Michael Burry bets on sportsbooks DraftKings and Flutter, sees prediction markets curbed by regulation
Michael Burry's Scion Asset Management has disclosed new long positions in DraftKings (DKNG) and Flutter Entertainment (FLUT), signaling a belief in the long-term growth of regulated sports betting. This move comes with a concurrent bearish outlook on prediction markets, which Burry expects to face increasing regulatory scrutiny.
What happened
Michael Burry's Scion Asset Management has disclosed new long positions in DraftKings (DKNG) and Flutter Entertainment (FLUT), signaling a belief in the long-term growth of regulated sports betting.
The read · Jul 8
Michael Burry's new long positions in DraftKings (DKNG) and Flutter (FLUT) raise the question of whether regulated sportsbooks are poised for a significant uplift as prediction markets face potential regulatory headwinds.
Wrong if
Sustained unprofitability or unexpected regulatory hurdles for regulated sportsbooks would undermine the trade. Additionally, if prediction markets avoid significant regulatory crackdown, the thesis weakens.
CoverageSource: CNBC · Published here WED, JUL 8 · 3:33 PM ET · the only report in this recordHow this is decided →
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The story1 min read
Michael Burry, known for his prescient market calls, has revealed new bullish positions in two major players within the online sports betting industry: DraftKings (DKNG) and Flutter Entertainment (FLUT). Scion Asset Management's latest 13F filing indicates a significant bet on the continued expansion and regulatory stability of regulated sportsbooks.
Simultaneously, Burry articulated a skeptical view on prediction markets, suggesting that their unregulated nature makes them vulnerable to future legislative crackdowns. This dual stance implies a strategic view that regulatory clarity will favor established, compliant operators like DraftKings and Flutter over less regulated, nascent prediction market platforms.
The thesis centers on a "flight to quality" within the broader betting landscape, where capital will flow into companies operating within clear legal frameworks. DraftKings, with projected revenue growth of 27.0% YoY to $6.1B by FY2025, and Flutter, with 16.6% YoY growth to $16.4B, are positioned to benefit from this dynamic. Both companies, however, still report negative diluted EPS, indicating that profitability remains a key focus for future performance.
This development sets up a tension between the growth potential of regulated sports betting and the perceived regulatory overhang on prediction markets. The Angle explores whether Burry's bet on the sportsbooks is well-timed, given their current revenue trajectories and the potential for a regulatory tailwind.
The read, in fullWhy it matters
Burry's disclosed position provides a potential catalyst for DKNG and FLUT, highlighting the perceived value in regulated sportsbooks. The thesis is that increased regulatory scrutiny on prediction markets will re-rate compliant operators, driving capital into DKNG and FLUT, both showing robust top-line growth (DKNG +27.0% YoY, FLUT +16.6% YoY).
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▲ The case it holds
The bull case for DKNG and FLUT is strengthened by Burry's conviction that regulatory clarity will funnel capital into established, compliant sports betting platforms, boosting their valuations given their strong revenue growth trajectories.
▼ The case it breaks
The bear case centers on the persistent unprofitability of both DKNG (-$0.01 dil. EPS) and FLUT (-$1.75 dil. EPS), suggesting that even with regulatory tailwinds, the path to sustainable earnings remains challenging and could cap upside.
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