You know, this commodity fraud thing is the first time that they've ever charged this in connection with the predictions market. And it's kind of a signal that they have this broad new theory and it can be applied elsewhere. It can be applied to sports. It could be applied to entertainment. It could be applied to insiders in all sorts of different realms. Welcome to the Powers That Be daily, Puck's podcast focused on the intersection of Wall Street, Washington, Silicon Valley, and Hollywood, and the players who run it all. I'm Peter Hamby. It's Wednesday, May 6th. Today, I'm joined by Eric Gardner, who's here to answer a salient question in the era of prediction markets. Will the federal government establish some rules of the road for insider trading on platforms like Kalshi and Polymarket? The Justice Department just indicted a soldier for cashing in on classified information before the January raid in Venezuela that captured Nicolas Maduro. But will they go after traitors in other industries, like sports or media, in the same way? Eric and I discuss. We also dig into a defamation lawsuit that surprisingly has legs. California Governor Gavin Newsom is suing Fox News for lying about his conversations with Donald Trump. The case seems thin, but a judge in Delaware just ruled it can move forward, meaning that Fox, awkwardly, might have to enter internal company documents into discovery. We'll discuss all that and much more on today's episode of The Powers That Be. This message is brought to you by Warner Brothers Discovery Advertising. You've probably seen the headlines, and yeah, there's a lot happening at WBD right now. But here's the thing. Change is happening everywhere. Media planning has never been this complicated. More platforms, more data, more pressure to prove every dollar is working. In short, a lot of chaos, when what you really need is clarity. That's what WBD delivers. The world's most iconic stories, the audiences who love them, and the intelligence to turn that attention into action. So your brand doesn't just show up, it shows up in the right place at the right time with real impact. Because in today's market, success isn't about juggling more, it's about having a partner who navigates the chaos, making change work for you. Visit advertising.wbd.com to learn more. Happy Wednesday, everybody, and welcome to the powers that be. By the way, thanks everyone for coming out last night in Hollywood to our Stories of the Season event curated by our guy Matt Bellany. Talking to a bunch of Hollywood players about Emmys award season. It was a real pleasure. I'm joined today by Eric Gardner, my colleague. We're going to talk about insider sports betting on Calci and Polymarket, these prediction markets. Is the government going to start cracking down over insider trading on prediction markets? Are they going to write some rules? Are athletes, coaches, trainers, water boys on college campuses for various sports teams, are they in the crosshairs? We're also going to talk about a kind of forgotten lawsuit against Fox News from Gavin Newsom. Eric says we should be paying attention to this. It revolves around something Fox and Donald Trump said last year during the unrest here in California. Gavin Newsom might have an edge here. Anyway, Eric, two fascinating stories. let's start with calci and polymarket of course we live in a world now eric where sports and gambling uh seem to go hand in glove if you watch sports center if you watch any you know football basketball broadcast there are ads everywhere for draft kings but also increasingly calci and polymarket these prediction markets it's obviously pretty jarring to uh people who grew up watching unlv basketball get in trouble pete rose getting banned from baseball tim donaghy getting suspended from refereeing NFL games. But these prediction markets, they're a little different than casinos and bookies, etc. We saw the federal government charge a U.S. Army soldier last month with commodities fraud after he put down, I think, like $40,000 for different bets heading into the raid on Venezuela that captured Nicolas Maduro. He made $400,000 off of that, immediately tried to send it to an overseas crypto account, changed his password or changed his account number, tried to lie to people about it. Look, everyone was talking at the time when this news popped because you can see people's trades. And at the time of the Maduro raid, lots of people on the Internet were like, oh, gosh, a government insider cashed in on this. It turns out that's exactly what happened. He used classified information to make a huge profit, this soldier who's based in North Carolina. and it did signal that the government was going to actually take this stuff seriously which i think surprised a lot of people because you get the sense that the trump administration is pretty hands-off when it comes to private companies also polymarket after this uh indictment put out a pretty uh lengthy statement saying they support and cooperated with the government they want to make sure that they not running out outside the boundaries of the law because these companies want to keep making billions and billions of dollars Anyway now that they gone after somebody for placing this bet on Cali Market and breaking the law is the federal government going to start cracking down on sports betting? Because I have seen some almost like local news reports. I think the reason I mentioned a water boy, I think there was a Tennessee undergrad at the University of Tennessee who kind of had some information about a transfer or an injury for a football game, I think, or a basketball game and made some money off of it. And one of the prediction markets sent it to the athletic department and they kicked the kid out of school or something. So this is the kind of thing that I feel like is happening a lot. Is the government going to do anything about it? Yeah, I think they will. I think the tell here is that they charged this guy with commodities fraud. If they had just charged him with theft of government secrets, you know, leaking classified information or whatever, we could shrug it off and say, yeah, they're protecting their own. But, you know, this commodity fraud thing is the first time that they've ever charged this in connection with a predictions market. And it's kind of a signal that, you know, they have this broad new theory and it can be applied elsewhere. It can be applied to sports. It could be applied to entertainment. It could be applied to, you know, insiders in all sorts of different realms. And so, you know, this is a tool in the prosecutor's toolbox. And I certainly would expect them to move forward with it. Not only that, but, you know, besides the prosecution, you know, the regulatory body that's really been looking after this sort of thing, the Commodities Future Market Commission. They have been putting out a comment period. They've been getting opinions from a lot of insiders and outsiders about what they should do. And I think that they're about to write some rules, at least. And once you write those rules, if someone breaks the rules, I imagine that they go forward with prosecutions. So there's a lot of signals pointing to the fact that we're going to see this charged a lot more in the future. What other signals are you seeing out there? I mean, the signals are that there's so much pressure on regulators to do something about this. You're seeing letters from politicians. We're seeing the leagues really want enforcement on this. There's just a lot of pressure to do something about this. A lot of people are just not happy that some insiders can come in and make a lot of money while they get shafted. I mean, these platforms have become very popular. There's a lot of money that's being flown around, for better or worse. I mean, there's an argument to be made that you want a slight little amount of insider trading because it can tell you about things. Well, that's the argument that the Kalshi people have been making. It makes us – the collective wisdom of the crowd helps us figure out the world, but there's a slippery slope there. There definitely is. I mean when the elections come and I want to see who's winning, you can look at the polls, but you can also look at the prediction markets. And for the last few years, the prediction markets have been as good or maybe even better than the polls. uh you don't think so let me so i well like i'm the i'm the political insider here like sometimes the texas senate primary is a good example we're talking about yes the knowledge of political junkies about which polls are good and which polls are bad combined with different tells like fundraising early vote analysis told people that despite some other polling that democrat jasmine Crockett was going to win that primary late, most people stuck with James Tallarico in the prediction markets and he ended up winning. However, the prediction markets were dead wrong on the Republican side of that primary. Everyone sort of had Ken Paxton running away with it. And it turned out John Cornyn was the one who narrowly won. And so I think it gets certain things right and certain things wrong. There's obviously a lot of dumb money out there. Like there's a lot of like college kids who think they know about the world of politics. It sounds to me like you should be putting some bets down in the Cal sheet, Peter. Well, this gets to another question with the government, because I am interested in the political side of things. There is, and this is not an accusation, who knows if this is true. There's a thing called mentions markets on at least Cal sheet where you can put money down on whether, say, the announcers during the Minnesota Timberwolves and Denver Nuggets game will say triple-double. Will they say charge? Will they say Jokic? And there are different odds, whatever. But people theoretically in the booth might have knowledge of that and put money on it. Or another example, what will Caroline Levitt say in a White House press briefing? Will she say fake news? Will she say illegal alien? I mean, there's a world where in the White House press shop, people are like, yo, Caroline, can you go out there and say this? Say crypto. The odds are really good that we'll win a lot of money if you say the word crypto. No one's picking it. And that seems to me like insider trading. Right. I don't know what the definition is specifically under the letter of the law, but it seems like there's a lot of places right now where you can bet on real world events. And a lot of people have some insider knowledge that can be monetized Yeah I mean certain markets are prone to manipulation And you know I think this stuff goes back a little bit I mean, you can bet on the color of Gatorade at the Super Bowl or how long the national anthem takes to sing. That's true, that's true. And certainly if you're very close to the singer of that national anthem, you can probably get the scoop ahead of time. So it is kind of hard to police these markets. The other question that's going to come up in these cases as they get prosecuted is who's really defrauded here? Is it the betting market? It's the people who are betting the other way. There's no material misrepresentation being made. So it's not the easiest and neatest fraud claim to pursue. I don't think that these cases are 100% going to result in guilty verdicts, which is one of the reasons why I think that the regulators have to come up with some rules here so that people know what the rules of the road are. Otherwise, I think a lot of people are doing stuff that is arguably illegal, arguably legal. Nobody knows, and that's not really – Right, because you're not breaking the law if there's no law about it. You have to have the intent to commit fraud. And without knowing what the law is, how can you have intent? Eric, let's take a quick break. When we come back, we're going to talk about Gavin Newsom suing Fox News. This message is brought to you by Warner Brothers Discovery Advertising. And this is more than an ad. This is an invitation to be part of the stories the world can't stop watching, to connect with moments that dominate the conversation, to participate in culture, not just advertise around it. With the most sought after IP, passionate audiences, and an advanced AI-powered foundation, WBD Advertising transforms attention into influence and impressions into outcomes. This is innovation. This is impact. This is opportunity. This is Warner Brothers Discovery Advertising. Visit advertising.wbd.com to learn more. Oh my God. Please follow and listen to Family Lore, an Odyssey podcast available now on Apple Podcasts, Spotify, or wherever you get your shows. Welcome back to The Powers That Be. I'm talking to my colleague, Eric Gardner. This is a fascinating story, Eric. And I totally forgot about this because both Donald Trump and Gavin Newsom post on X relentlessly. things feel like in our news cycle that they're big major stories and then you forget about them 30 minutes later. So there is a $787 million defamation lawsuit against Fox News. Gavin Newsom filed this lawsuit. You tell me if the state filed it or Gavin Newsom's personal attorney filed it, but this is what it is. So when Fox was covering civil unrest in Los Angeles in the summer of 2025, This was after the ICE raids sort of came to L.A. There were tons of protests. Many of them turned violent. It was all over Fox News. A reporter asked Donald Trump the last time he spoke with Newsom. Trump said in this press conference on June 10th, a day ago, Newsom fired back on X, quote, there was no call. Americans should be alarmed that a president deploys Marines onto our streets and doesn't even know who he's talking to. And then Trump showed John Roberts on Fox News a screenshot of the June 7th call. And then Fox reported that the conversation had, in fact, occurred just based off of that screenshot. And Jesse Waters added, why would Newsom lie and claim Trump never called him? And Newsom says that Jesse Waters line crossed a legal line. And this to me, by the way, and you write this as well, this doesn't seem like it's going to survive a $787 million defamation claim that this would actually pay out. So Jesse Waters is one of the co-defendants here because Newsom is claiming that technically, while they did talk, it wasn't a day ago. And that Fox lied about the timing of the call. And that's why Newsom is accusing Fox of lying and suing them. So why is this case surviving? Look, I mean, Fox lies. They have been, this has been proven out in the courts based off of their lies about voting machines and the 2020 election and the idea of a conspiracy. But this doesn't seem as strong of a case as that. Yeah, you would think that. I mean, to me, it seems like a flimsy little case. Yeah, you lied about me lying. It seems very silly. And yet, this is kind of the performative theater that Newsome has been playing. I mean, even the number 787 million, that exactly what Dominion settled for So yeah he wanted to picket at Fox News for you know being so reflexively against him And while he has a point, I also think like, you know, really, you want to, you know, hang a defamation case on this. But a Delaware judge looked at this case and is allowing it to go forward, which really means that Gavin Newsom gets to go into the discovery phase against Fox News. And that is huge. I mean, it means... Wait, what was his reasoning for allowing this to go forward? I mean, there wasn't much of a reason. It was basically, yeah, it's plausible that people could interpret this as a lie about a lie. You're suing in Delaware, you're the California governor, but why not? We're just as good as any other state. So I mean, I was not very persuaded by the judge's opinion here. But at the end of the day, the judge said that Gavin Newsom has a plausible case. And whether or not it fails, it's not going to fail right this second, which means that Gavin Newsom can dig into what went on behind the scenes of this and try to get evidence of actual malice. And that's no small thing. I mean, you know, I think a lot of reporters would be very uncomfortable if Donald Trump had access to CNN's emails or the New York Times' email trying to find reckless disregard for the truth. And here, Gavin Newsom has advanced. And to me, that's kind of a pretty interesting development that deserves a little bit more attention. Yeah, look, this doesn't seem like it's the same as the Dominion voting systems lawsuit, where there would be a chain of evidence where there's lots of emails and lawyers looked at what they were saying and that went on for days and days and days, what Fox was saying about a possibly stolen election and whatever other conspiracies were mentioned on television. However, if Trump showed John Roberts a screenshot that presumably was sent to a producer or was moved around, so there will be some sort of paper trail here. Would Fox ever settle this Or do they think that it would just get tossed down the road? Maybe they'd settle it. I'm sure their insurer wants to settle it. The question is, does Gavin Newsom want to settle it? Or does he see this as an opportunity to get before a Delaware jury? And I'm sure that Delaware juries aren't the most friendly to Fox News. So Gavin Newsom has a lot of advantage here. Why was it filed in Delaware? There's not much reason that it was filed in Delaware. I mean, it was filed in Delaware, practically speaking, because, you know, that's where the Dominion case was. Fox News' parent company, Fox Corporation, is registered in Delaware. It's a big corporation state. But Fox News itself is domiciled in New York. Gavin Newsom is the governor of California. You know, all the reporters, I don't think that Jesse Waters lives in Delaware. So there's no real good reason to have this in Delaware. And, you know, I think that the judge probably should have applied a tighter jurisdictional frame here and said that, you know, this case should be really litigated somewhere else. But, you know, that's not what the judge did. And so it goes on in Delaware. Interesting. Well, I just looked up the complaint. Gavin C. Newsom is the plaintiff. So, yeah, not the state of California, just Gavin. Let me also say that Delaware has become a very popular libel spot. This is also the place where France's President Emmanuel Macron is suing Candace Owens over saying that his wife was really a man. And, you know, there's lots of cases actually in Delaware right now. The Dominion case was kind of a shot in the arm. And until recently, it didn't have an anti-SLAPP statute. And so a lot of people see Delaware as being a very hospitable forum for plaintiffs. And so we're seeing a lot of cases there. We're seeing a lot of cases in Delaware. We're seeing a lot of cases in Florida. And you can imagine why. Oh, yeah. No, I mean, that's, I think, one reason ABC settled that George Stephanopoulos lawsuit, because they were in Florida. And you could probably get a Trump-friendly jury in Florida, that's for sure. Eric, thank you so much for joining me in explaining the law, as always. Appreciate you. My pleasure. I think we went over on the Koushi market, just for the record. Thanks so much for listening to another episode of The Powers That Be. As a reminder, The Powers That Be is the official podcast of Puck. We'd like to thank Ben Landy, Liz Goff, and Alex Bigler for their editorial and production guidance. If you like what you hear, please share with a friend. It really helps us keep delivering the inside scoop that only Puck can offer. Follow us on Twitter at Puck News. I'm Ben Landy. See you tomorrow. This has been a presentation of Odyssey. Please listen, rate, review, and follow all episodes wherever you get your podcasts. The Powers That Be Daily is executive produced by John Kelly, co-founder of Puck, Bob Tabador, and Ben Landy, executive editor at Puck.
