Shares of DraftKings (DKNG) and Flutter Entertainment (FLUT) rose Friday following a U.S. Court of Appeals for the Ninth Circuit decision. The court ruled that Nevada can enforce state gaming laws against prediction market platforms like Kalshi. This classification defines sports-related event contracts as gambling rather than federally protected financial products.
The ruling benefits established operators by creating significant barriers to entry for new competitors. However, the decision conflicts with a previous Third Circuit ruling, establishing a formal circuit split. This legal disagreement increases the likelihood that the U.S. Supreme Court will ultimately determine the regulatory future of prediction markets.