U.S. — Investor Michael Burry has purchased shares in DraftKings and Flutter Entertainment, citing a future expectation of increased regulation and taxation on prediction markets. Burry acquired a position split approximately 60% in Flutter Entertainment and 40% in DraftKings.

Burry stated that he bought Flutter Entertainment shares at approximately $107 per share and DraftKings shares in the low $26 range. He indicated that he could potentially increase each holding to a full standalone position over time. Burry shared his rationale in a Substack post, writing, "I believe that the political climate will not tolerate this." He added that prediction markets currently "exist in a loophole adjacent to a heavily regulated and taxed industry" and that "in time, prediction markets will be subsumed into regulation and taxation."

Burry also offered assessments of both companies. Regarding DraftKings, he wrote, "DraftKings is inflecting as an operating business and the value is in the transition I foresee in the near future." He also commented on Flutter Entertainment, stating, "Flutter has been hurt by capital misallocation in the past, but is a fundamentally very good operating business with terrific scale."

Why It Matters

The U.S. Commodity Futures Trading Commission (CFTC) asserts jurisdiction over event-based contracts offered by prediction market platforms and is engaged in legal action regarding their regulation. Prediction market contracts have previously avoided state gaming taxes.

Shares of DraftKings have seen a decline of about 45% from their 52-week high in September 2024, and Flutter Entertainment's shares have fallen 65% from their peak in August 2024. Both DraftKings and Flutter Entertainment have begun to explore their own prediction-market offerings.