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Bonus TL;DR
- The Ninth Circuit Court ruled that sports event contracts are gambling products rather than federally regulated swaps, clearing the way for Nevada to enforce state gaming laws against platforms like Kalshi.
- The decision drove stock gains for DraftKings and Flutter, marking a significant legal win for traditional sportsbooks seeking to prevent prediction markets from operating outside state-level regulations.
DraftKings and Flutter Entertainment shares jumped after the Ninth Circuit Court of Appeals ruled that sports-related event contracts at issue in Nevada are gambling products, not swaps governed by federal commodities law.
The decision cleared the way for Nevada to apply its gaming rules to those contracts and denied requests from Kalshi, Crypto.com, and Robinhood for injunctive relief. For sportsbook operators, the ruling is an early legal win in the fight over whether sports-outcome contracts should be treated like state-regulated betting or federally regulated trading products.
On the market reaction, DraftKings Inc. shares gained as much as 10% and Flutter Entertainment plc rose as much as 8%, according to the source report.
Court says contracts are sports bets, not swaps
According to the source report, the Ninth Circuit found that the sports event contracts at issue were not “swaps” under federal commodities law. The article described the court’s core finding this way: sports event contracts offered by prediction-market platforms are sports bets, not swaps subject to federal commodity law.
That matters because prediction-market platforms and the Commodity Futures Trading Commission have argued that event contracts fall under exclusive federal jurisdiction. But the ruling allows the Nevada Gaming Control Board to continue applying state gaming law to those offerings in Nevada.
The court also denied the injunction requests from Kalshi, Crypto.com, and Robinhood, which had sought to stop Nevada regulators from shutting down their sports-related event contract offers in the state.
Why the ruling matters for sportsbooks and prediction markets
The report said 44 states have objected to these kinds of sports contracts, arguing they are effectively sports betting products. That makes the Nevada case more than a single-state dispute, even if it does not resolve the issue nationwide.
For licensed sportsbook operators such as DraftKings and Flutter, the ruling may ease concerns that prediction market companies could offer sports-outcome products outside the state-by-state gambling system. The article characterized the decision as a meaningful win for states and licensed sportsbooks.
Still, the legal fight is not over. The report said Kalshi filed a petition for rehearing on Sept. 9, and it noted that future Supreme Court review remains possible. That leaves the broader question unsettled: whether courts ultimately treat these products as gambling, federally regulated financial contracts, or some mix of the two depending on structure and jurisdiction.
The immediate takeaway is narrower but important for the U.S. betting industry: in this case, the Ninth Circuit sided with Nevada’s view that the sports contracts at issue can be regulated as gambling products.
Source: As reported by Sheryar Siddiq.
