Burry Buys DraftKings, Flutter as Prediction Markets Face Curbs
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- Michael Burry purchased a split position of roughly 60% Flutter Entertainment and 40% DraftKings, entering Flutter at about $107 a share and DraftKings in the low-$26 range
- Burry said the bet rests on his belief that prediction markets exist in 'a loophole adjacent to a heavily regulated and taxed industry' and will eventually be 'subsumed into regulation and taxation'
- DraftKings shares are down about 45% from their 52-week high reached last September, while Flutter has slid roughly 65% from its August peak amid prediction-market competition
- Burry noted he could eventually increase each holding into a full standalone position, calling DraftKings an 'inflecting operating business' and Flutter 'a fundamentally very good operating business with terrific scale'
- The U.S. Commodity Futures Trading Commission asserts jurisdiction over event-based contracts offered by prediction-market platforms and is currently in legal action against multiple states over who can regulate them
- DraftKings and Flutter have both begun exploring their own prediction-market offerings, which Burry said could position them to benefit regardless of how the regulatory landscape evolves
- Prediction-market contracts have managed to sidestep state gaming taxes, a dynamic Burry said will not be politically sustainable
Why it matters: Burry is putting capital behind a thesis that the regulatory moat around licensed U.S. sportsbooks is undervalued after a brutal selloff: DraftKings is off 45% and Flutter off 65% from recent highs. With the CFTC actively fighting states over prediction-market jurisdiction, his entry points at $107 (Flutter) and low-$26 (DraftKings) effectively price in a future where event-based contracts lose their tax-and-licensing arbitrage.
