Key facts
- Michael Burry has acquired shares in Flutter Entertainment and DraftKings.
- Burry's investment is based on the expectation that prediction markets will face increased regulation and taxation.
- Prediction markets allow trading of event contracts under CFTC oversight, bypassing state gaming taxes.
- Flutter shares are down 50% year-to-date, while DraftKings shares have fallen 21%.
- Burry also increased his stake in JD.com.
Michael Burry, the investor renowned for his prescient bet against the U.S. housing market in 2008, has taken significant positions in sports-betting companies Flutter Entertainment and DraftKings. His investment strategy is predicated on the belief that regulatory scrutiny will eventually curtail the competitive advantage held by prediction markets.
Burry disclosed on his website that he acquired Flutter shares at approximately $107 each and DraftKings shares in the low $20s. The combined investment is currently weighted about 60% towards Flutter, with the possibility of equalizing the positions in the future. He views prediction markets, which allow trading on event outcomes like sports, elections, and economic data, as a primary threat to these companies. Burry argues that these platforms exploit a loophole by operating under Commodity Futures Trading Commission oversight while avoiding state gaming taxes, a situation he believes the political climate will not sustain.
He anticipates that prediction markets will ultimately be brought under a regulatory and taxation framework. Despite Flutter's 50% year-to-date decline and DraftKings' 21% drop, Burry finds them attractive due to Flutter's strong business scale and DraftKings' improving operational performance. In addition to his sports-betting investments, Burry also reported buying more JD.com shares at $27.58, identifying it as one of his top three holdings. He further expressed an expectation that Hong Kong and Chinese stocks will benefit from a rotation away from AI and memory-chip enthusiasm in South Korea and Japan.