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Michael Burry Discloses Stakes in DraftKings and Flutter, Dismisses Prediction Market Threat
Summary
Investor Michael Burry, known for his foresight in "The Big Short," has revealed new investments in sports betting companies DraftKings and Flutter Entertainment. He argues that emerging prediction markets are not a long-term threat due to their likely future regulation.
Michael Burry, the investor famed for predicting the 2008 financial crisis, announced new stakes in online gambling firms DraftKings and Flutter Entertainment on Wednesday. The disclosure, made in his Substack newsletter, caused a brief spike in the shares of both companies, which later settled with modest gains.
In his note, Burry described the investment as a structural bet on the maturation of the businesses. He stated that DraftKings is at an "inflection" point as an operating business. Regarding Flutter, Burry noted that despite past "capital misallocation," it remains a "fundamentally very good operating business with terrific scale."
Burry also addressed the competitive threat posed by the rise of political and alternative prediction markets, a concern for some investors in traditional sportsbooks. He dismissed these platforms as "structural paper tigers," arguing that their current operational model is unsustainable.
AdAccording to Burry, these prediction markets currently exist in a "loophole adjacent to a heavily regulated and taxed industry." He predicts that this will change, stating, "In time, prediction markets will be subsumed into regulation and taxation." He believes that once these newer platforms face the same tax and compliance burdens as established companies like DraftKings and Flutter, their competitive advantage will disappear.
In the same newsletter, Burry also revealed that he has increased his existing investment in the Chinese e-commerce company JD.com.