Shares of DraftKings and Flutter Entertainment advanced on Friday after a U.S. appeals court ruled that sports bets are not swaps under federal law, a decision that removes a regulatory hurdle for prediction markets.
DraftKings rose 6.5% while Flutter Entertainment gained 4.6% in afternoon trading. The gains followed a ruling by the Ninth Circuit Court of Appeals in a case involving Kalshi, a platform that operates prediction markets for sports and other events.
The court determined that sports bets do not qualify as swaps under the Commodity Exchange Act, a classification that would have subjected Kalshi to stricter oversight by the Commodity Futures Trading Commission. The decision narrows the scope of what constitutes a swap under federal law, a distinction that has drawn scrutiny in the growing prediction-market sector.
The ruling provides clarity for companies operating in the prediction-market space, which have faced regulatory uncertainty in the U.S. Kalshi had argued that its products are akin to traditional sports betting, while regulators had raised concerns about their similarity to financial derivatives. The appellate court’s decision aligns with the company’s position that its markets do not meet the legal definition of swaps.
