Michael Burry Buys DraftKings and Flutter Shares, Betting Regulators Will Rein In Prediction Markets
The investor who called the 2008 housing crash says DraftKings and Flutter are undervalued because prediction markets exploit a regulatory loophole that won't last.
Michael Burry, the investor who famously predicted and profited from the 2008 U.S. housing market collapse, has purchased shares of Flutter Entertainment and DraftKings, betting that regulatory scrutiny will eventually curb the competitive threat posed by prediction markets. Burry disclosed Wednesday that he bought Flutter at roughly $107 a share and DraftKings in the low $26s, building a full-sized position weighted about 60% toward Flutter and 40% toward DraftKings.
The move stands out because both stocks have been battered this year largely due to the rise of CFTC-regulated event-contract platforms like Kalshi and Polymarket. Flutter shares are down roughly 65% from their August peak, while DraftKings has fallen about 45% from its 52-week high reached last September.
The Case for a Regulatory Reckoning
In a post on his Substack, Burry argued that prediction markets occupy a loophole adjacent to the sports betting industry, offering nationwide event contracts under Commodity Futures Trading Commission oversight while sidestepping state gaming taxes and licensing requirements that companies like DraftKings and Flutter must pay. “I believe that the political climate will not tolerate this,” Burry wrote. “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.”
Burry’s thesis lands amid an escalating legal fight over who has jurisdiction to regulate event contracts on sports outcomes. The CFTC maintains it holds exclusive authority, while multiple states, including Nevada and Arizona, have pursued enforcement actions arguing prediction markets are functionally unlicensed sports betting.
Two Different Turnaround Stories
Burry differentiated his rationale for each holding. He called DraftKings “inflecting as an operating business,” suggesting the value lies in a near-term operational turnaround, while describing Flutter as “a fundamentally very good operating business with terrific scale” that has been hurt by past capital misallocation rather than any structural flaw. He said he may build each position into a full standalone stake depending on how developments unfold.
Notably, Burry also pointed out that both companies have begun building their own prediction-market products — DraftKings launched its DKeX exchange in July, and Flutter has rolled out FanDuel Predicts — potentially positioning the sportsbook giants to benefit regardless of how the regulatory fight over event contracts is ultimately resolved.