Michael Burry takes stakes in DraftKings and Flutter on regulation view

Michael Burry said Wednesday he has bought shares of regulated sports-betting operators Flutter Entertainment and DraftKings, taking a position built on his view that prediction markets will eventually face stricter regulation and taxation. He said the holding is split roughly 60% in Flutter and 40% in DraftKings, with purchases around $107 a share for Flutter and in the low $26 range for DraftKings.

Burry, known for anticipating the U.S. housing crash before the 2008 financial crisis, said in a Substack post that the two companies had been pressured by the rapid growth of prediction-market platforms. He described the purchase as a full-sized position and said he may later increase each company into a separate full position.

The trade links two listed gambling operators to a wider policy dispute over event-based contracts. Prediction markets allow users to trade contracts tied to the outcome of events. The U.S. Commodity Futures Trading Commission has asserted jurisdiction over such contracts, while multiple states are contesting or facing federal action over who has authority to regulate the activity.

That distinction has financial consequences for the companies involved. Regulated sportsbooks operate under state gaming regimes, including licensing and tax obligations. Prediction-market contracts have been able to avoid state gaming taxes, according to CNBC, creating a competitive pressure point for operators such as DraftKings and Flutter.

“I believe that the political climate will not tolerate this,” Burry wrote in the Substack post. “Prediction markets exist in a loophole adjacent to a heavily regulated and taxed industry. In time, prediction markets will be subsumed into regulation and taxation.”

Shares of DraftKings have fallen about 45% from their 52-week high reached last September, while Flutter has dropped 65% from its August peak, according to CNBC. In afternoon Nasdaq trading cited by CNBC at 3:40 p.m. EDT, DraftKings was up 0.50% at $27.05 and Flutter was up 2.09% at $110.61.

Burry said the share-price weakness has created an opportunity in businesses he views favorably. “DraftKings is inflecting as an operating business and the value is in the transition I foresee in the near future,” he wrote. On Flutter, he said the company “has been hurt by capital misallocation in the past, but is a fundamentally very good operating business with terrific scale.”

Flutter owns FanDuel, one of the largest U.S. sports-betting brands. Both Flutter and DraftKings have also started examining prediction-market offerings of their own, CNBC reported. Burry noted that this could give the companies exposure to the category if the regulatory outcome allows such products to keep expanding.

The core of Burry’s argument is that a tax and regulatory gap between sportsbooks and prediction markets is unlikely to persist. If regulators bring event contracts closer to gaming-style oversight, the relative advantage of newer platforms could narrow, affecting the competitive balance between listed sportsbooks and prediction-market operators.

This story draws on original reporting from CNBC.