Strongly Worded Letters

Summary

Money Stuff: The Podcast

Episode: Strongly Worded Letters

Date: June 12, 2026
Host: Matt Levine
Co-host: Katie Greifeld

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Episode Overview

In this episode, Matt Levine and Katie Greifeld dive deep into recent financial news, with a particular focus on the SpaceX IPO and its implications for index providers, prediction markets, and governance structures. The episode also tackles new federal regulations on sports betting, ESG concerns around high-profile IPOs, and a Supreme Court case impacting closed-end funds and shareholder activism. As always, the tone is witty, conversational, and filled with sharp technical insight.

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Key Discussion Points and Insights

1. Celebrity Row and Knicks Comeback (02:01–03:20)

• Opens with a lighthearted chat about the star-studded audience at the recent Knicks game, noting overlooked finance celebrities.
• Quote:
  Matt Levine: “That’s the kind of insight you need to come to Bloomberg for.” (02:28)

2. SpaceX IPO: Pricing, Demand & Index Impact (03:36–14:16)

• IPO Structure and Demand (03:36–05:30):

  • SpaceX IPO priced at $135/share, notably oversubscribed (“four times” institutional, plus huge retail interest).
  • Discussion on the fixed-price approach and anticipation of where it will open once trading begins.
  • Quote:
    Matt Levine: “It could open wildly up or wildly down. But...there’s market prices, so...there's pretty robust gambling markets.” (05:30)

• Prediction & Betting Markets (05:30–08:10):

  • Explains how offshore platforms (Polymarket, Binance, Hyper Liquid) host derivative bets on SpaceX’s trading levels, and the regulatory reasons they’re barred in the US.
  • Contrasts index futures (allowed as commodities) with single-stock futures (restricted by SEC).

• SpaceX & Index Inclusion Dilemma (08:22–14:16):

  • S&P's decision not to fast-track SpaceX into their index.
  • Contrasts with other index providers relaxing rules for inclusion.
  • Implications for passive investors: exposes how “passive” indexes are governed by committees making active decisions.
  • Indexes like S&P 500 requiring profitability, so SpaceX isn’t eligible yet.
  • Quote:
    Matt Levine: “If you think you are a passive investor...it’s a little annoying to be like, no, these are active decisions made by committees...” (09:23)
  • Active managers now have an opportunity to outperform benchmarks without mandatory SpaceX exposure.
  • Short debate on ESG (Environmental, Social, Governance) issues, especially SpaceX’s governance—effectively, Elon makes all decisions, shareholder power is minimal.
  • Quote:
    Matt Levine: “Governance is bad.” (14:11)

• Meme Stock Parallels (14:35–16:01):

  • Retail excitement compared to meme stocks. Cites quotes from retail investors excited just to be “part of the thing”—even knowingly overpaying.

3. The Shift from 'Private Forever' to AI IPO Boom (16:01–18:14)

• Noting a flip from the “private forever” era (Uber, etc.) to current tide of mega-IPOs in the AI space (SpaceX, Anthropic, OpenAI).
• The need for massive public market capital—especially for AI and data center funding.

4. Tech Company Governance and Disclosure (18:14–19:21)

• Discusses differences in governance between SpaceX (public but Musk-controlled) and the candid, nuanced postures of OpenAI and Anthropic.
• Speculates that more companies may copy the “founder-in-control” public company model.

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5. CFTC & Federal Sports Betting Regulation (21:52–30:32)

• New Proposed Rules (21:52–24:11):

  • CFTC publishes first-ever proposed rules on federally regulated sports betting, a bizarre twist given their historical role.
  • Quote:
    Matt Levine: “...the CFTC does not actually regulate sports gambling...until this week when they published a big set of proposed rules. ...I just find just as a concept, very funny.” (22:51)

• What’s Off Limits (24:12–27:30):

  • Bans on betting for “pre-collegiate” sports (i.e., Little League, high school), injury contracts, and contracts on whether brawls break out at games.
  • Concerns are the potential for manipulation, ensuring market integrity, and preserving public interest.
  • Quote:
    Matt Levine (paraphrased CFTC): “...the effect of a market and physical altercation contracts on the culture of athletic competition is inconsistent with the public interest.” (27:02)
  • The oddity and path dependency of the CFTC even being involved in regulating sports bets.

• Limits on Political Event Contracts (27:37–30:32):

  • Recap of the controversy over “leader out of office” bets turning into de facto “assassination markets” when abrupt events occur.
  • Disputes over payout when leaders are deposed by assassination, with CFTC erring on the side of caution.
  • Philosophical quandaries about event contracts when the mode of the event matters.

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6. Supreme Court Ruling on Closed-End Fund Activism (33:23–36:47)

• Case: Supreme Court blocks activist investors, led by Boaz Weinstein (Saba Capital), from suing closed-end funds that limit voting power above 10%.
• Key Points:
  • Federal law says “one vote per share,” but Maryland law allows funds to cap activists’ votes.
  • Supreme Court rules only the SEC (not shareholders) can enforce the rule, limiting activist leverage.
  • Quote:
    Matt Levine: “He won in court because that’s true. And then in the Supreme Court, he got reversed because the Supreme Court said, didn’t even address his argument. ...The only way to enforce it is the SEC has to enforce it. ...Poez lost on a technicality.” (34:26)
  • Discussion on what this means for activist arbitrage and the potential weakening of shareholder power.
  • Ongoing ability to write “strongly worded letters” to the SEC, even if legal recourse is limited—a wink to the episode title.

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Notable Quotes & Memorable Moments

• On IPO Betting Markets:
  “There’s pretty robust gambling markets...where you can just bet on the price of SpaceX stock...”
  – Matt Levine (06:00)
• On Index Construction:
  “It’s such an active decision that has such an economic impact.”
  – Matt Levine (10:02)
• On SpaceX Governance:
  “The governance of SpaceX is such that you cannot complain about the governance of SpaceX.”
  – Matt Levine (14:11)
• On Meme Stocks:
  “I’m willing to overpay for it just to say I’m part of the thing.” (quoted retail investor) (15:56)
• On CFTC Rulemaking:
  “I just find just as a concept, very funny.”
  – Matt Levine (22:51)
• On Supreme Court Case:
  “You can continue to write strongly worded letters to the SEC...maybe they’ll read the letters.”
  – Matt Levine (36:39)

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Important Timestamps

• SpaceX IPO pricing and betting markets: 03:36–08:10
• S&P and index inclusion implications: 08:22–14:16
• ESG and meme stock discussions: 13:43–16:01
• AI IPOs and governance models: 16:01–19:21
• CFTC sports betting proposals: 21:52–27:30
• Political event market debates: 27:37–30:32
• Supreme Court/closed-end fund activism case: 33:23–36:47

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Tone and Style

The episode is marked by Matt’s signature blend of analytical rigor, market nuance, and dry humor, while Katie keeps the conversation fresh and relatable. The discussion flows freely but returns repeatedly to the theme of how rules (whether for IPOs, indexes, or prediction markets) are ultimately human-made, contested, and sometimes arbitrary. The title’s reference to “strongly worded letters” is both a running joke and serious commentary on limits of influence in financial governance today.

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For more Money Stuff, subscribe to the Bloomberg newsletter or watch Katie Greifeld on Bloomberg TV’s "The Close".

Transcript

[Katie Greifeld]

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Bloomberg Audio Studios Podcasts

[Katie Greifeld]

Radio News how about them Nicks? Yeah, Michael R. Bloomberg photographed next to Timothee Chalamet and Kylie Jenner. That was a highlight for me. Taylor Swift was also there. Paul Tudor Jones was behind her. What an interesting cast of characters on Celebrity Row.

[Matt Levine]

It's funny, I feel like I've seen a number of articles about who was there on Celebrity Row and none of them mentioned Paul Tudor Jones.

[Katie Greifeld]

He was there.

[Matt Levine]

That's the kind of insight you need to come to Bloomberg for.

[Katie Greifeld]

I went to bed at halftime and the vibes were that of a funeral. It was so bad.

[Matt Levine]

Then they changed.

[Katie Greifeld]

Oh my goodness, did they change. I woke up at like one in the morning and I couldn't believe it.

[Matt Levine]

Can I tell you something cute? My kids love sports and my youngest son loves basketball. But like he is, he is particularly enamored of half court shots. And he has like, got it in his head that like, a half court shot is the best thing in basketball. And so when like, you know, they go to bed before the Knicks games, but like, they come downstairs in the morning and we're like, The Knicks won 107, 106. It was a huge comeback. And he's like, were there any half court shots?

[Katie Greifeld]

Otherwise I'm not interested. That's pretty true.

[Matt Levine]

I mean, like, one day in like the previous spurs series, I could be like, yes, Wemby made a half court shot in the first half.

[Katie Greifeld]

We don't speak his name.

[Matt Levine]

Yeah. Well, hello and welcome to the Money Stuff podcast. I'm Matt Levine and I wrote the Money Stuff column of Bloomberg Opinion.

[Katie Greifeld]

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

[Matt Levine]

I was thinking like two weeks ago you were talking about how we were going to be recording this at like a crucial time for the SpaceX IPO. Because we're recording this at like 2 in the afternoon on 2 13, 213 on Thursday. And it'll come out, you know, in the morning, ish on Friday. And between now and then the SpaceX IPO will have priced and maybe even started trading. Although I kind of doubt that. And what will we do? What will we do?

[Katie Greifeld]

What will we do?

[Matt Levine]

I wrote about it today a little bit.

[Katie Greifeld]

Yeah, go on.

[Matt Levine]

The poem today was about why we're podcasting today. I kind of was like, there's not a pricing today. I understand that the IPO is pricing today, but it actually priced a week ago because they went out at a fixed price and a fixed number of shares. They're like, the price is 135 per share. Take it or leave it. All accounts are that people took it.

[Katie Greifeld]

Yeah, a lot of people.

[Matt Levine]

It's like Bloomberg's last reporting, I think, was that it was four times oversubscribed. But that's like the institutional. There's also like 100 billion of retail orders. It's significantly oversubscribed. And so it would be interesting if it prices tonight at like $140 a share. But I don't think they can even do that. I think they're going to price it at the price they've said they're going to price it at. And then so we know the SpaceX IPO price, which is $135 per share. We're going to beep this if I'm wrong.

[Katie Greifeld]

This makes my job on television today a Lot easier because we're awaiting the pricing.

[Matt Levine]

You're awaiting the pricing. And then it'll come like it's 1:35. And then of course the question is where it'll open tomorrow, which will probably happen after we publish this episode.

[Katie Greifeld]

But theoretically. Yeah.

[Matt Levine]

No, not theoretically. I mean, the stock Exchange opens at 9:30 in the morning and it's like.

[Katie Greifeld]

But I feel like you get first trades.

[Matt Levine]

They're like two in the afternoon.

[Katie Greifeld]

Yeah.

[Matt Levine]

So.

[IBM AI Advertiser]

Right.

[Matt Levine]

So it could open because they're going out at a fixed price. That is like Elon Musk's arbitrary decision. It could open wildly up or wildly down. But the thing that I wrote about today is there's market prices, so there's the secondary private company secondaries, the Hive and Forge and Equity Zen, which I don't know how real those prices are. I don't know how much stock trades in this. But there's also pretty robust gambling markets.

[Katie Greifeld]

Yes.

[Matt Levine]

Not just like polymarket, but also like Binance and Hyper Liquid. Like big crypto exchanges run essentially cash settled derivatives markets. Right. Where you can just bet on the price of SpaceX stock and then like, you know, it eventually morphs into connecting to the actual public price of the stock. And those are trading at like, you know, up, you know, 20% from the IPO price, which is kind of what you want in an ipo. I don't know, the market is kind of saying like, you've done it perfectly, Elon Musk. You got it right on the first try.

[Katie Greifeld]

Yeah. I was actually having that conversation around betting markets and this particular ipo, how they seem particularly relevant for this offering since there's just so much demand and it seems hard to get your little hands on it.

[Matt Levine]

Right. I feel like I've spent a lot of time complaining about the betting markets for two reasons. One, mostly they're sports bets and that's annoying. And then secondly, to the extent they're stock market bets, that's just illegal. And all of these things are offshore, like polymarket and Binance and hyper liquid. All their SpaceX stock price bets are not open to US customers because it's just clearly forbidden by US securities law and kind of for good reason. But also the argument they provide truth, function and price discovery is kind of real. Right. Maybe if the Stock opens at 400 tomorrow or 40, then whoops, never mind. But for now, these things are like, yeah, you got it perfectly right.

[Katie Greifeld]

Yeah. To that point, are you only talking about individual stocks? Can I bet on the future movement of the s and P500 in the next 15 minutes.

[Matt Levine]

It's a more complicated question, but I think the short answer is, yeah, you kind of can, because for some reason index futures, the regulatory regime is so weird, but basically prediction markets are commodities exchanges, and for boring historical reasons, index futures are traded on commodities exchanges. And so, like, Kalshi can list them, and single stock futures are SEC regulated and so Calci can't list them. And there's, like, more to it than that.

[Katie Greifeld]

But I feel like we're getting into dangerous territory with our. Well, also with our. We're going to talk a little bit about the regulatory regime, but I want to talk about SpaceX a little bit more. Oh, S and P came out.

[Matt Levine]

Oh, yeah. We haven't talked about this.

[Katie Greifeld]

I know, it's. Which is crazy because it feels like so long ago because every day feels like a year, Right?

[Matt Levine]

Everyone was like, all the indexes are changing their rules to let SpaceX into their index as fast as possible.

[Katie Greifeld]

Shocker.

[Matt Levine]

S and P, like, put out a consultation, being like, we're going to waive our profitability requirements and let them in in six months. And then they're like, nope, we did the consultation and we decided we're not going to do that.

[Katie Greifeld]

So now we're talking about potentially a year before.

[Matt Levine]

Well, the minimum is a year. But then they also have to be profitable. I think the S and P rule is you have to be profitable for like, four quarters, basically.

[Katie Greifeld]

Yeah.

[Matt Levine]

Which is.

[Katie Greifeld]

That's true. 2040, so you're maybe a little bit optimistic. This was a shocker, though. I remember chatting about it with my ETF friends over at Bloomberg Intelligence, and they were placing like, 75% odds that the S&P 500, or the S and P rather, would do what all the other index providers did. And what an interesting world this is going to create.

[Matt Levine]

Right.

[Katie Greifeld]

It's kind of ugly for the other index providers.

[Matt Levine]

All of it is ugly for all index providers in the sense that if you think that you are a passive investor by buying an undifferent, like, whatever index you happen to buy, then it's a little annoying to be like, no, these are active decisions made by committees after consultations in round numbers. Is the s and P500 the same thing as the Crisp Total Stock Market Index that underlies the big Vanguard Fund kind of. Right. But for the next year or two or five, they're going to have wildly divergent performance because one of them will have the three big AI stocks basically starting space and one of them won't. Right?

[Katie Greifeld]

Yeah.

[Matt Levine]

And that's going to be a big difference in index performance. And people are like, well, some passive investors. It's just like, it's like such an active decision that has such an economic impact. By the way, you're like, oh, it's bad for the other index providers. I don't know, it depends if they go up optically.

[Katie Greifeld]

I'm just talking about the optics.

[Matt Levine]

Everyone says. I understand that the sort of like house view everywhere is that these index providers are evil for changing their rules to accommodate Elon Musk. I don't think that's true. I think it's like they're like, look, you know, our job is to provide exposure to the stock market, reflect the index part of the stock market.

[Katie Greifeld]

I am sympathetic to that view. I mean, you think about the, the mission of a lot of these indexes, the NASDAQ 100. They want to have the 100 largest companies that are listed on NASDAQ. It makes sense, but definitely have seen S and P presented as like their decision. They're the adult in the room here.

[Matt Levine]

There's vocal support for what S and P did. Yes, I think there's vocal, like, you know, I got an email from one reader who was like, look, I don't buy the S and P to buy all the 500 biggest companies. I buy the S and P for its rules that you have to be profitable and liquid and, you know, seasoned public company. And he might be the only one. I don't really believe that that's how most like retirement savers are. Like, oh, you know, what I really care about is S&P's rules.

[Katie Greifeld]

I'm happy that guy exists.

[Matt Levine]

So clearly that guy exists. But also, I think a lot of people, when this problem is presented to them, when they're reminded of the fact that S and P has rules and it's thinking about waiving them for SpaceX, a lot of people are like, no, those rules are good and we don't like this. But will they change their minds in two weeks if SpaceX doubles? I don't know.

[Katie Greifeld]

That would look terrible for them, I feel like.

[Matt Levine]

For who?

[Katie Greifeld]

S and P. Yeah.

[Matt Levine]

The thing is S and P, actually, in some ways it's not that big a problem for S and P because S and P was never considering, like, we're going to put SpaceX in the index in two weeks, which is what? Like a lot of the other indexes and one reason they didn't do that is because you just could not physically fit the S and p demand into SpaceX because the S And P demand is like, I don't know, I'm going to say the wrong number. It's probably like 10 percent of companies stocks and so SpaceX is going public with like 4% of its stock. Like you can't fit the S and P dividend. So yeah, you know, they were like, should we do this in six months or should we do it in three years? Right, yeah. So whatever happens in the next six months wouldn't have mattered anyway what their decision was.

[Katie Greifeld]

I have to say I think this is the most interesting outcome. The fact that you had all the other index providers make this decision. S and P standing firm. And part of the reason I'm so interested is because I have to imagine there is a whole bunch of active managers out there who are absolutely psyched that Space X isn't going into the

[Matt Levine]

S and P. Oh yeah.

[Katie Greifeld]

Uh, it's just been impossible to beat that benchmark and now you potentially have a chance to.

[Matt Levine]

Right. Also you're not forced to make a decision on SpaceX in the same way. Like if you're like a quote unquote active manager whose job is to track the index and beat it a little bit, you know, might be how some active managers see themselves. Then putting SpaceX in the index made you like either have to own it

[Katie Greifeld]

or have to not own it that

[Matt Levine]

you're, that you're not like missing out on performance. Having SpaceX in the index means that if you do not own SpaceX for your career, it's equivalent to being short SpaceX and you might not like an Elon Musk company, but even if you don't like Tesla, you wouldn't necessarily short it because it's terrifying.

[Katie Greifeld]

Right? Yeah.

[Matt Levine]

And like, you know, the same dynamic exists if you're like a long only manager benchmark to the index and it's like if I don't buy SpaceX and then it doubles, I'm going to look like an idiot. So you get to dodge that bullet a little bit. And if you like SpaceX, you can buy it and outperform.

[Katie Greifeld]

Something we were talking about last week was ESG considerations around SpaceX. The Governance super hard here and is the worst.

[Matt Levine]

Like Mark Levine, no relation. The the Comptroller of New York.

[Katie Greifeld]

Right, right.

[Matt Levine]

Put out a statement being like we're going to try to stop them. They can't be allowed to disempower shareholders.

[Katie Greifeld]

They're going to try to stop Space X, they're going to try to stop Elon Musk. Who are they trying to stop?

[Matt Levine]

He's going to write a strongly worded letter.

[Katie Greifeld]

Wow.

[Matt Levine]

The governance of SpaceX is such that you cannot complain about the governance of SpaceX. You can't buy shares and sue or run a proxy fight. Those are all closed off to you. So there's nothing you can do. You either buy the shares and just trust Elon or you don't buy the shares. Or the third option is you write strongly worded letters saying they should really have different governance. But it doesn't matter. Governance is bad.

[Katie Greifeld]

I don't know about the E. I don't really know. I don't know how to make heads or tails of that either.

[Matt Levine]

It's sort of orthogonal to all previous ESG environmental conversations. It's like, wow, we're going to put a lot of data centers in space. Is that good for the environment?

[Katie Greifeld]

Do the polluting in space versus a

[Matt Levine]

lot of solar energy to run the space data centers.

[Katie Greifeld]

Yeah.

[Matt Levine]

Oh, I really like the Bloomberg story. I think it was yesterday, maybe today, whatever. About like all the retail investors quoting them saying things like they tried to borrow money from a bank or for their sister to buy more SpaceX stock or so one woman says there's no such thing as too much when it comes to investing in one of the most ambitious companies that ever existed. And another guy says, I'm willing to overpay for it just to say I'm part of the thing. Which is like an amazing. I don't think about like, what. What is a meme stock? Yeah, it's hard to like. It's easy for you to look at GameStop and be like, oh, this is a company that trades above its fundamental value because retail investors like it. But then you go on Reddit or whatever and people are making fundamental cases for GameStop. You can't necessarily tell a meme stock by what people say about it. Right. You have to sort of be like this enthusiasm is. It's my aesthetic judgment that some of these stocks are meme stocks. But then this guy is like, I know, I'm overpaying. I don't think this company is worth that much. But I want to be part of this thing.

[Katie Greifeld]

I want to meme stock. I want to participate in the culture.

[Matt Levine]

Yes, exactly.

[Katie Greifeld]

It's kind of beautiful. I like how candid he is and true to his own intentions. He is something I did think was interesting and we probably have to move along, but I just think the conversations that we're having around SpaceX anthropic OpenAI. I think back to the conversations we were having on this podcast probably a year ago talking about how private forever is the new mantra and the dearth of IPOs. And it is pretty amazing to think about where we are at this moment where SpaceX is about to go public. We have S1s in some form from Anthropic and OpenAI. It's just like a total 180. It feels like in some ways to the conversations that kind of defines my 2025.

[Matt Levine]

Yeah, it's interesting. I think a lot about Uber was part of a wave of like very similar conversations where it was like, I think I started writing private markets or the new public markets when Uber was private and there was this like real sense of like companies could stay private forever. Like all the technology for like tender offers and like fundraising in private markets and all that stuff like was being developed and there was this real sense that companies didn't want to go public anymore. And all the big companies that say private and then like they all kind of went public and then there's another wave of it this year basically. And you know, some of it is just like all of those stories are always overblown and eventually every company, every big tech startup is going to go public. But some of it is just the very specific AI story of you need a gajillion dollars of CapEx for data centers and so you have to tap every possible financing source. And being a public company helps you do that.

[Katie Greifeld]

Yeah, it's hard to say how much you can extrapolate it out. I did think to this point though, the language in OpenAI, the company coming out and saying that they basically just want to give themselves the option to go public, that there is this pressure to go public and they are in kind of an anthropic. But the company said that they haven't decided on timing for an IPO yet. It may be a while because there are things we want to do that are likely easier as a private company. But it's a complicated set of trade offs and this gives us the option to go public sooner if that ends up being the best.

[Matt Levine]

Yeah.

[Katie Greifeld]

Which was pretty candid.

[Matt Levine]

Yeah. People who complain about the governance of SpaceX like they're not wrong. It is a real sea change from how public companies are run. And basically it's like Elon Musk can do whatever he wants. He has super voting stock, he controls the board. You can't sue him. There's no real way to sue for pre shift fiduciary duty. The company can do whatever they want. And obviously that is informed by Elon Musk's own particular history with public market lawsuits. But I don't know. OpenAI is like there are things we can do as a private company that are easier if we're private. Some of those things will be easier if you copy the SpaceX governance structure and go public. Right? Some of them are not. Not having disclosure is useful or whatever, but SpaceX will not be as constrained by public company roles as any previous public company. And I wonder if OpenAI and Anthropic, which are not run by Elon Musk, but which have similar like idiosyncratic interests. Like maybe they'll do the same thing and be like shareholders, just gotta trust whatever we say.

[Katie Greifeld]

Take it or leave it. We'll see. I will be firmly on maternity leave when those companies go public.

[Matt Levine]

So yeah, and this podcast will have already come out when SpaceX officially goes public.

[Katie Greifeld]

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[Matt Levine]

Sports so one thing I have been saying for a while now is that now there is federal sports gambling. And one thing I've said is there's now federally regulated sports gambling where Kalshi runs a sports betting operation that is regulated by the CFTC and it says because it's regulated by the CFTC it can't be regulated by state gaming regulators. And it has mostly won that argument in court. Most league courts have said, yep, that's right, the CFTC regulation preempts state regulation. And so because you're a CFTC regulated sportsbook, you don't have to follow state laws. So for instance, you can offer bets in states that forbid sports gambling. You can offer sports gambling to 18 year olds, whereas most states restrict it to 21 year olds. All these things. And one thing that I've said is this is a weird situation for many reasons. But one reason is that the CFTC does not actually regulate sports gambling. There's no rules that the CFTC has ever published about sports betting until this week when they published a big set of proposed rules. They're not finally out. They have to go through notice and comment, but they propose rules for how to regulate federal sports betting, which I just find just as a concept, very funny.

[Katie Greifeld]

Yeah, I enjoyed your column on this. The CFTC confronting questions that no regulator has had to contemplate before.

[Matt Levine]

Like plenty of state gaming regulators.

[Katie Greifeld]

Yeah, for sure. Not necessarily the CFTC financial markets regulator. No. And I do love, you know, when talking about pre collegiate sports, collegiate I went to high school. Like that's where my brain went. You just went straight to Little League?

[Matt Levine]

Yeah, I mean for I have children, pre high school age children, one of whom is an accomplished little leaguer.

[Katie Greifeld]

I thought you were going to say I have a side hustle and it's no.

[Matt Levine]

But like I will tell you Katie, I am like the least athletic or sports knowledgeable person. But like I go to these Little league games and I'm like, yeah, they need assistant coaches. I could be the third biggest coach. I feel like I'm going to be a Little league coach within the next two years.

[Katie Greifeld]

I thought you were contemplating basketball as well.

[Matt Levine]

My daughter is like a competitive basketball and softball player, but I feel like I'm more suited to Little League.

[Katie Greifeld]

I was going to say Little League. It seems like slower pace than basketball, but then I realize I'm thinking about the NBA Finals, which is super fast

[Matt Levine]

and probably basketball is just faster paced than softball.

[Katie Greifeld]

It's fair anyway.

[Matt Levine]

Yeah.

[Katie Greifeld]

So you can't bet on it.

[Matt Levine]

I wrote that the CFTC in its hundred page rulemaking about prediction markets did have to confront the question, should there be federally regulated betting on Little League? Right. Technically what they say is pre collegiate sports or sports below the collegiate level. So that includes high school sports, it also includes Little League and they come out on the side of no, you can't have betting on Little League because essentially these are market integrity questions. You do not want to allow federally regulated betting. Swap contract trading on stuff where you can't be pretty confident that the result is one, determinable. Who knows who won a Little League game? There's no official records. Right. And then two, it's not manipulable. Right. Like you don't want someone to throw a Little League game to win a bet.

[Katie Greifeld]

That's true.

[Matt Levine]

Whereas like what are the chances of someone throwing an NBA game to win a bet? They're not zero, but like there's a lot of constraints on that.

[Katie Greifeld]

Yeah.

[Matt Levine]

Fewer constraints on Little League.

[Katie Greifeld]

In some ways it's a shame because I feel like you could have a real edge, you know, if you.

[Matt Levine]

Well that's the point.

[Katie Greifeld]

Yeah.

[Matt Levine]

The point is that like, the point is that like prediction markets are meant to like be truth seeking functions and like you want to incentivize people to like find public information, find difficult to get but like you know, legally accessible information to build models to try to predict the future. This is mostly economically relevant for non sports prediction markets. It's like, ooh, well there's a prediction market on what the Fed will do and people who predict that well add information to the world. Whereas people who predict the Knicks game well will win a sports bet.

[Katie Greifeld]

Yeah.

[Matt Levine]

But the CFTC is agnostic. It's like sports are economically important. So we're going to have lots of betting on sports. But we want to encourage people to do work that is informative rather than just like bribe or wrath. They want to ban injury contracts because those are like, you know, the person who knows whether a player is going to come back from an injury is kind of like the player and his doctor and like his team, his camp and like those are going to be insider traded contracts.

[Katie Greifeld]

And you don't want to encourage a Tonya Harding and have some.

[Matt Levine]

Right, right. They also, they also want to ban contracts on fights. Not like boxing, but on will a fight, like a brawl, a brawl, breakout at a baseball game. One reason for that is to protect so that you don't bet on a brawl and then start a brawl and people get hurt. But then they also say even if the probability that any athlete or market participant acts on such incentive is low, the effect of a market and physical altercation contracts on the culture of athletic competition is inconsistent with the public interest. Which is like true. Yes, but imagine if I had told you five years ago that the Commodity Futures Trading Commission was like, well, the integrity of the game requires us not to take bets on fights at games. It's like, why is that a commodity?

[Katie Greifeld]

It's amazing.

[Matt Levine]

Why is any of this happening? It's so weird and path dependent.

[Katie Greifeld]

I do applaud them for putting out this report.

[Matt Levine]

I read it skeptically and I was like, they did a good job. Good job.

[Katie Greifeld]

Yeah. And the way it's written, it's very sober, it's with a straight face and

[Matt Levine]

it's thoughtful about a lot of these questions. It's not bad.

[Katie Greifeld]

It is pretty cool.

[Matt Levine]

I will say there's one very weird one. Yeah, it's not sports.

[Katie Greifeld]

Go on.

[Matt Levine]

Did we talk about the Supreme Leader of Iran out of office?

[Katie Greifeld]

We must have.

[Matt Levine]

There's this controversy where like Kalshi had a market on like will Ali Khamenei be out of office as Supreme Leader of Iran? And then he was out of office because he was killed for sure. And Kalshi was like, we don't want this to be an assassination market so we're not going to pay it out. We're not going to pay out. Yes, we're going to refund everyone their money basically. And people got really mad about that. Yeah, but that is like consistent with like the CFTC even before this rulemaking, like the CFTC has kind of had a rule against assassination markets. So like obviously a market in like will a world leader be assassinated? Is obviously not okay. But what about like will a world leader leave office by the end of the year? If like the world leader resigns or loses an election, that's fine. You're allowed to have a market on that and like election markets are a big part of it. But if he's assassinated, then that's bad. And you might say, well, if it's just on will he leave office? It's not a bet on assassination, so that's fine. But in fact, what the CFTC says, they talk about Nicolas Maduro, which is the example of these, they say an event contract that settles on whether Maduro is out of office by a certain date without further specification of the Qualifying mechanisms involves assassination within the meaning of the rule. Because assassination is among the pathways by which the settlement condition can be satisfied. That is, if you have like a world leader out contract, that is illegal. And so there's a lot of stuff like that. They're like, you know, Iran shuts down oil facilities, contract is illegal if, like one way they could shut them down is getting them bombed. Which is very strange because like any event could happen or not happen because of like a murder. You know, they have bets on war. Yeah. So they have bets on like, what state will Taylor Swift get married in July 5th? And like.

[Katie Greifeld]

Oh, I thought you said date.

[Matt Levine]

Well, yeah, I think they have date, but they certainly have location contracts. And it's like, she will not get married in New York if she's murdered. But like, it can't be illegal to list that contract because there's some way for it to resolve no due to war or assassination. So it's a very. That's like they haven't thought that one through.

[Katie Greifeld]

How does that get resolved? What they. There's just a bunch of complaining about it.

[Matt Levine]

Yeah, probably. Or there's not and I'm the only one complaining. And then they just blunder along.

[Katie Greifeld]

I don't know, it seems like a slippery slope.

[Matt Levine]

It is. Because the Khomeini contract was like, probably everyone thought it was fine until he got killed. And they're like, oh, wait, that was in hindsight, an assassination contract. Right. There'll probably be other things like that where things that are not obviously assassination contracts will turn out to be, in hindsight, assassination contracts. And I'm really like, eh, what if

[Katie Greifeld]

you die of natural causes?

[Matt Levine]

I actually think it's okay, but it's a little, it's a little gray area. I think they probably would discourage bets on people dying, even if it's limited to dying of natural causes.

[Katie Greifeld]

Yeah.

[Matt Levine]

Although who knows, maybe it'll turn into an insurance market.

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[Matt Levine]

Let's talk real quickly about friend of the show former guest Boaz Weinstein. Boaz Weinstein lost a big case in the Supreme Court today.

[Katie Greifeld]

Yeah, the headline on the Bloomberg terminal is that the Supreme Court shields investment funds from shareholder suits. Specifically, the justices blocked activist investors from suing 11 closed down funds. And the suing investors were led by hedge fund manager Boaz Weinstein's Saba Capital Master Fund.

[Matt Levine]

It's a weird case. So basically the Investment Company act, which is like the federal law that regulates closed end funds, investment funds, mutual funds says that if you issue shares of a mutual fund or closed end fund, you have to have one vote per share. They all have to be equal voting shares. No super voting whatever. A lot of these funds are incorporated In Maryland, as Marilyn Law, that says you can have, you can opt into a provision where if a shareholder gets more than 10% of the stock, they can't vote their extra shares. They can only vote 10%. They don't get to vote their entire holding to prevent basically activists from influencing the funds. Right. It's like an anti activist pro management provision. And so all these funds are in Maryland and have that provision. And so Boaz, I don't think owns more than 10% of any of these funds. But he sued to be like, you can't have that provision because that's like a way to blow block activism. And he said, you can't have it because the Investment Company act says really clearly one vote per share. And this would be taking away votes from shares. And so he won in court because that's true. And then in the Supreme Court, he got reversed because the Supreme Court said, didn't even address his argument. They were just like, you don't have a right to sue under this statute. Like this statute that says you have to have one vote per share. There's no right to sue if you violate it. The only way to enforce it is the SEC has to enforce it. And if the SEC doesn't enforce it, tough luck. So Poez lost on a technicality.

[Katie Greifeld]

Yeah. And his firm did provide a statement basically saying that this decision puts the burden squarely on the sec.

[Matt Levine]

Good luck with that.

[Katie Greifeld]

Et cetera, et cetera. Closing with the SEC has no excuse not to act.

[Matt Levine]

It does have an excuse not to act, which is.

[Katie Greifeld]

Go on.

[Matt Levine]

Which is everyone has turned off this podcast by now because many people are not as interested in the injustices of closed end fund management as Boaz Weinstein is. Katie is like, gesturing, like, obviously I'm interested, but you know who's not? It's Paul Atkins in the sec.

[Katie Greifeld]

Yeah, he's probably a little busy.

[Matt Levine]

He's busy.

[Katie Greifeld]

He has to answer a letter from Elizabeth Warren asking him to basically delay the SpaceX IPO because it's overpriced.

[Matt Levine]

Yeah, yeah, it's really good. He's also. We're not gonna have time to talk about this, but, like, today they put out a really major revision to equity market microstructure rules.

[Katie Greifeld]

Oh, my God.

[Matt Levine]

Getting rid of the trade through rule, which is like 10 of my readers, like, their heads exploded. But I'll just, I'll just leave that here.

[Katie Greifeld]

Wait, I. We have, like, minutes. We have minutes left. What does this mean for the entire industry of closed end fund arbitrage, though? Does this essentially kneecap it.

[Matt Levine]

No, because the funds. Boaz didn't own 10% of any of these funds.

[Katie Greifeld]

Okay.

[Matt Levine]

He still do activism. You just can't vote above 10% of the funds.

[Katie Greifeld]

Okay.

[Matt Levine]

Also, like he can continue to write strongly worded letters to the sec being like, you guys gotta do something about this. Yeah, maybe they'll read the letters.

[Katie Greifeld]

Yeah, who knows? I might.

[Matt Levine]

And that was the Money Stuff Podcast. I'm Matt Levine.

[Katie Greifeld]

And I'm Katie Greifeld.

[Matt Levine]

You can find my work by subscribing to the Moneystuff newsletter on Bloomberg.com and

[Katie Greifeld]

you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[Matt Levine]

We'd love to hear from you. You can send an email to moneypodlumberg.net Ask us a question and we might answer it on the air.

[Katie Greifeld]

You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

[Matt Levine]

The Money Stuff podcast is produced by Anna Mazarakis, Moses Andam and Alexis Haut.

[Katie Greifeld]

Our theme music was composed by Blake Maples.

[Matt Levine]

Amy Keen is our executive producer. Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.

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[Matt Levine]

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