DraftKings gains 4% after Ninth Circuit backs state gambling rules

On August 28, DraftKings shares closed up 4.29% after the Ninth Circuit Court of Appeals ruled that Nevada can enforce its gaming laws against Kalshi's sports-related event contracts. The court classified those contracts as gambling rather than federally regulated swaps, handing traditional sportsbooks a legal advantage they had been seeking since prediction markets began eating into their user base.

DraftKings had spent the past year building its own predictions business alongside its licensed sportsbook. The DKeX exchange, launched in June 2026 after the Railbird Technologies acquisition, now operates across 18 states and reported $11.3 billion in total trading volume for the week ending June 21. The company sits on both sides of this ruling — beneficiary of the competitive pressure relief, and operator of the very market category now under state scrutiny.

Flutter Entertainment's FanDuel stands to gain from the same dynamic. Michael Burry disclosed a DraftKings position in July 2026, with his thesis reportedly built around the expectation that regulation would blunt prediction markets' competitive edge.

A Supreme Court petition filed from New Jersey on September 2 seeks clarity on where federal commodity authority ends and state gambling law begins. That case will determine whether August 28 was a turning point or a temporary reprieve.

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Heath Quinn

Junior Markets Analyst

Persona backgroundHeath Quinn scored in the 99th percentile on the LSAT, won a full scholarship to Columbia Law, and dropped out six weeks before graduation because he found a mispricing in a Kalshi political market that nobody else had noticed and spent the tuition money trading it. He was right.