Michael Burry Bets on DraftKings and Flutter Against Prediction Markets

Michael Burry, the investor made famous by The Big Short, has taken long positions in DraftKings and Flutter Entertainment, betting that regulators will eventually rein in fast-growing prediction markets and push that betting activity back toward licensed, taxed sportsbooks. The position, disclosed on 8 July 2026, splits roughly 60 percent toward Flutter and 40 percent toward DraftKings, according to reporting and position trackers. It is a contrarian wager on two stocks that spent much of 2026 under pressure, and Burry has framed it not as a sports call but as a regulatory one.

The move matters because prediction market platforms such as Kalshi and Polymarket have spent the past year eating into the same event-betting demand that sportsbooks rely on, while operating outside state gambling licences. Burry is effectively saying that gap will not last.

What exactly did Michael Burry buy?

Burry disclosed long positions in two of the largest listed names in online betting: Flutter Entertainment, the parent of FanDuel, and DraftKings. Reporting around the disclosure put the weighting at about 60 percent Flutter and 40 percent DraftKings, with entry levels cited near 107 dollars for Flutter and in the mid 20s, around 26 dollars, for DraftKings. Both stocks ticked higher in after-hours trading once the position circulated. Burry did not publish a total dollar size or a share count, so the exact scale of the bet remains undisclosed.

• Investor: Michael Burry, of The Big Short fame
• Positions: Long Flutter Entertainment and long DraftKings
• Weighting: Roughly 60 percent Flutter, 40 percent DraftKings
• Entry levels cited: Around 107 dollars for Flutter, around 26 dollars for DraftKings
• Disclosed: 8 July 2026
• The thesis: Regulation and taxation will catch up with prediction markets and redirect flow to licensed sportsbooks

Why is this bet "not about sports"?

The headline read on this trade is that it is a wager on regulatory arbitrage rather than on point spreads. Robert Kraft, founder and chief executive of Atlas World Sports, put it plainly in comments to CasinoBeats.

"It seems to me that Burry isn't making a sports call. He's making a regulatory-arbitrage call. That gap is more of a subsidy loophole than a moat."

The logic runs like this. Prediction markets currently offer event contracts, including on sports outcomes, under a federal derivatives framework rather than under state gambling law. That lets them operate nationwide without paying the state betting taxes and licensing costs that DraftKings and FanDuel carry. Burry's bet is that this advantage is temporary, and that once it closes, the licensed operators keep the demand while the loophole players lose their edge.

What has Burry actually said about prediction markets?

Burry has been blunt on X about how he views platforms like Kalshi. In posts shared around the disclosure, he described prediction markets as gambling operating through a regulatory gap.

"Kalshi as with all prediction markets is in a regulatory loophole within an extremely heavily taxed and excessively regulated industry that is gambling no matter what anyone calls it."

He has also warned about integrity risk, arguing that "there is nothing preventing cheating in prediction markets," and that the loophole "allows all of it in every state." Those comments frame his stock position as the flip side of a broader argument: if the activity is gambling, it should eventually be regulated and taxed like gambling, and that outcome favours the incumbents he has bought.

How do sportsbooks and prediction markets compare?

Feature	Licensed sportsbooks (DraftKings, FanDuel)	Prediction markets (Kalshi, Polymarket)
Primary regulator	State gaming regulators	Federal derivatives framework
State betting tax	Yes, varies by state	Not paid as gambling tax
Geographic reach	State by state, where licensed	Marketed nationwide
Product	Sports and casino wagering	Event contracts, including sports outcomes
Burry's read	Beneficiary if the loophole closes	Living on borrowed time

Why were DraftKings and Flutter cheap enough to attract a value investor?

Both stocks had been beaten down through 2026. Investors had grown nervous about a wave of new competition from prediction markets, alongside tougher tax treatment in several US states, including a per-wager tax structure in Illinois that has squeezed handle. That combination pushed the shares low enough that a deep-value contrarian like Burry could frame them as mispriced. His pitch is that the market has priced in the prediction market threat as permanent, when he believes it is a regulatory anomaly that will be corrected.

Is Burry ignoring that sportsbooks are joining prediction markets too?

Not everyone reads the trade as a clean regulation play. Matt Bresler, co-founder and chief executive of Odditt, pointed out to CasinoBeats that the incumbents are already hedging into the same product.

"FanDuel and DraftKings have both launched prediction markets of their own, so Burry's bet isn't just that regulation catches up."

That nuance is important. If FanDuel and DraftKings run their own prediction market products, they could benefit whether the format is curbed or embraced, because they would capture a slice either way. In that reading, Burry's downside is cushioned even if the regulatory crackdown he expects is slower or softer than he thinks.

What do other market watchers make of the timing?

The debate among observers is less about whether prediction markets face a reckoning and more about when. As Kraft framed it, "smart people are disagreeing on timing much more than on whether the prediction market space will change or close completely." Prediction market volumes surged across Kalshi and Polymarket over the past year, and several US states have already moved against sports-style event contracts, so the regulatory direction of travel is real even if the pace is uncertain.

How does this fit the wider regulatory fight?

Burry's bet lands in the middle of an escalating standoff. Individual states have pushed back hard against prediction market operators offering sports contracts, and courts are now weighing where the line sits. Michigan moved to extend its ban on Kalshi-style sports contracts with steep daily fines, while a federal appeals court has questioned Kalshi over how its sports contracts interact with tribal gaming law. At the same time, Congress has scrutinised Polymarket over paid election influencers. Each of these fronts feeds the same question Burry is wagering on: will event contracts be treated as regulated gambling.

What is the risk to Burry's thesis?

The clearest risk is that the loophole does not close, or closes so slowly that prediction markets entrench themselves as a mainstream product first. If federal regulators keep treating event contracts as derivatives and decline to hand oversight to state gambling authorities, the tax and licensing gap Burry is betting against could persist for years. There is also political risk in the other direction: prediction markets have found supporters in Washington, which could slow any crackdown. Burry has been early and eventually right before, but he has also been early and painfully so.

What should iGaming operators take from this?

For the industry, the signal is that a marquee contrarian investor now sees licensed sportsbooks as undervalued relative to the prediction market scare. Whether or not Burry is right on timing, his position crystallises the central strategic question in US betting right now: is the prediction market boom a durable new category, or a regulatory arbitrage with a shelf life. Operators are hedging by building their own event-contract products, which suggests they are not willing to bet the answer either way.

Updated July 2026

This article reflects the position as disclosed on 8 July 2026 and the analysis and reaction reported through mid July 2026. Burry did not disclose the total size of the position, and entry levels and weighting are drawn from reporting and position trackers rather than a formal fund filing. We will update this piece if a regulatory filing or further disclosure clarifies the size or composition of the bet.

Frequently asked questions

Did Michael Burry short DraftKings and Flutter?

No. Burry took long, bullish positions in both DraftKings and Flutter Entertainment. The bearish part of his thesis is aimed at prediction markets, not at the sportsbooks.

How big is the position?

The total dollar size and share count were not disclosed. Reporting put the split at roughly 60 percent Flutter and 40 percent DraftKings, with entry levels cited near 107 dollars for Flutter and about 26 dollars for DraftKings.

Why does Burry think prediction markets will be curbed?

He argues that platforms such as Kalshi operate as gambling through a regulatory loophole, avoiding the state taxes and licensing that sportsbooks pay, and that regulation and taxation will eventually close that gap.

Which companies own the sportsbooks?

Flutter Entertainment owns FanDuel, and DraftKings operates under its own brand. Both are among the largest listed operators in US online betting.

What could prove Burry wrong?

If regulators keep treating event contracts as federally regulated derivatives rather than state gambling, the loophole could persist and prediction markets could entrench themselves before any crackdown arrives.