DraftKings shares rise despite regulatory blow to prediction markets

DraftKings stock jumped as much as 10% intraday on August 28 after a federal appeals court handed the company an unexpected gift: permission for states to treat prediction markets like gambling. The Ninth Circuit Court of Appeals ruled that Nevada can enforce its gaming laws against Kalshi’s sports-related event contracts, classifying them as gambling rather than federally regulated swaps under the CFTC. Shares of DraftKings closed the day up 4.29%, settling under $25. That’s still more than 50% below its early 2025 peaks, but the direction mattered more than the altitude. Why Wall Street liked the ruling Prediction markets had become a growing headache for traditional sportsbooks. Platforms like Kalshi offered sports-adjacent contracts that operated under federal commodity rules, sidestepping the state-by-state licensing gauntlet that companies like DraftKings and FanDuel spend millions navigating. Lower tax burdens and nationwide reach made these platforms an increasingly attractive alternative for bettors. Flutter Entertainment, the parent company of FanDuel, stands to benefit from the same dynamic. But DraftKings arguably had more to gain given its own predictions business, whi...