Michael Burry bets on Flutter Entertainment and DraftKings, wagering regulation will crush prediction markets

Michael Burry, the investor best known for profiting from the 2008 housing collapse, just placed a very different kind of bet. On July 8, he disclosed a full-sized long position in Flutter Entertainment and DraftKings, two of the biggest names in traditional sports betting.

His thesis is simple and characteristically contrarian: prediction markets like Polymarket and Kalshi are living on borrowed time. Once regulators catch up, the money flows back to the operators that already play by the rules.

The trade breakdown

Burry’s allocation isn’t subtle. Roughly 60% of the position sits in Flutter Entertainment, with shares picked up at around $107 each. The remaining 40% went into DraftKings at entry prices in the low $26 range.

Flutter owns FanDuel, which is about as close to a household name as sports betting gets in the US. DraftKings, meanwhile, has carved out its own massive share of the domestic market.

Both stocks rose in after-hours trading following the disclosure. That reversal is notable because both companies had been under pressure from the emergence of prediction-market competitors that operate with fewer regulatory constraints and, critically, lighter tax burdens.

The prediction market problem

Prediction markets have exploded over the past couple of years, particularly in the crypto-adjacent space. Platforms like Polymarket, which runs on blockchain infrastructure, allow users to wager on everything from election outcomes to Fed rate decisions. Kalshi, a CFTC-regulated exchange, has similarly pushed into territory that traditional sportsbooks consider their turf.

Burry’s argument is that these platforms exist in what amounts to a regulatory loophole. Traditional sportsbooks like FanDuel and DraftKings operate under state-by-state licensing regimes, pay significant taxes, and comply with extensive consumer protection requirements. Prediction markets, by contrast, have largely avoided that framework.

The CFTC has been increasing its scrutiny of prediction markets, particularly those offering contracts on political events.

Burry’s view is that the political landscape simply won’t tolerate a scenario where one set of wagering companies pays full freight on taxes and compliance while another set skirts those obligations. That asymmetry, he believes, gets resolved in favor of the incumbents.

What this means for crypto-linked betting platforms

Polymarket processes its bets on the Polygon blockchain, and the broader prediction market category has become one of the more visible use cases for decentralized finance infrastructure. If Burry is right about the regulatory trajectory, platforms built on crypto rails could face the same compliance headwinds as their centralized counterparts.

A regulatory crackdown wouldn’t necessarily kill crypto-based prediction markets, but it would raise the cost of operating them. Licensing requirements, KYC mandates, and tax obligations are the tools regulators use when they want to bring an emerging sector to heel, and each chips away at the cost advantage that has made prediction markets competitive with traditional sportsbooks.

The counterargument is that prediction markets offer genuinely different products. Betting on whether the Fed raises rates or whether a bill passes Congress isn’t the same as wagering on an NFL game. Whether regulators appreciate that distinction remains an open question.

Burry’s 60/40 split between Flutter and DraftKings suggests he sees Flutter’s FanDuel brand as the stronger play, but views both companies as beneficiaries of the same structural tailwind. Investors watching this space should monitor CFTC actions on prediction market contracts and state-level legislative responses to unregulated betting platforms, as those will be the earliest indicators of whether Burry’s thesis is playing out on schedule.