DraftKings and Flutter Shares Fall Following Kalshi's NFL Contracts
DraftKings and Flutter Entertainment, the parent company of FanDuel, have reported stock declines after attention turned to Kalshi, which introduced parlay-style futures contracts linked to NFL outcomes. DraftKings had fallen 5.4% in the past five days to $37.40 at the end of trading Monday, while Flutter had dropped over 30% to $254.01.
Analysts connected the downturn to concerns that Kalshi's products could challenge the best sports betting sites by drawing customers toward alternatives positioned as financial trades rather than wagers.
Kalshi's new contracts allow participants to trade bundled NFL team outcomes in a format similar to sports parlays. Unlike sportsbook bets, these products are regulated as futures under the Commodity Futures Trading Commission (CFTC). The strategy positions Kalshi between finance and sports betting, raising questions about how close the two industries can become.
The market's response was a note of concern regarding the competition implications. DraftKings and Flutter, which declined to $252.40 by 1 pm on Sept. 30 before a slight uptick, remain among the best sports betting apps. However, Kalshi's licensing to provide futures with sports-like qualities has planted the seed of uncertainty.
The developments also signal the regulatory debate over whether to designate such products as financial products or illegal gambling.
Investors retaliated by trimming positions among incumbent operators, viewing Kalshi itself as a potential disruptor. Although Kalshi itself is not operating as a sportsbook, its offering of products that resemble wagers with federal approval has increased attention from regulators and the industry.
Massachusetts files lawsuit against Kalshi
Massachusetts has filed a lawsuit against Kalshi, asserting that the company's NFL contracts constitute sports betting and therefore violate state and federal law. Attorney General Andrea Campbell argued that the contracts, though labeled as futures, function in practice as wagers.
The lawsuit claims that the CFTC exceeded its authority to grant Kalshi approval.
State officials warned that allowing such contracts would erode oversight of sports betting, which is restricted to licensed operators. Regulators emphasized that wagers styled as parlays cannot bypass state jurisdiction by being categorized as financial products.
Kalshi has argued that its products are genuine futures contracts, regulated by the federal government, and not any form of gambling. Massachusetts officials responded that Massachusetts residents can get these products outside of the licensed model, followed by Massachusetts sports betting apps, posing a risk to consumers and the integrity of regulated markets.
Earlier in the year, cease-and-desist letters were sent to other unlicensed gaming platforms operating in the state, with the lawsuit also aiming to address exposure of gambling to young people in the state.
