Michael Burry buys Flutter, DraftKings shares, warns prediction markets face regulation
Michael Burry disclosed purchases of Flutter and DraftKings shares, wagering that the threat from prediction markets to the two companies will fade. Burry said prediction markets are the main threat facing the companies because their event contracts can compete with traditional sports betting. In a follow-up comment, Burry warned that prediction markets will eventually be absorbed into regulation and taxation. The disclosure comes as DraftKings shares have fallen 45% from their 52-week high.
Burry's trade ties the prediction-markets threat directly to sportsbook equity valuations, giving institutional investors a clear hedge thesis. If he is right, DraftKings and Flutter shares recover as state taxes and court battles slow CFTC-registered platforms like Kalshi and Polymarket. If he is wrong, DKeX's $3.4 billion annualized volume shows sportsbooks are already vertically integrating into the very market Burry dismisses.
The 45% DraftKings drawdown means his position has asymmetric upside on regulatory friction alone. Traders now have a disclosed benchmark: sell-side notes will cite Burry's logic when assessing whether state-tax stacks or federal preemption wins. The outcome shapes whether event contracts stay a sideline or rival core betting revenue.
Burry's warning that prediction markets face absorption into regulation and taxation joins Kentucky, Illinois, and North Carolina as states that already tax CFTC-registered platforms, confirming the state-tax pattern he expects to spread.