# NFL Takes On Kalshi & Sentencing at SCOTUS

An episode of [Bloomberg Law](https://invisiblenetwork.ai/podcast/277975394), 15 Oct 2026, 33 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7c892d84-801f-4c0b-b0e9-ae2b0012ff5f/ded523f4-fdad-4d73-8e96-b4e40033fe60/audio.mp3?utm_source=Podcast&in_playlist=91224201-26a6-429d-ac3c-ae2b0012ff6d

Securities law expert James Park, a professor at UCLA Law School, discusses the NFL asking the Supreme Court to take New Jersey’s appeal of a clash with Kalshi, arguing that the states should regulate the prediction markets. Then sentencing expert Sam Merchant, a professor at the University of Minnesota Law School, discusses Supreme Court oral arguments on sentencing guidelines. June Grasso hosts. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
[0:08] Speaker 1: Excuse me, sir. Have you heard of Calchi? Yes, I have.
[0:12] Speaker 2: They're the prediction market that lets you trade on anything
[0:14] Speaker 2: from sports to culture.
[0:16] Speaker 3: Just find an event and select yes or no depending
[0:19] Speaker 3: on what you think will happen.
[0:21] Speaker 2: But the NFL is not happy with bets on football
[0:25] Speaker 2: made on Kalshi. Unlike the MLB, it's not lining up
[0:30] Speaker 2: to make any alliances with prediction markets. In fact, just
[0:35] Speaker 2: the opposite. It's opposing Kalshi and the Trump administration in
[0:39] Speaker 2: a high-stakes legal battle and asking the Supreme Court to
[0:43] Speaker 2: step in. The NFL says federal regulators and the prediction
[0:47] Speaker 2: markets have refused to impose needed safeguards, including bans on
[0:53] Speaker 2: certain types of wagers and a requirement that people placing
[0:57] Speaker 2: bets be at least 21 years old. The league is
[1:01] Speaker 2: urging the Supreme Court to allow states to regulate the
[1:04] Speaker 2: prediction markets. saying the laissez-faire attitude of the Commodity Futures
[1:09] Speaker 2: Trading Commission could allow unscrupulous actors to cause mischief, trade
[1:14] Speaker 2: on inside information, and harm the integrity of the game.
[1:18] Speaker 2: Joining me is an expert in securities law, James Park,
[1:21] Speaker 2: a professor at UCLA Law School. Jim, explain why the
[1:25] Speaker 2: NFL is asking the Supreme Court to take up this
[1:29] Speaker 2: appeal by New Jersey regulators in a clash over who
[1:33] Speaker 2: should regulate Kalshi.
[1:35] Speaker 3: Well, they're trying to get the Supreme Court to review
[1:38] Speaker 3: a decision by the U.S. Court of Appeals for the
[1:41] Speaker 3: Third Circuit, which held that it was likely that calci,
[1:44] Speaker 3: a prediction market, could show that various event contracts relating
[1:50] Speaker 3: to sporting events like NFL football games are swaps. And
[1:55] Speaker 3: if they are swaps, they are regulated by a federal
[1:57] Speaker 3: agency called the Commodities and Futures Trading Commission, the CFTC.
[2:03] Speaker 3: And the NFL is saying the CFTC is not up
[2:06] Speaker 3: to the job, that they only have 500 employees. Pennsylvania has,
[2:11] Speaker 3: you know, 300 or 400 employees alone that are dedicated
[2:14] Speaker 3: to gaming. The CFTC does a lot of other important things,
[2:18] Speaker 3: you know, overseeing commodities and derivative markets. How much attention
[2:23] Speaker 3: are they going to be able to focus in on
[2:26] Speaker 3: regulating event contracts relating to sporting events?
[2:29] Speaker 2: The NFL says it's written multiple letters to the CFTC
[2:34] Speaker 2: outlining the kind of contracts it objects to. For example,
[2:38] Speaker 2: ones that can be easily manipulated by a single athlete,
[2:42] Speaker 2: like field goals where a kicker could intentionally miss. It
[2:47] Speaker 2: also objects to bets tied to injuries, officiating, and other
[2:52] Speaker 2: things where insiders would know in advance, like the first
[2:56] Speaker 2: play of a game. And the NFL says that the
[2:59] Speaker 2: CFTC has failed to act on these. So does it
[3:03] Speaker 2: seem like there is an unwillingness on the part of
[3:06] Speaker 2: the commission to act on the NFL's concerns?
[3:10] Speaker 3: Maybe an unwillingness or an inability because the CFTC really
[3:14] Speaker 3: doesn't have expertise with respect to regulating betting. And so
[3:18] Speaker 3: they may simply, you know, not have the infrastructure in
[3:22] Speaker 3: place to make considered determinations about these types of requests.
[3:26] Speaker 3: That's one possibility. Another possibility is this is part of
[3:30] Speaker 3: a deliberate policy choice by the CFTC to permit these
[3:36] Speaker 3: types of sporting event contracts to flourish without regulation. That's
[3:41] Speaker 3: also a possibility that it could be a deliberate policy choice.
[3:45] Speaker 2: One of the other things that the NFL wants is
[3:48] Speaker 2: a requirement that people placing the bets be at least
[3:51] Speaker 2: 21 years old, because most states mandate that for sports betting.
[3:56] Speaker 2: On Calshi, customers as young as 18 can bet. So
[4:00] Speaker 2: that's not something that would be so difficult for the
[4:02] Speaker 2: CFTC to implement, is it?
[4:05] Speaker 3: It's not difficult, but it would be a little bit
[4:08] Speaker 3: complicated because it would then become a uniform rule across
[4:13] Speaker 3: the country. And I suspect that there are some states
[4:17] Speaker 3: that have different gambling ages, and so do they want
[4:20] Speaker 3: to go so far as to sort of side with
[4:23] Speaker 3: the NFL and implement a uniform betting age? They could
[4:27] Speaker 3: do it, but I think the question is, do they
[4:29] Speaker 3: feel comfortable doing it, given that there may be some
[4:32] Speaker 3: variation in state practices about gambling age?
[4:36] Speaker 2: Thirty-nine states have also urged the Supreme Court to take
[4:40] Speaker 2: the case. Tell us where the circuit courts stand.
[4:43] Speaker 3: There is a circuit split. The Third Circuit said there's swaps.
[4:46] Speaker 3: The Sixth Circuit and Ninth Circuit said we're not going
[4:49] Speaker 3: to interpret these event contracts as swaps. Therefore, they're regulated
[4:53] Speaker 3: by the states. And so that's a reason the Supreme
[4:56] Speaker 3: Court will take on a case. The fact that so
[4:58] Speaker 3: many states want The Supreme Court, to hear the case,
[5:01] Speaker 3: also indicates maybe concern about the lack of clarity with
[5:05] Speaker 3: respect to what the law is. Is gambling going to
[5:08] Speaker 3: be regulated by the states, or is it going to
[5:10] Speaker 3: be regulated by the CFTC? And then you have other
[5:13] Speaker 3: stakeholders like the NFL, which are affected by decisions relating
[5:17] Speaker 3: to gambling, who want to weigh in as well. So
[5:20] Speaker 3: there seems to be an outpouring of support for the
[5:24] Speaker 3: Supreme Court to provide some clarity. And what the NFL
[5:27] Speaker 3: has said in its amicus brief is that you know,
[5:29] Speaker 3: part of it is we want to know who the
[5:30] Speaker 3: regulator is, right? If we know, then we can really
[5:33] Speaker 3: focus in on the CFTC. If it is the CFTC,
[5:36] Speaker 3: if not, you know, we don't want to waste time
[5:39] Speaker 3: with a federal agency that is not truly the regulator
[5:42] Speaker 3: of these event contracts.
[5:44] Speaker 2: I mean, how much will this be, you know, states'
[5:47] Speaker 2: rights versus federal rights, where in their brief, the NFL said,
[5:52] Speaker 2: What constitutional power allows Congress to override states' traditional police
[5:56] Speaker 2: powers to regulate intrastate gambling? I mean, how much is
[6:00] Speaker 2: that part of what the Supreme Court may consider if
[6:03] Speaker 2: it takes the case?
[6:05] Speaker 3: I think that'll be a big part of the Supreme
[6:08] Speaker 3: Court's sort of concern in evaluating the case, because under
[6:12] Speaker 3: the Third Circuit opinion, you will have effective federal preemption
[6:17] Speaker 3: of state regulation of gambling. And there's a question of
[6:20] Speaker 3: did Congress intend to do this when it passed Dodd-Frank
[6:24] Speaker 3: in 2008. And as the NFL points out, at the
[6:28] Speaker 3: time there was a federal ban essentially on sports gambling.
[6:31] Speaker 3: And so it would seem odd for this Dodd-Frank law
[6:35] Speaker 3: that gives the CFTC jurisdiction over swaps to be intended
[6:40] Speaker 3: to permit the CFTC to regulate gambling when it was
[6:43] Speaker 3: prohibited by another statute at the time. And the NFL
[6:47] Speaker 3: cites the major questions doctrine. Do we read a statute
[6:50] Speaker 3: in a way so that it would reconfigure a major
[6:53] Speaker 3: national regulatory structure that has significant impacts for the economy?
[6:58] Speaker 3: So I think it's going to be a very significant
[7:00] Speaker 3: consideration for the Supreme Court.
[7:02] Speaker 2: If the Supreme Court takes it, is the decision based
[7:05] Speaker 2: on whether it's swaps or betting, or are there a
[7:09] Speaker 2: host of other things that play in?
[7:11] Speaker 3: I think it'll be a combination of the two. I
[7:14] Speaker 3: think they'll first look at the statute. They'll try to
[7:16] Speaker 3: interpret the language. They will try to evaluate, are they
[7:20] Speaker 3: swaps under the text of the statute? And In addition
[7:25] Speaker 3: to that, I think if the language is ambiguous, they're
[7:28] Speaker 3: going to look at other considerations such as the major
[7:31] Speaker 3: questions doctrine and other broader policy concerns that may bear
[7:36] Speaker 3: on what Congress intended to do. I think it's going
[7:38] Speaker 3: to be a combination of all of those different things,
[7:40] Speaker 3: which is why you have different circuits concluding differently, because
[7:46] Speaker 3: the answer does not really point clearly in one direction.
[7:50] Speaker 3: If you really focus in on the text, the Third
[7:52] Speaker 3: Circuit was able to read the text reasonably as including
[7:57] Speaker 3: event contracts relating to sports. And so that is certainly
[8:01] Speaker 3: a plausible textual reading of the provision. And so it's
[8:05] Speaker 3: really up to the Supreme Court to decide who is correct.
[8:10] Speaker 2: The NFL and the states are arguing that sports prediction
[8:14] Speaker 2: contracts are effectively gambling, not financial swaps, as Kalshi and
[8:19] Speaker 2: the CFTC claim. Tell us about the parameters of that issue,
[8:24] Speaker 2: which is key here.
[8:25] Speaker 3: It's a tricky line to draw, right? A swap is
[8:29] Speaker 3: basically an agreement that pays out depending on some occurrence
[8:33] Speaker 3: or event. And the statute said it has to be
[8:36] Speaker 3: associated with a potential financial, economic, or commercial consequence. And
[8:40] Speaker 3: so the traditional reading of a swap is that I
[8:43] Speaker 3: enter into swaps in order to hedge economic risks. whether
[8:48] Speaker 3: it's the risk that interest rates are going to go
[8:51] Speaker 3: up or commodity prices are going to go down, I
[8:54] Speaker 3: can enter into swaps to manage economic risk. The question
[8:58] Speaker 3: is whether event contracts that are based on something happening
[9:02] Speaker 3: in a sports game would qualify. They do have some
[9:07] Speaker 3: economic impact if you win a bet. But are you
[9:11] Speaker 3: entering into the sports event contract to manage economic consequences?
[9:17] Speaker 3: Usually not, right? And most of the time, it's just gambling.
[9:20] Speaker 3: You're just betting. And it's not because you feel like
[9:23] Speaker 3: if this team wins, that's going to have some impact
[9:26] Speaker 3: on my business, although there may be a small number
[9:28] Speaker 3: of cases where that could occur. So it's a very
[9:31] Speaker 3: fine line as to what Congress meant when it says
[9:34] Speaker 3: that the contract has to relate to various economic consequences. And,
[9:39] Speaker 3: you know, the Third Circuit said, yes, there are economic
[9:41] Speaker 3: consequences if the bet pays out one way or the other.
[9:45] Speaker 3: The Sixth and Ninth Circuits said, well, it's not really
[9:49] Speaker 3: about managing sort of economic events that could affect your
[9:53] Speaker 3: business or something of that nature, which is the more
[9:55] Speaker 3: traditional understanding of what a swap is.
[9:58] Speaker 2: The CFTC basically complained that the NFL didn't sign a
[10:03] Speaker 2: memorandum of understanding with it and that the league hasn't
[10:08] Speaker 2: engaged with it. But why would the NFL sign something
[10:11] Speaker 2: like that?
[10:12] Speaker 3: I think that what the NFL might say is, well,
[10:14] Speaker 3: can we really enter into an agreement if we don't
[10:18] Speaker 3: really know you're our regulator, right? If we know for
[10:21] Speaker 3: sure you're our regulator, then we know sort of our
[10:25] Speaker 3: position and we know what we will try to agree
[10:27] Speaker 3: to and not agree to. Why would we waste our
[10:30] Speaker 3: time negotiating this extensive agreement with someone who we don't
[10:34] Speaker 3: even think is our regulator? We want to get some
[10:37] Speaker 3: clarification on that first. So, you know, the CFTC does
[10:40] Speaker 3: also have point in that, you know, maybe you should
[10:43] Speaker 3: be working with us a little bit. And if you're
[10:46] Speaker 3: criticizing us for not being up to the job, give
[10:49] Speaker 3: us a chance, you know, give us a chance to
[10:51] Speaker 3: do this. And you haven't given us that chance yet.
[10:54] Speaker 2: The CFTC under Trump, is the CFTC different? Is there
[10:58] Speaker 2: a different outlook or a different regulatory approach under Trump
[11:03] Speaker 2: than there was under Biden?
[11:07] Speaker 3: It's definitely more deregulatory. And, you know, my understanding is
[11:11] Speaker 3: they may still have just one commissioner and they don't
[11:13] Speaker 3: have a balance of commissioners who can weigh in and
[11:16] Speaker 3: at least make the case for a stronger regulatory approach.
[11:21] Speaker 3: And so it is definitely different than under the Biden administration.
[11:25] Speaker 3: And it's possible in a future administration that, you know,
[11:28] Speaker 3: the CFTC could be more favorable towards regulation. So it's
[11:32] Speaker 3: not quite clear what is best for the NFL. If
[11:35] Speaker 3: you're against regulation, it may not be a great idea
[11:39] Speaker 3: to put all the power in the CFTC because maybe
[11:42] Speaker 3: a later administration then decides, we're going to write a
[11:45] Speaker 3: whole bunch of rules relating to gambling, and they're going
[11:48] Speaker 3: to be very extensive. So that's certainly a possibility that
[11:52] Speaker 3: could come down the line in two years or six
[11:55] Speaker 3: years or however long it may take for a new administration,
[11:58] Speaker 3: a new democratic administration to come in.
[12:01] Speaker 2: So, Kalshi is gambling that the CFTC will stay in
[12:05] Speaker 2: this deregulatory mode.
[12:07] Speaker 1: It is.
[12:08] Speaker 3: It is.
[12:09] Speaker 2: Also, Kalshi said that the CFTC's ongoing rulemaking addresses many
[12:14] Speaker 2: of the NFL's supposed concerns. Do we know what the
[12:18] Speaker 2: rules are yet?
[12:19] Speaker 3: I don't think so. I think there's still a work
[12:22] Speaker 3: in progress and... I think that what the NFL is
[12:27] Speaker 3: saying is that it's just not comfortable working with this regulator,
[12:31] Speaker 3: that it's got some concerns about what its approach has been.
[12:35] Speaker 3: And that's why they've given some examples of proposals that
[12:39] Speaker 3: they want the CFTC to adopt, which they have not adopted,
[12:43] Speaker 3: or it does not appear that they are going to adopt.
[12:45] Speaker 3: So even if they are going forward with rulemaking, I
[12:49] Speaker 3: think the NFL's point is, well, they're not really listening
[12:52] Speaker 3: to us. And they're taking an approach we think is
[12:56] Speaker 3: going to harm the game, that's going to harm our business.
[12:59] Speaker 3: And we would rather work with state regulators in this
[13:01] Speaker 3: particular area.
[13:03] Speaker 2: And the numbers are stunning. The NFL noted that On
[13:07] Speaker 2: the first Sunday of the 2026 season, more than half
[13:11] Speaker 2: of all prediction markets trading volume, $ 1. 8 billion out of
[13:15] Speaker 2: $ 3. 3 billion, was related to the NFL. And they said
[13:19] Speaker 2: that any delay from the court will result in increasing
[13:22] Speaker 2: consumer harm and risk to game integrity. But it seems
[13:26] Speaker 2: like the MLB is not concerned about game integrity because
[13:31] Speaker 2: five teams have made multi-year deals with Calshi.
[13:35] Speaker 3: Yeah, I think given the size of the amount that
[13:39] Speaker 3: is being wagered on the NFL, given the profitability of
[13:44] Speaker 3: the league, and really concerns about there being so many
[13:48] Speaker 3: different things where corruption could come into the game in
[13:51] Speaker 3: very subtle ways. And if we lose confidence in the
[13:55] Speaker 3: integrity of the outcome, if we don't believe that it
[13:59] Speaker 3: is a true competitive game, then... The fear is that,
[14:04] Speaker 3: you know, fans are going to be turned off and
[14:07] Speaker 3: do something else. I think that is essentially their concern
[14:09] Speaker 3: is that there are secondary effects to manipulation and fraud,
[14:15] Speaker 3: you know, on other stakeholders. And so the sort of
[14:18] Speaker 3: speculation that's going on is something that the NFL is
[14:21] Speaker 3: very concerned about because it's very hard to police. It's
[14:24] Speaker 3: very hard to police things like officiating. It's very hard
[14:27] Speaker 3: to police, you know, things like if somebody gets injured and,
[14:32] Speaker 3: Things like that could really open up a big can
[14:36] Speaker 3: of worms in terms of questions about what's really going
[14:39] Speaker 3: on at critical times in these sporting events.
[14:43] Speaker 2: I'd be surprised if the Supreme Court doesn't take this case.
[14:47] Speaker 2: And we could hear as soon as December whether they'll
[14:49] Speaker 2: take the case in the current term. Great to talk
[14:53] Speaker 2: to you as always, Jim. That's Professor James Park of
[14:56] Speaker 2: UCLA Law School. You often hear about federal sentencing guidelines.
[15:01] Speaker 2: But at the Supreme Court on Tuesday, the focus was
[15:04] Speaker 2: on the commentary to the guidelines. And the justices appeared
[15:08] Speaker 2: wary of reducing the deference judges have to pay to
[15:12] Speaker 2: the commentary when sentencing defendants. Several of the justices, like
[15:16] Speaker 2: the chief justice, seem to suggest that it's best to
[15:20] Speaker 2: leave well enough alone.
[15:21] Speaker 4: Of course, after Booker, the guidelines are advisory, and I'm
[15:26] Speaker 4: not sure why we should I invite the lower courts
[15:29] Speaker 4: to engage in somewhat, it strikes me, as an academic
[15:32] Speaker 4: exercise of interpreting.
[15:35] Speaker 2: Justice Katonji Brown-Jackson, who served as vice chair of the
[15:38] Speaker 2: Sentencing Commission from 2010 to 2014, said the guidelines and
[15:44] Speaker 2: commentary are inextricably linked and work together.
[15:49] Speaker 5: Sentencing judges use the guidelines manual to do what is
[15:53] Speaker 5: essentially a calculation. It's kind of like math. that the
[15:58] Speaker 5: guidelines themselves have certain components to them. And the commentary
[16:03] Speaker 5: tells you how those pieces fit together, how you are
[16:07] Speaker 5: supposed to take them into account. When you are a judge,
[16:10] Speaker 5: you're using both to reach the right answer under the guidelines.
[16:14] Speaker 5: And there is a right answer.
[16:16] Speaker 2: Justice Samuel Alito was one of those who expressed concerns
[16:20] Speaker 2: about the number of defendants that would have to be
[16:23] Speaker 2: resentenced if the court overturned a three-decade-old rule.
[16:28] Speaker 6: Is it reasonably foreseeable that overruling Stinson would require the
[16:34] Speaker 6: resentencing of, what, 10,000 defendants from 2025 alone?
[16:39] Speaker 2: Joining me is Sam Merchant, a professor at the University
[16:44] Speaker 2: of Minnesota Law School and an expert in sentencing. Sam,
[16:48] Speaker 2: will you start by telling us just what the sentencing
[16:51] Speaker 2: guidelines are and how judges use them.
[16:56] Speaker 7: To understand the sentencing guidelines, this requires a bit of unpacking.
[16:59] Speaker 7: To sort of take us back a little bit before
[17:01] Speaker 7: we even had sentencing guidelines, for most of America's history,
[17:05] Speaker 7: judges were left on their own to sentence anywhere within
[17:08] Speaker 7: these broad statutory ranges of punishment that Congress establishes. So
[17:14] Speaker 7: for a crime, take burglary, for example, Congress might say
[17:17] Speaker 7: that the statutory range would be probation to 20 years
[17:21] Speaker 7: in prison. And this was supposed to take into account
[17:24] Speaker 7: the fact that there are a lot of aggravating and
[17:26] Speaker 7: mitigating circumstances in a burglary that Congress just didn't want
[17:30] Speaker 7: to account for in the statute or else the statute
[17:32] Speaker 7: books would be 100 times longer than they already are.
[17:34] Speaker 1: And so, for example, you might have a burglary.
[17:37] Speaker 7: Maybe the defendant is going to his friend's house to
[17:40] Speaker 7: try to reclaim some property he believes is his property.
[17:43] Speaker 7: That's one version that a burglary might take. Another could
[17:46] Speaker 7: be a burglary in which the defendant attacks an elderly woman.
[17:49] Speaker 1: And causes injury, right? Something like that. That'd be a
[17:51] Speaker 1: much more severe crime.
[17:52] Speaker 7: And so Congress, not wanting to establish every permutation of
[17:56] Speaker 7: a burglary, just said, we're going to defer to judges
[17:59] Speaker 7: to sentence anywhere within those broad statutory ranges of probation
[18:02] Speaker 7: in 20 years. As you can imagine, under this system...
[18:05] Speaker 7: With that much discretion to judges, they were sentencing sort
[18:09] Speaker 7: of all over the place. And so seemingly similar offenders
[18:13] Speaker 7: would be sentenced to one year and in a different
[18:14] Speaker 7: jurisdiction or in a different case, another would get 15 years.
[18:17] Speaker 7: And this just seemed very unfair. And so in 1984,
[18:21] Speaker 7: Congress passed the Sentencing Reform Act. And the goal here
[18:26] Speaker 7: was to try to have more uniformity and certainty in
[18:29] Speaker 7: sentences by narrowing the ranges of punishment that are available
[18:33] Speaker 7: to judges. And so instead of a statutory range of
[18:36] Speaker 7: zero to 20 years, you'd map on top of that
[18:40] Speaker 7: sentencing guidelines that would narrow that range to maybe 10
[18:43] Speaker 7: to 11 years. And then hopefully the idea would be
[18:46] Speaker 7: you have similar sentences imposed on similar defendants all around
[18:49] Speaker 7: the country. At the same time, Congress created the U.S.
[18:52] Speaker 7: Sentencing Commission and instructed the Sentencing Commission to create these
[18:56] Speaker 7: guidelines to help judges guide their sentencing practices. And here,
[19:00] Speaker 7: the Sentencing Commission did that, and they created guidelines and
[19:03] Speaker 7: commentary underneath those guidelines to help judges... sort of parse
[19:07] Speaker 7: through some of the language of the guidelines. And at
[19:10] Speaker 7: this time, these sentencing guidelines were binding on judges. The
[19:13] Speaker 7: commentary was binding, the guideline was binding, and so judges
[19:15] Speaker 7: had to follow them. Then we get in 2005, a
[19:18] Speaker 7: Supreme Court case called U.S. v. Booker, and the Supreme
[19:21] Speaker 7: Court said, a binding guideline regime violates the Sixth Amendment,
[19:25] Speaker 7: and so... The way to remedy this constitutional violation is
[19:28] Speaker 7: just to make the sentencing guidelines advisory only. And so
[19:32] Speaker 7: now we are left with a system of advisory guideline
[19:35] Speaker 7: ranges that advise judges on what the Sentencing.
[19:37] Speaker 1: Commission thinks is an appropriate sentence in a case.
[19:40] Speaker 7: But after the judge calculates that, the judge can then
[19:43] Speaker 7: reject that advice and pose a sentence that they think
[19:45] Speaker 7: is fair.
[19:46] Speaker 2: Tell us about the sentencing of the defendant here and
[19:48] Speaker 2: what the issue is then.
[19:50] Speaker 7: In this case, Kendrick Beard was caught with a Glock 17,
[19:54] Speaker 7: one of the most common handguns in America. And he
[19:57] Speaker 7: was a prohibited person under the statute. He was not
[19:59] Speaker 7: supposed to possess a firearm, but he possessed a firearm.
[20:02] Speaker 7: And the firearm had a standard 17-round magazine. And the
[20:07] Speaker 7: sentencing guidelines for this offense were... have an enhancement if
[20:11] Speaker 7: the weapon of the firearm can, quote, accept a large
[20:15] Speaker 7: capacity magazine. But the guidelines don't define what a large
[20:19] Speaker 7: capacity magazine is. And so to figure out what that means,
[20:23] Speaker 7: the Sentencing Commission has some commentary under the guideline that
[20:26] Speaker 7: helps define what the Sentencing Commission thinks a large capacity
[20:30] Speaker 7: magazine means. And the commentary says that anything over 15
[20:33] Speaker 7: rounds is considered.
[20:35] Speaker 1: By the commission at least, a large capacity magazine.
[20:38] Speaker 7: So here, the question is essentially, do judges have to
[20:41] Speaker 7: defer to the guidelines commentary here, or can judges completely
[20:45] Speaker 7: ignore the commentary and interpret what a large capacity magazine
[20:49] Speaker 7: means on their own? And if that happens here, the
[20:53] Speaker 7: judge could ignore the commentary and not impose this enhancement
[20:56] Speaker 7: because the judge could say, I don't think this is
[20:58] Speaker 7: a large capacity magazine. This is a pretty average size magazine.
[21:01] Speaker 7: And so I'm not going to apply this enhancement. If
[21:03] Speaker 7: the commentary is binding in some way, or judges are
[21:06] Speaker 7: supposed to give some deference to the commentary, then the
[21:08] Speaker 7: enhancement applies. And as applied here, it amounted to around
[21:11] Speaker 7: an extra year on this defendant's sentence. And so it
[21:15] Speaker 7: really matters whether the guideline commentary is binding or not
[21:18] Speaker 7: on judges.
[21:18] Speaker 2: I thought you said before that the guidelines were advisory only.
[21:22] Speaker 7: Yeah, so these are advisory only, but under the spin
[21:24] Speaker 7: court's precedence, the judges still have an obligation to accurately
[21:28] Speaker 7: calculate the guideline range. And so they have to go
[21:30] Speaker 7: through the process and accurately apply the enhancements and reductions.
[21:35] Speaker 7: and then come to the advisory guideline range and then
[21:37] Speaker 7: make a decision about whether to follow that guideline range
[21:40] Speaker 7: or not. And a part of coming to the accurate
[21:42] Speaker 7: guideline range in this case is, do we have to
[21:46] Speaker 7: give deference to the commentary when we're calculating the guideline range?
[21:49] Speaker 7: Or can we ignore the commentary when we're trying to
[21:51] Speaker 7: calculate the guideline range? And that matters here. Again, it's
[21:55] Speaker 7: sort of a year difference. And in some cases, it
[21:57] Speaker 7: could be several years difference, whether the commentary is given
[22:00] Speaker 7: deference or whether it's ignored.
[22:01] Speaker 2: And what did the justices focus on during the oral arguments?
[22:06] Speaker 7: The oral argument in the Beard case was sort of
[22:08] Speaker 7: fascinating in that the Sentencing Commission is a very unique
[22:12] Speaker 7: agency as far as agencies go.
[22:14] Speaker 1: When Congress creates administrative.
[22:16] Speaker 7: Agencies, it almost always puts them in the executive branch.
[22:20] Speaker 1: And it put the U.S. Sentencing Commission in the judicial branch.
[22:24] Speaker 7: And so the Supreme Court has sort of grappled with
[22:26] Speaker 7: what to do with that since Congress created the Sentencing
[22:29] Speaker 7: Commission in 1984. And as we know from following the
[22:32] Speaker 7: Supreme Court, the Supreme Court has taken a much more
[22:35] Speaker 7: skeptical view in the last sort of 10, 15 years
[22:38] Speaker 7: of executive branch agencies and deference to executive branch agencies
[22:43] Speaker 7: and the congressional design of executive branch agencies and So
[22:46] Speaker 7: now the question is, how much of that skepticism is
[22:48] Speaker 7: going to then apply to a judicial branch agency like
[22:51] Speaker 7: the Sentencing Commission? And so a lot of the oral
[22:53] Speaker 7: argument was grappling with whether the court wants to import
[22:58] Speaker 7: some of its precedents and doctrines from executive agency administrative
[23:02] Speaker 7: law cases to the Sentencing Commission, or whether the Sentencing
[23:05] Speaker 7: Commission really needs its own deference analysis and doctrinal analysis,
[23:10] Speaker 7: because what it's doing is ultimately different than what executive
[23:13] Speaker 7: branch agencies are doing. So there was a lot of
[23:15] Speaker 7: discussion about Executive various agencies, deference, whether Congress has the
[23:19] Speaker 7: power to do this, whether the Sentencing Commission has the
[23:21] Speaker 7: power to promulgate the commentary that it does, whether that
[23:25] Speaker 7: commentary is binding or it's advisory or whether judges can
[23:28] Speaker 7: ignore it. In the executive agency context, the courts are
[23:32] Speaker 7: getting more and more in the camp of allowing judges
[23:35] Speaker 7: to interpret de novo agency interpretations. And so do you
[23:39] Speaker 7: want to apply that to the sentencing guidelines, context, and commentary?
[23:43] Speaker 7: So a lot of that was what the justices were
[23:45] Speaker 7: grappling with in this oral argument.
[23:47] Speaker 2: Coming up next, we'll talk about the likely outcome of
[23:50] Speaker 2: the case. You're listening to Bloomberg. I've been talking to
[23:54] Speaker 2: sentencing expert Sam Merchant, a professor at the University of
[23:57] Speaker 2: Minnesota Law School. So Justice Katonji Brown-Jackson served as vice
[24:03] Speaker 2: chair of the Sentencing Commission for about four years. I mean,
[24:07] Speaker 2: could you tell which side she was on?
[24:09] Speaker 1: We could.
[24:10] Speaker 7: So Justice Jackson had some very helpful framing points in
[24:14] Speaker 7: this oral argument that I think a lot of the
[24:16] Speaker 7: other justices drew on with some of their questioning. And
[24:20] Speaker 7: this likely comes from her experience as a vice chair
[24:23] Speaker 7: on the Sentencing Commission. And so Justice Jackson basically framed
[24:27] Speaker 7: the issue in this way. She basically says... We don't
[24:31] Speaker 7: need to look that dispositively at our executive agency jurisprudence
[24:36] Speaker 7: in this case, because the Sentencing Commission is very different,
[24:39] Speaker 7: and what it does is very different, and what the
[24:40] Speaker 7: guidelines do is very different than executive branch agency regulations.
[24:45] Speaker 7: She analogized to, as a hypothetical, she analogized to a
[24:50] Speaker 7: situation in which effectively, before every sentencing hearing around the country,
[24:54] Speaker 7: the U.S. Sentencing Commission would send each judge a a
[24:58] Speaker 7: memo saying, this is what we think an appropriate sentence
[25:01] Speaker 7: would be based on the aggravating and mitigating circumstances in
[25:05] Speaker 7: this case and based on the defendant's criminal history. We
[25:08] Speaker 7: think this is what a reasonable sentence would be. This
[25:10] Speaker 7: is what other judges around the country are doing. And
[25:12] Speaker 7: so as the US Sentencing Commission, the entity that studies
[25:15] Speaker 7: these things in detail, we think this is an appropriate sentence.
[25:18] Speaker 7: And they send that to every judge all around the country.
[25:20] Speaker 7: Instead of a procedure like that, under the current guidelines
[25:23] Speaker 7: and the current system that we have, each judge looks
[25:26] Speaker 7: at the sentencing guidelines manual and tries to figure out
[25:30] Speaker 7: what the U.S. Sentencing Commission thinks a reasonable sentence would be.
[25:33] Speaker 7: And so it's a similar outcome. And then all the
[25:36] Speaker 7: judges are doing is trying to get advice from the
[25:38] Speaker 7: Sentencing Commission on what an appropriate sentence would be. And
[25:41] Speaker 7: so Justice Jackson's point here is that all you're trying
[25:45] Speaker 7: to do here is get sort of advice, including with
[25:49] Speaker 7: the commentary. We're trying to get advice on what the
[25:50] Speaker 7: Sentencing Commission thinks these guidelines mean. In this case, what
[25:54] Speaker 7: a large capacity magazine actually means. Once judges accurately figure
[25:59] Speaker 7: that out, giving deference to the commission on what it
[26:01] Speaker 7: thinks a large capacity magazine means, then judges have their
[26:05] Speaker 7: guideline range. We have what the sentence commission thinks is
[26:08] Speaker 7: an appropriate sentence. And then judges can sort of disregard
[26:12] Speaker 7: that if they don't think that's appropriate and sentence in
[26:14] Speaker 7: a way that they think is fair. And so it's
[26:16] Speaker 7: totally different from what happens in the executive agency context.
[26:20] Speaker 7: In the sentence commission context, it's sort of a different procedure.
[26:24] Speaker 7: And for those reasons, the Sentence Commission can get deference
[26:27] Speaker 7: because all you're giving deference to is what the Sentence
[26:29] Speaker 7: Commission thinks is a reasonable sentence.
[26:31] Speaker 2: There seem to be questions about whether if they ruled
[26:34] Speaker 2: in favor of the defendant, tens of thousands of defendants
[26:39] Speaker 2: would have to be resentenced.
[26:41] Speaker 7: There was some concern from several of the justices. Justice
[26:44] Speaker 7: Alito was concerned with that. Justice Kavanaugh was concerned with that.
[26:47] Speaker 7: This was sort of framed as the pendulum swinging too
[26:50] Speaker 7: far in the other direction. such that we would need
[26:53] Speaker 7: to have tens of thousands of resentencings here. Or if
[26:56] Speaker 7: the Supreme Court agrees with amicus here and ultimately with
[27:02] Speaker 7: what the lower court judge did in this case, then
[27:05] Speaker 7: you wouldn't have a lot of those resentencings and the
[27:08] Speaker 7: system wouldn't change very much. And so under the current system,
[27:12] Speaker 7: judges essentially defer to the Sentencing Commission on its commentary
[27:17] Speaker 7: interpreting the sentencing guidelines. And so that seemed to get
[27:20] Speaker 7: a consensus view. There weren't a lot of justices that
[27:23] Speaker 7: were interested in displacing that view. And so if the
[27:27] Speaker 7: Supreme Court sort of goes down that road, you wouldn't
[27:29] Speaker 7: have all these resentencings. You wouldn't have to worry about
[27:32] Speaker 7: the Sentence Commission having to take some extreme action in
[27:34] Speaker 7: order to remedy the problem that the Supreme Court might
[27:37] Speaker 7: identify if they agreed with the defendant in this case.
[27:40] Speaker 7: But if they agreed with the defendant in this case,
[27:42] Speaker 7: you would potentially have tens of thousands of resentencings and
[27:46] Speaker 7: a lot of different actions that the Sentencing Commission will
[27:49] Speaker 7: probably need to take to bring the guidelines into compliance
[27:52] Speaker 7: with the Supreme Court's decision. By my count, it looked
[27:54] Speaker 7: like it was really kind of eight to one in
[27:57] Speaker 7: favor of agreeing with Amicus and rejecting the defendant's argument.
[28:00] Speaker 1: Maybe seven to two.
[28:03] Speaker 7: Justice Thomas seemed a little bit on the fence at times.
[28:05] Speaker 7: We're not really sure where he's ultimately going to land,
[28:08] Speaker 7: and so we'll have to see. Justice Gorsuch was clearly
[28:10] Speaker 7: on the side of the defendant. He regularly pressed all
[28:13] Speaker 7: sides to say, We should give essentially no deference to
[28:17] Speaker 7: the Sentencing Commission and these types of issues. He's been
[28:20] Speaker 7: a long skeptic of deference to administrative agencies. It seems
[28:24] Speaker 7: quite clear that he will dissent in this case, but
[28:26] Speaker 7: it did seem like at least seven other justices were
[28:29] Speaker 7: interested in maintaining the current system, some version of the
[28:32] Speaker 7: current system that we already have, which would not be
[28:35] Speaker 7: much of a difference on the ground for defendants or
[28:37] Speaker 7: for the sentencing procedure.
[28:39] Speaker 2: I thought in criminal cases, Justices Gorsuch and Sotomayor agreed usually.
[28:45] Speaker 1: Yes, they often agree.
[28:46] Speaker 7: And Justice Gorsuch sort of has a reputation of being
[28:49] Speaker 7: relatively defendant-friendly on a lot of criminal cases, at least
[28:53] Speaker 7: coming from the conservative side of the bench. And I
[28:57] Speaker 7: think what he might calculate, if that's true in this case,
[28:59] Speaker 7: is just that a lot of the commentary is might
[29:03] Speaker 7: not be defendant-friendly, it might be government-friendly. And so if
[29:06] Speaker 7: the judges don't have a deferential attitude toward the commentary,
[29:10] Speaker 7: then they're freed up from some of these more government-friendly
[29:13] Speaker 7: definitions and commentary.
[29:15] Speaker 1: I haven't audited the commentary. I think the Sentence Commission
[29:18] Speaker 1: probably has.
[29:19] Speaker 7: I haven't audited the commentary to see how much of
[29:22] Speaker 7: it would be defendant-friendly versus how much would be government-friendly.
[29:26] Speaker 7: Certainly some commentary, and this came up in our argument,
[29:29] Speaker 7: some commentary cuts in favor of the defendant and some
[29:31] Speaker 7: commentary cuts in favor of the government. And so the
[29:34] Speaker 7: justices seem to think that it would be more of
[29:36] Speaker 7: a wash. But Justice Gorsuch, I think, seems to think
[29:38] Speaker 7: that if we disregarded the commentary, it might be beneficial
[29:41] Speaker 7: to defendants in the aggregate.
[29:43] Speaker 2: Is it odd that the U.S. Solicitor General's office sided
[29:47] Speaker 2: with the defendant here?
[29:49] Speaker 7: I guess I should say it is a bit unusual
[29:51] Speaker 7: for the Solicitor General to do this. But ultimately, it
[29:53] Speaker 7: came out of oral argument that there's not that much
[29:56] Speaker 7: daylight in between the amicus. So when you don't have
[30:00] Speaker 7: anyone defending the decision below, the court appoints amicus to
[30:03] Speaker 7: argue on behalf of the decision below. And that happened here.
[30:07] Speaker 7: And there wasn't that much daylight in between the government's
[30:09] Speaker 7: position and the amicus position. So they both disagree with
[30:13] Speaker 7: the defendant. But on the other side of the V,
[30:15] Speaker 7: there really wasn't that much daylight. And it came up
[30:18] Speaker 7: regularly at oral argument, where the deputy solicitor general Fagan said,
[30:23] Speaker 7: We really wouldn't oppose a decision that rules in favor
[30:26] Speaker 7: of amicus as long as it's sort of phrased in
[30:28] Speaker 7: the way that we think is appropriate.
[30:29] Speaker 2: And what was your take on the oral arguments in general?
[30:32] Speaker 7: This was a really interesting oral argument in that you
[30:35] Speaker 7: had a lot of references to other justices across ideological lines.
[30:40] Speaker 7: I watched the court very closely, and I have for years,
[30:42] Speaker 7: and that's a little bit unusual. Usually you have some
[30:45] Speaker 7: of the more conservative justices referencing other conservative justices and
[30:48] Speaker 7: their questions and some of the more liberal justices referencing
[30:51] Speaker 7: each other. But here you have Justice Alito saying, I
[30:54] Speaker 7: want an answer to Justice Sotomayor's question. And Justice Sotomayor saying,
[30:58] Speaker 7: you didn't really give me a complete answer to Justice
[31:01] Speaker 7: Kavanaugh's question. There's a lot of crosstalk between the justices
[31:04] Speaker 7: and across sort of what some people might think are
[31:06] Speaker 7: the political lines or the partisan lines.
[31:09] Speaker 1: And that's another.
[31:09] Speaker 7: Indication to me that we'll probably see some unanimity here,
[31:13] Speaker 7: maybe eight to one or seven to two. One other
[31:16] Speaker 7: point on what Justice Jackson sort of reiterated throughout the
[31:19] Speaker 7: oral argument, she really got to the purpose of the
[31:22] Speaker 7: Sentencing Reform Act. And so we talked a little bit
[31:25] Speaker 7: earlier about what American sentencing looked like before the Sentencing
[31:28] Speaker 7: Reform Act and how judges were sort of all over
[31:30] Speaker 7: the place. on their sentences, and there wasn't a lot
[31:32] Speaker 7: of uniformity. Justice Jackson reiterated that the whole point of
[31:36] Speaker 7: the Sentencing Reform Act was to constrain judicial discretion. We
[31:39] Speaker 7: think judges are exercising too much discretion, and that's leading
[31:43] Speaker 7: to unfair sentences and unwarranted sentencing.
[31:46] Speaker 1: Disparities across the country.
[31:48] Speaker 7: We want to constrain judicial discretion with the Sentencing Reform Act,
[31:51] Speaker 7: and one way to do that is through sentencing guidelines.
[31:54] Speaker 7: And so Justice Jackson sort of reiterated If that's the
[31:56] Speaker 7: whole point of the Sentencing Reform Act, then why would
[31:59] Speaker 7: we have a doctrinal interpretation of how judges are supposed
[32:02] Speaker 7: to consider the commentary in a way that expands judicial discretion?
[32:06] Speaker 7: By giving them the ability to analyze commentary or completely
[32:09] Speaker 7: reject the commentary and analyze the guidelines in the way
[32:14] Speaker 7: that they think is appropriate. In which case, you'd have
[32:17] Speaker 7: hundreds of judges all around the country potentially saying, interpreting
[32:21] Speaker 7: the language of the guideline in different ways. The whole
[32:23] Speaker 7: point is to constrain judicial discretion. And so she sort
[32:25] Speaker 7: of reiterated that point a few times. And I think
[32:27] Speaker 7: that resonated with a lot of the other justices.
[32:30] Speaker 2: Sometimes it's nice to have an oral argument where there's
[32:32] Speaker 2: no tension. Thanks so much, Sam. That's Professor Sam Merchant
[32:37] Speaker 2: of the University of Minnesota Law School. And that's it
[32:41] Speaker 2: for this edition of the Bloomberg Law Show. Remember, you
[32:43] Speaker 2: can always get the latest legal news on our Bloomberg
[32:46] Speaker 2: Law Podcast. You can find them on Apple Podcasts, Spotify,
[32:50] Speaker 2: and at www.bloomberg.com slash podcast slash law. And remember to
[32:56] Speaker 2: tune into the Bloomberg Law Show every weeknight at 10 p.m.
[32:59] Speaker 2: Wall Street time. I'm June Grosso, and you're listening to Bloomberg.

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