Kendall, 18, and Kylie, 16, were having dinner with a female friend, player Chandler Parsons and his sports agent, reported People magazine.
"They were heavily flirting, but no touching," an onlooker said.
"Chandler and Kendall were talking the whole time. His agent was chatting with Kylie and the other friend," the source added.
Parsons, 25, played for the University of Florida on an athletic scholarship before being drafted by the Houston Rockets in 2011.
Jenner has been linked to rapper Young Jinsu and One Direction's Harry Styles.