Short Sellers Have Made $2.3 Billion Betting Against Online Gambling Stocks in 2026

Short sellers have generated approximately $2.3 billion in paper profits in 2026 by betting against the publicly traded stocks of major online gambling companies, including Flutter Entertainment, DraftKings, and Entain. The figure, based on analysis of short position data against year-to-date stock price movements in the sector, underscores the skepticism among a segment of institutional investors about the near-term profitability trajectory and competitive sustainability of the publicly traded sports betting and online casino industry.

Flutter Entertainment, which owns FanDuel and holds market-leading positions in both the United States and several European markets, has been among the most heavily shorted stocks in the sector. DraftKings, the second-largest player in the US sports betting market by revenue, and Entain, which operates BetMGM in partnership with MGM Resorts International and runs a global portfolio of gambling brands, have also attracted significant short interest. The combined short positions in these companies reflect a broader thesis among bears that the sports betting industry is structurally less profitable than its growth metrics suggest.

Why Bears Are Betting Against the Sector

The bear case against publicly traded sports betting stocks rests on several interconnected arguments. First, customer acquisition costs remain elevated as major operators compete aggressively for new depositors through welcome bonuses, free bet promotions, and marketing spend. The promotional intensity that drove early market share gains has proven difficult to reduce without losing customers to competitors, creating a persistent drag on margins that has kept the sector from delivering the profitability that investors initially expected.

Second, the emergence of prediction markets as an alternative wagering destination has introduced new competitive pressure without the traditional barriers to entry that have historically protected licensed sportsbooks. Prediction market platforms operate with lower regulatory overhead, pay no state gambling taxes, and have demonstrated meaningful customer acquisition in legal sports betting markets, creating both competitive and tax disadvantage for incumbent operators.

Third, rising state tax rates represent a structural headwind. New York taxes sports betting gross gaming revenue at approximately 51 percent, and several other states have raised rates in recent budget cycles. As tax jurisdictions mature and states look for additional revenue, the risk of further rate increases is real, directly compressing operator margins in high-volume markets.

The Bull Case and What Happens Next

The bullish counterargument is that the sector is still in an early stage of customer lifecycle development, and that the long-term value of retained customers will significantly exceed the acquisition costs that are currently depressing reported earnings. Flutter’s FanDuel operation has demonstrated improving unit economics in more mature state markets, and the company has argued that its scale advantages will increasingly differentiate it from smaller competitors over time.

DraftKings has similarly pointed to its customer data advantages and parlay product capabilities as long-term moats, and has guided investors to expect meaningful operating leverage as promotional spending normalizes. The argument is that the current short interest reflects near-term profitability concerns that do not account for the durable competitive positions being built through early market leadership.

The 2026 World Cup, taking place in North America for the first time, represents the largest near-term betting revenue opportunity in the sector’s history, and major operators are expected to report significant handle growth for the event. Whether that translates into the kind of sustained profitability improvement that would pressure short positions remains the central question for investors watching the sector through the back half of the year. For users of DraftKings Sportsbook and other major platforms, the corporate financial dynamics are less relevant than the user experience, but the competitive pressure that drives short selling also tends to produce promotional intensity that benefits bettors in the near term.