DraftKings and Flutter Rise After Court Rules Prediction Markets Are Gambling
Shares of DraftKings (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT) rose significantly after a U.S. Ninth Circuit Court ruling clarified that prediction markets involving sports-related contracts are classified as gambling, not federally regulated financial swaps. The decision allows states like Nevada to apply their own gaming regulations to these platforms, which is seen as favorable for traditional online sportsbooks such as DraftKings and Flutter. The court rejected appeals from Kalshi, Crypto.com, and Robinhood seeking an injunction against state-level regulation of prediction markets in Nevada. This ruling supports the position held by 44 states that event contracts are essentially a form of gambling rather than derivatives under federal law. The decision could limit the regulatory advantages previously enjoyed by platforms like Kalshi. Both DraftKings and Flutter had seen declining institutional ownership due to concerns over competition from prediction markets, but this ruling is expected to level the playing field by subjecting all sports betting-like products to similar state-level regulations.
Topics: gambling regulation Ninth Circuit Court of Appeals prediction markets stock market reaction