Mexico border."
Last month, a federal judge in Washington, D.C., issued a temporary restraining order (TRO) that required restoration of press passes for 78 journalists employed by three news outlets that President Donald Trump peremptorily banned from the White House on September 18. U.S. District Judge Timothy J. Kelly, a Trump appointee, extended that order on Tuesday, granting a preliminary injunction to CNN, MS NOW, and Politico.
While Kelly's TRO was based on CNN et al.'s claim that their sudden banishment violated the Fifth Amendment's guarantee of due process, his justification for the preliminary injunction also addresses their argument that revocation of their press passes violated the First Amendment by retaliating against them for constitutionally protected speech and discriminating against them based on viewpoint. Kelly concludes that the plaintiffs "are likely to succeed not only on their due process claim, but also on their two First Amendment claims."
A retaliation claim requires showing that the plaintiff engaged in conduct protected by the First Amendment, that the defendant's action was "sufficient to deter a person of ordinary firmness" from "speaking again," and that there was "a causal link between the exercise of a constitutional right and the adverse action." Although the government's lawyers did not dispute that the CNN et al.'s journalism is constitutionally protected, they argued that the plaintiffs had failed to satisfy the two other elements.
Kelly disagrees. The "hard passes" at issue in this case, he notes, give journalists unescorted access to the White House "press area," which includes "the briefing room, the press offices, and certain other locations in and around the White House that are open to correspondents." CNN et al. argued that "a hard pass is an important credential because it 'allows a reporter to react to fast-developing news' and gives them 'swift and easy access to key official sources.'" Since "the revocation of Plaintiffs' hard passes matters a lot as to how, whether, and to what extent they can do their jobs," Kelly says, "it is likely that the open-ended ban here would chill a reporter's work."
Trump's "own comments suggest that he intended the revocation of Plaintiffs'
hard passes to alter their reporting on him, bolstering the case that his action here is sufficient to deter a reporter of ordinary firmness from reporting in the same way she had before," Kelly adds. The day he announced the ban, Trump complained that CNN et al. "purposely write negative news" to "try and diminish the Republicans and a Republican administration." Although "the ban would go as far as you can," he added, "I'd love it" if "they could straighten themselves out."
The plaintiffs also have shown "there is likely a causal link between the exercise of their First Amendment rights and the revocation of their hard passes and exclusion from the White House press area," Kelly writes. "President Trump likely banned Plaintiffs from the White House because he believes that their reporting is generally inaccurate and biased against him."
Again, Trump's public comments amply support that conclusion. He explicitly said he was banning CNN, MS NOW, and Politico "as a result of their constant 'reporting' [of] FAKE NEWS," adding that journalists "shouldn't be able to constantly write or report FICTION and LIES when they're covering the President of the United States, the Trump Administration, or the United States of America." When asked whether his decision was motivated by a "particular reason" or "particular story," Trump replied: "No, no. It's really just cumulative stories over the last two years." The problem, he said, was "purposely negative stories."
In a Truth Social post three days later, Trump likewise condemned "Fake News" that he said was "corrupt, purposeful, pervasive, fully coordinated, and totally out of control." CNN et al.'s reporters are "Third Rate Clowns" who "purposefully distort, twist, and degrade with everything they write or publish," he added that evening. "Virtually every story about me, or anything having to do with me, is negative, wrong and, in many cases, DANGEROUS for our Country! No matter how GREAT my Achievements, they trivialize and demean."
Trump offered a similar defense of the ban in a September 28 interview with Time. "It's just bad story after bad story," and "most of them are fake," he complained. "I don't think anybody should be forced to bear fake news, constantly bad stories, because I've done great things." Although "I can name 100 great things I've done," he added, "I never get good press. I never get fair press."
The government's lawyers maintained that Trump or another official "would have reached the same decision" based on the "alternative ground" that CNN et al. had violated "minimum professional journalistic standards" by "publishing classified and national security information." Kelly was not impressed by that belated rationale, which no one mentioned until after the news outlets gave the government a copy of their lawsuit.
"There is no evidence in the record that President Trump made the decision to revoke
Plaintiffs' hard passes on national security grounds," Kelly writes. "Nor at any time has he directly stated that national security was the reason for his decision. When he announced the ban with his post on September 18, he did not mention national security. When he was asked later that day about the 'particular reason' for his action, he did not mention national security."
Trump did mention "national security" in Truth Social posts he wrote the day that CNN et al. filed their lawsuit. But "that expression appears to have been simply another way for him to describe Plaintiffs' alleged inaccuracies and unfairness in their reporting about topics like his achievements or electoral success," Kelly says. "All this suggests that 'national security' was merely a post-hoc justification for the decision, which greatly undermines" the claim that Trump would have "taken the same action in the absence of Plaintiffs' protected speech."
The government also cited letters to CNN, MS NOW, and Politico from the White House Press Office, which were sent four days after Trump banned them. Those letters averred that the three news outlets had violated "the standards of professionalism and decorum expected of those given access to the White House Complex" by "publishing sensitive or classified information" and "trafficking in verifiable falsehoods about national security and other issues."
The letters "hardly move the needle" on the question of why Trump banned CNN et al. from the White House, Kelly says. They "appear to conflate concerns about otherwise protected speech" with "national security concerns," he notes, and they do not even explicitly say that Trump "made the decision for national security reasons."
Each letter lists specific stories to which the White House objected. But Kelly notes that two reporters "had their hard passes renewed after publishing articles that Defendants cite in their September 22 letters as supporting the potential revocation of their hard passes."
The Trump administration tried to shore up its "national security" justification by submitting a declaration from Pentagon Press Secretary Kingsley Wilson. While Wilson explains "how the publication of classified and sensitive information can undermine national security," Kelly notes, she "says little to nothing about President Trump's decision to revoke Plaintiffs' hard passes" and does not say "anything about White House press practices or operations."
The defendants "have not really tried to support" the claim that CNN et al.'s reporting "damaged national security," Kelly says, noting that news stories based on "sensitive or classified information" are "commonplace, for better or worse." If Trump "would have banned Plaintiffs from the White House even in the absence of their protected speech," he suggests, "Defendants would not have had to scramble to make their case with unsigned letters and a declarant who does not even work there."
The evidence of retaliation also supports the claim that Trump discriminated against CNN et al. based on viewpoint, which is presumptively unconstitutional. The U.S. Court of Appeals for the D.C. Circuit, Kelly notes, has held that "the White House Press Area" qualifies as a "nonpublic forum," meaning journalists cannot be excluded because of the views they have expressed.
"It is likely that Plaintiffs were selected by President Trump for revocation of their access to the White House press area because he believes their coverage of him and his administration is generally inaccurate and biased," Kelly writes. "In other words, it was 'an effort to suppress the speaker's activity due to disagreement with the speaker's view,' rather than to vindicate any other purportedly 'compelling governmental interest,' including maintaining professional standards for journalists or protecting national security. Simply put, that is unlawful viewpoint discrimination."
Kelly's decision "is a stinging defeat for Trump's assault on the free press and a powerful vindication of the First Amendment," Caitlin Vogus, senior adviser for advocacy at the Freedom of the Press Foundation, said in an emailed press release. "As Kelly rightly recognized, presidents don't get to use their power to purge journalists because they don't like what they report."
It sounds absurd, but as my newest video shows, that's really happening.
How can that be? Doesn't America's Constitution say government may not impose "excessive fines"?
It happens because some bureaucrats, savoring their power, act like tyrants.
At least now there is hope for a remedy. One of these excessive fine cases has reached the Supreme Court.
Ken Jouppi worked as a pilot in Alaska for 30 years, until one day, state troopers stopped his plane before takeoff.
"I didn't think we had anything to hide," he says. "They searched the airplane, opened up this lady's boxes of groceries and found beer."
Transporting beer. That was his crime.
"Isn't beer legal in America?" I ask Jouppi's lawyer, Mike Greenberg.
"In most places," he replies. But some towns in Alaska ban beer.
Jouppi was convicted of bootlegging.
Every pilot must know which town has what rule, and search everybody?
"They think pilots should search people's luggage," says Jouppi. "It was such a terrible thing to do to another individual, invade their privacy, and assault their dignity….I just didn't feel right about doing that."
"That airplane was my primary source of income," says Jouppi. "Without it, I didn't have a business anymore."
I assumed such excessive punishment would be dismissed quickly by a court. But it wasn't.
"Jouppi has been fighting to keep his plane for 14 years," says Greenberg. "The plane is still sitting on a tarmac….It's a ludicrous situation where the state has every interest in going after valuable assets rather than actually fighting supposed harms of alcohol."
Greenberg's law firm, the Institute for Justice, took Jouppi's case, and now the U.S. Supreme Court will hear it.
I hope he wins. It's just wrong when governments destroy lives for small mistakes.
They're also doing that to Tuncay Saydam, a retired professor.
The IRS demands he pay $400,000 because he didn't know to fill out a one-page form about an old bank account in his native Turkey.
"The fines," says Saydam, "will destroy my life….We have never been rich."
His unpaid tax is less than $30,000. But the IRS demands he pay them more than $400,000. A California court upheld that penalty. Northern Californian Chief Magistrate Judge Donna Ryu wrote, "Government suffered a significant tax loss."
When they saw greenhouses, they fined property owners.
Blu Graham was fined $900,000, "$30,000 a day, when all I've ever done is grow vegetables in my greenhouses."
"There actually was no marijuana on the property!" says Greenberg. "They were just guessing that if you built a greenhouse, this must be connected to marijuana."
Finally, a lawsuit got the county to promise to end its ruinous fine system.
But it took four years.
Why do governments fight to keep outrageous fines that punish largely innocent people?
"Unlike other forms of punishment," says Greenberg, "fines make the government money. The prosecutor's office, state troopers, they get to keep the proceeds. It's an abusive system because they have every incentive to continue to prosecute."
I invited the heavy-fining judges and government lawyers to appear in my video to explain these fines. None would agree to talk about it.
Bureaucrats always want more money. It's a reason the Constitution prohibits excessive fines.
I trust that the Supreme Court will put a stop to these abuses.
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