• DKNG and FLUT stock gain for the fourth straight session. 
• Michael Burry has established full-sized long positions in sports betting leaders Flutter Entertainment (60% weighting) and DraftKings (40% weighting).
• Burry argues that alternative prediction exchanges currently capitalize on a "loophole economy" that regulators and tax authorities will eventually dismantle.

DraftKings (DKNG) and Flutter Entertainment (FLUT) saw their share prices rise 1% and 2.7%, respectively, on Wednesday after Michael Burry, the famed money manager who predicted the 2008 subprime crisis, built substantial stakes in the sports betting firms. 

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Burry disclosed Wednesday that he has built substantial stakes in DraftKings and FanDuel parent Flutter, betting that a looming regulatory wave will suppress the alternative prediction markets currently eating into the sportsbooks' market share.

Writing on his Substack newsletter, Burry revealed that the combined investments constitute a full-sized position for his portfolio, heavily weighted with roughly 60% allocated to Flutter and 40% to DraftKings. Burry stated he initiated his DraftKings position "in the low $26s" and purchased Flutter shares at approximately $107.

The announcement triggered an immediate reaction on Wall Street, sending shares of DraftKings and Flutter spiking to session highs before closing with more modest gains.

Sees Prediction Platforms Facing Regulatory Hurdles

Flutter and DraftKings shares have plummeted roughly 61% and 36%, respectively, over the past year. Much of the downward pressure has been due to the rise of prediction platforms, such as Polymarket and Kalshi, which allow users to trade derivatives on real-world outcomes ranging from politics to pop culture and sports. 

Burry in his blog pushed back on the idea that the new prediction platforms will cannibalize on traditional sports betting companies. 

"DraftKings is inflecting as an operating business and the value is in the transition I foresee in the near future," Burry wrote. Turning to its primary competitor, he added, "Flutter has been hurt by capital misallocation in the past, but is a fundamentally very good operating business with terrific scale." 

DKNG, FLUT Stock: Retail View 

Retail sentiment on Stocktwits was ‘neutral’ for DKNG and ‘bullish’ for FLUT stock. 

One user predicted FLUT stock to hit $150 following Burry’s report. 

FLUT stock has lost 49% year-to-date, and DKNG has lost 22% during the same period. 

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