Shares of DraftKings and Flutter Entertainment advanced on Friday after a U.S. appeals court ruled that sports bets do not qualify as swaps under federal law in a case involving prediction market operator Kalshi.
DraftKings rose 6.5% while Flutter Entertainment gained 4.6%, reflecting investor optimism that the decision removes regulatory ambiguity over the legal status of sports betting and related prediction markets. The Ninth Circuit Court of Appeals ruled in favor of Kalshi, determining that sports bets fall outside the scope of swaps regulations under the Commodity Exchange Act.
The decision follows years of legal uncertainty for the prediction market sector, where operators have sought clarity on whether their products could be subject to stricter financial regulations. The ruling suggests that sports betting and prediction markets may operate under gaming laws rather than financial commodities regulations, a distinction that could ease compliance burdens for industry participants.
The market reaction underscored the sensitivity of DraftKings and Flutter Entertainment—both major players in sports betting—to regulatory developments affecting the broader gambling and prediction market ecosystem.
