DraftKings (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT), the parent company of FanDuel, saw their shares climb more than 4% on Monday morning following news of a bipartisan legislative push to restrict prediction markets.
The rally comes as investors weigh a new proposal from Senators Adam Schiff (D-Calif.) and John Curtis (R-Utah) that would explicitly prohibit prediction market operators from listing event contracts tied to sporting events and "casino-style" games.
The proposed legislation aims to settle a growing jurisdictional dispute between federal and state regulators.
Currently, platforms such as Kalshi and Polymarket operate under the purview of the Commodity Futures Trading Commission (CFTC), which classifies their offerings as derivative contracts or "swaps."
However, the new bill seeks to return control of sports-related wagering to state gaming commissions, where DraftKings and FanDuel already hold extensive licensure.
Senator Schiff argued that the CFTC has been "greenlighting" these markets inappropriately, while Senator Curtis emphasized the need to protect young people from unregulated "addictive sports betting contracts."
The move follows a series of legal setbacks for prediction markets at the state level.
Last week, Arizona Attorney General Kris Mayes filed criminal charges against Kalshi, accusing the operator of illegal gambling and election wagering without a state license.
Nevada and Arizona have been among the most vocal critics, arguing that these platforms bypass the rigorous consumer protections and tax frameworks imposed on traditional sportsbooks since the Supreme Court struck down the federal ban on sports betting in 2018.