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U.S. & Iran Trade Attacks in First Major Escalation in Weeks; Now: Jury Deliberating in Clancy Triple-Murder Trial; Casinos Gear Up For "All-Out War" Against Prediction Markets. Aired 11-11:30a ET

Aired August 31, 2026 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[11:00:01]

WOLF BLITZER, CNN ANCHOR: Happening now, high tech hunt, the growing effort to keep up with drones spying on U.S. military bases and finding out who's sending them.

And later, taking on tariffs. President Trump's trade war with Canada could see U.S. citizens paying billions of extra dollars.

Welcome to our viewers here in the United States and around the world. I'm Wolf Blitzer. Pamela Brown is off. You're in The Situation Room.

Happening now, the fragile calm in the Iran war shatters. For the first time in more than a month, the U.S. and Iran have exchanged strikes. Iran state broadcaster claims this video shows ballistic missiles being fired at U.S. military sites in Jordan. Iran says it also targeted a U.S. base in the United Arab Emirates. It was retaliation for U.S. forces striking two Iranian rocket launchers on Larek Island.

A U.S. official tells CNN that Iranian forces were seen preparing to launch rockets with mines into the Strait of Hormuz. CNN senior national security reporter, Haley Britzky, is here with me in The Situation Room. What else are you learning, Haley?

HALEY BRITZKY, CNN SENIOR NATIONAL SECURITY REPORTER: Yes. Wolf, I think the important part of this is that while the administration has been focusing on economic pressure, certainly in recent military action is obviously still ongoing and military operations are still happening. So what we saw yesterday, U.S. striking two Iranian launchers, preparing to launch sea mines into the Strait of Hormuz, and then Iran retaliating, firing at U.S. military positions.

And this, of course, comes just a few days after the administration and U.S. Central Command Commander Admiral Brad Cooper saying that sea mines had been cleared from the Strait of Hormuz. This has obviously been something that the military has been grappling with for several months now. CNN first reported months ago that Iran was beginning to lay some of these sea mines. So it has been something that they've grappled with and that it appeared, they're saying have successfully cleared.

But the Strait has continued to be just sort of the center point for tensions between the U.S. and Iran. Obviously, we know that talks have all but stalled, that the White House said last week there were no ongoing negotiations. The President mentioning this morning in a Truth Social post that Iran is a failed nation, pointing again to what he said pretty frequently that they have no navy, no air force. But that doesn't mean, obviously they don't a threat, as we just saw yesterday with how the U.S. was responding there.

So, you know, it really raises the question of sort of what is coming next here, the President saying this morning that we're going to hit them hard, there will be a response, obviously something we're going to be watching for to see how the U.S. manages that.

BLITZER: And Haley, I'm sure you saw "The Washington Post" is now reporting that military leaders, top military leaders, including some four star generals, have actually warned the Defense Secretary, Pete Hegseth, against extending operations in the Iran war. Tell us about that.

BRITZKY: Yes, so "The Post" reporting here that the secretary is extending deployments in the Middle East through September some through 2027. And so that takes away, you know, personnel, it takes away assets from elsewhere in the world. And we know that commanders around the military have been sort of concerned specifically with what this would mean for the U.S. military's operations in the Pacific against China. And so "The Post" reporting that, you know, these commanders basically said that they did not agree with the decision, that it presented significant risk to the U.S. military operations around the globe.

Of course they would continue to carry that out if ordered by the secretary. But it does also just show here that the military is not planning for this to end anytime soon as the administration is sort of figuring out what the next steps are with Iran, whether economic pressure works or does not work. But certainly the military isn't going anywhere here, Wolf.

BLITZER: Yes. And "The Post" reporting also that this expanded U.S. military operations involving Iran could undermine U.S. interests, military interests here in the United States itself.

BRITZKY: That's right. Yes. I mean, it's a game of where assets and equipment and personnel are. And of course, when personnel are deployed, they need so much time at home to, to regroup, to kind of refit their units. So it does present a problem. And it's something that the secretary is always having to manage where these personnel are going and when to bring them home.

BLITZER: Haley Britzky, thank you very, very much for that report.

Also happening now in Plymouth, Massachusetts, jurors are back working to try to determine a verdict for Lindsay Clancy. She's accused of murdering her three young children before taking trying to take her own life. Clancy does not deny strangling her children, but her defense argues she was suffering from postpartum psychosis and is not criminally responsible. Clancy was prescribed about a dozen different medications back in 2022 and 2023 to treat her mental ill. CNN's Jean Casarez is in Plymouth for us watching this trial unfold. Jean set the scene as we await the verdict.

[11:05:03]

JEAN CASAREZ, CNN CORRESPONDENT: Well, Wolf, they've been deliberating for about two hours now continuously. We haven't heard there's a question of law, a question of the evidence. We haven't heard that they want to see any evidence. So they're really buckling down. You can just imagine they're talking this group of 12, they are deliberating.

Now outside, everyone is just waiting. There is a group in the courtyard that just standing there waiting for any news out of anything. You know, the judge has said that once there is a verdict that it could take 30 to 45 minutes to be read. So that is a while. Lindsay Clancy was in the courtroom today. So she is right inside that courthouse right now as well as the defense every just waiting. The jury is in the lead. The jury will let us know and the court if they have any question or if there is a verdict.

BLITZER: Massachusetts, as you know, is one of a handful of states with what's called the burden of proving criminal response responsibility, meaning the prosecution has to disprove insanity rather than the defense proving cognitive incapacity. So what does that mean for the jurors?

CASAREZ: It's fascinating, Wolf, it really is. And the jury has their jury instructions which explain it. But once a defense asserts their defense of lack of criminal responsibility, the burden shifts all the way over to the prosecution. And what the jurors the pivotal question is the jurors will have to look at, and it's in the instructions, two things, and they've got to find it beyond a reasonable doubt.

Number one, even if you feel as a juror that Lindsay Clancy had a mental disease or defect, and at the time, the moment that she was killing her three children, did she appreciate the wrongfulness of her acts? Did she know that this was criminal, what she was doing? Now they can't go into her brain and her mind and she did not testify, which constitutionally was her right not to do so, they have to look at the facts and circumstances, the evidence surrounding the day. They may want to go in the weeks before or even September to January. But that's a pivotal question. At the moment, if she had that mental disease or defect, did she still know what she was doing was wrong? Wolf?

BLITZER: All right, Jean Casarez in Plymouth, Massachusetts. We'll stay in constant touch with you for updates. And you can also follow Jean in our complete coverage of the Lindsay Clancy trial on CNN all access at cnn.com/watch.

[11:07:39]

And still ahead, how casinos are now preparing for what's being described as all-out war as they fight the explosive growth of prediction markets. And can we eat lettuce again? What the FDA now saying about that outbreak that left two people dead and made thousands more sick. Stay with us. You're in The Situation Room. (COMMERCIAL BREAK)

BLITZER: Happening now, take a look at this live pictures coming in from Las Vegas this morning where casino operators are dealing with a tourism slump as well as an emerging threat to their business. Prediction platforms like Kalshi and Polymarket allow users to bet not just on sports but on anything from politics to pop culture and even the weather.

And they don't face the same scrutiny from state regulators. And it's believed that all-out war for customers is actually now brewing. CNN's Marshall Cohen has been doing a lot of the reporting on this for us. He's here with me in The Situation Room. So how much of a threat are these prediction markets to existing gambling markets, for example?

MARSHALL COHEN, CNN REPORTER: Well, they are waging all-out war to stop prediction markets, the casinos. But in terms of the actual business impact, it's limited so far but they're afraid of where it might go. Why are they fighting so hard? Well, as you mentioned, a lot of people don't realize that prediction markets aren't actually regulated like casinos. Even though you can bet on sports and almost anything, they are treated like financial markets regulated by the feds.

And that means there's a lot of state laws they don't have to follow and state taxes that they don't have to pay. They have beefed up their lobbying. Millions of dollars being spent on Capitol Hill high level attorneys fighting in cases across the country and a huge victory just a few days ago from the 9th Circuit from a case that came out of Nevada that ruled a federal appeals court said that states can if they want to regulate these companies. It's not the final word.

It's going to go to the Supreme Court. But it was a big victory. Wolf, I was in Las Vegas a few weeks ago talking with casino executives and state regulators and they think they have the momentum. I want to read for you a quote from one of those casino owners, Derek Stevens. He runs the Circa Resort and Casino and he said this. "A couple nerds came up with this idea to avoid paying taxes. Just because they're shrewd doesn't mean they should be exempt from the law. He called them thieves, pirates and marauders."

Now we asked Kalshi, which is the biggest prediction market in the country, for their reaction. And I interviewed their top lawyer, Rick Heaslip. Here's what he said.

(BEGIN VIDEO CLIP)

RICK HEASLIP, KALSHI GENERAL COUNSEL: They've been turning to litigation. They've been turning to threats rather than innovate. They're just trying to go to the courts. There are enough sports to go around. It is not our position that they need to follow our regulatory structure. They can continue to have their sportsbooks and we can continue to have sports prediction markets."

(END VIDEO CLIP)

[11:15:17]

COHEN: So, Wolf, the fight goes on. And one final point, CNN has a partnership with Kalshi. We use its data to cover major events, but they don't influence our coverage and we don't trade on prediction markets.

BLITZER: Editorial people can't get involved with Kalshi at all.

COHEN: Correct.

BLITZER: We're learning this morning, Marshall, that former Congressman George Santos is now banned for -- from Kalshi for life. What happened?

COHEN: It's just happened in the last hour. The first ever lifetime ban for anyone on the Kalshi platform. And it's because he was caught earlier this year, according to Kalshi, manipulating their market on whether or not he would attend a State of the Union. He was posting on Twitter saying he's going to be there, then placing bets behind the scenes. He didn't ultimately show. They said that he made a lot of money. It violates the rules. There was a referral to the federal regulators. He denies wrongdoing, but they have levied a lifetime ban. No more Kalshi for George Santos.

BLITZER: We'll see what happens on that front as well. Marshall, excellent reporting as usual. Thank you very much.

Also happening now, the U.S. government is scrambling to deal with a new threat. Chinese drones believed to be spying on U.S. military bases here on American soil. In one incident, two groups of Chinese nationals were detained after a drone was spotted flying near the White Sands missile range in New Mexico. U.S. officials believe they were tied to Chinese intelligence. CNN senior reporter, Katie Bo Lillis is here with me in The Situation Room. This is such a fascinating story and you've been doing a lot of reporting on this, Katie Bo, tell us exactly what happened at White Sands.

KATIE BO LILLIS, CNN SENIOR REPORTER: Well, Wolf, buckle up because it's kind of a wild story. So U.S. officials at this very sensitive military missile testing range in New Mexico start seeing this quadcopter style drone that's hovering over the base, flying in such a way that it looks like it's conducting surveillance, like it's flying a reconnaissance flight. So they watch this thing. They try determine who's operating it and why.

They ultimately use electronic warfare tools to force this thing to land in a parking lot at White Sands. At the same time, they're watching this rented Mercedes RV that is parked just outside the gates that they ultimately determine is the operator of the drone. It has three Chinese nationals inside. Two of them flew into an airport in New York, rented this RV, drive all the way across the country to Las Vegas in it, pick up a third person, and then beeline down to White Sands to the outside of this military base, and fly this drone.

And the FBI would ultimately tell Department of Homeland Security and military officials that these people did have links to Chinese intelligence. Wolf?

BLITZER: Yes, it's very dramatic development. How is the U.S. government now responding to this threat of small drones in general?

LILLIS: Yes. So there's two things that are really important about this story that it really kind of highlights. One of them is that as these kind of small, cheap, easy to acquire, easy to operate drones have just kind of exploded in the United States, gotten really popular, right? It's very hard for not just military officials, but for government officials generally to kind of police the skies over their installations, to both keep these things out of places where they're not supposed to be and tell the difference in between just like a lost hobbyist who thinks it would be cool to fly a drone over a military base and something more nefarious like potential espionage.

And this is really tricky when it comes to potential Chinese espionage, Wolf, because American officials tell us that one of the things that China does is they use kind of ordinary civilians, just regular people that they've pressured or incentivized to conduct this kind of what one official called nuisance surveillance when speaking to us.

And so one of the things that's very hard for counterintelligence officials is to definitively prove that any one incursion by a drone in restricted airspace that may have been flown by a Chinese national in such a way that looks a little suspicious was actually directly ordered by the Chinese government. So that has made it very hard to say how big is the problem, Wolf?

BLITZER: Yes. Excellent reporting Katie Bo Lillis, thank you. Thanks very, very much.

LILLIS: Thank you.

[11:19:24]

BLITZER: Up Next, more than 11,000 people have gotten violently sick from eating certain lettuce. So is it safe now to eat lettuce? What's the government saying? Information you need to know. You're in The Situation Room.

(COMMERCIAL BREAK)

BLITZER: So is it safe to eat lettuce again? The Food and Drug Administration says it is confident there where it's confident that all the recalled iceberg lettuce linked to cyclospora outbreak is no longer on store shelves. But officials say you could still get sick if you eat any of the recalled products that may still be out there. CNN medical correspondent Meg Tirrell is joining us right now. So how concerned do people need to be about eating lettuce now, Meg?

MEG TIRRELL, CNN MEDICAL CORRESPONDENT: Well, Wolf, hopefully not very concerned because as we know this recall in this outbreak of cyclosporiasis was specifically tied to the Taylor Farms of Mexico, iceberg shredded lettuce. And that recall was initiated July 17th. And the best by dates for the lettuce affected went out to August 3rd. So hopefully folks are not eating that lettuce anymore. They definitely should not be finding that in stores.

[11:25:09]

Just to remind folks of the scope of this outbreak, more than 11,000 illnesses have been tied to this specific iceberg lettuce outbreak. Almost 500 people have been hospitalized, and we've seen two deaths in this outbreak, which is a very rare occurrence for this parasite. Now, as you noted, the FDA said last week that it remains confident that all recall iceberg lettuce related to this specific cyclospora outbreak is off the market. And so just to look at sort of a timeline of the cases in the epicenter of this outbreak in Michigan, you can see that most of the people got sick there at the beginning of July, and that's before this recall was initiated July 17th.

And so while you still do see a few folks getting sick into August, just to explain the timeline there, the incubation period for this or the time it can take you to get sick after you ingest this parasite can be up to two weeks, and then it can be six weeks from there that it takes health authorities to actually tie a case back to this specific outbreak. So we may still be seeing case counts mount, but authorities are saying as long as you're not eating any of that lettuce, which expired in the beginning of August, you should be OK.

BLITZER: So, Meg, what's the advice you're now receiving from various food safety experts?

TIRRELL: Well, one of the things they're really emphasizing, Wolf, is that while there may be fear around eating lettuce and other produce, produce is a really important part of a healthy diet, and folks should be scared away from eating their fruits and vegetables. If folks are concerned about parasites or about bacteria, cooking your produce, boiling, roasting, things like that kills these pathogens. And then, of course, practicing other food safety practices, washing your hands, not cross contaminating with raw poultry, all of those things are good lessons to employ. Wolf?

BLITZER: Is it enough to simply wash these vegetables like lettuce in a sink and just try to wash off, wash off any of that bad stuff?

TIRRELL: Washing is helpful for getting rid of things like pesticide residues, but it's not going to get rid of cyclospora that you need to cook it to up to about 160 degrees Fahrenheit in order to kill the parasite? It's still a good idea, though, to wash your produce.

BLITZER: All right, Meg Tirrell, thanks very, very much.

And we'll have more news when we come back.

(COMMERCIAL BREAK)