Michael Burry’s investment firm, Scion Asset Management, disclosed new positions in Flutter Entertainment and DraftKings in a 13F filing for the second quarter of 2026. The filing, which reflects portfolio holdings as of June 30, 2026, revealed an $8.2 million combined stake in the two leading online sports betting companies. This contrarian investment by the prominent investor, famous for predicting the 2008 housing crisis, arrives after a multi-year period of intense regulatory scrutiny and stock price depreciation for the sector.
Context — why this matters now
The online sports betting market experienced explosive growth following the US Supreme Court's 2018 decision to overturn the Professional and Amateur Sports Protection Act (PASPA). This led to a rapid state-by-state legalization wave, fueling valuations for early entrants like DraftKings. However, by late 2024, the regulatory environment tightened significantly. Key concerns included intensified advertising restrictions, proposed federal tax increases on gross gaming revenue, and heightened compliance costs related to responsible gambling protocols.
The current macro backdrop features a stabilizing interest rate environment, with the Federal Funds target range holding at 4.50-4.75% since May 2026. This stability reduces capital cost pressures for growth-oriented companies that require significant marketing expenditure. The catalyst for Burry's entry appears to be a perceived shift in the regulatory overhang. Recent legislative sessions have seen several high-profile anti-gambling bills stall in committee, suggesting the most aggressive regulatory threats may not materialize.
Data — what the numbers show
Scion’s 13F filing detailed a precise allocation to the sector. The firm acquired 40,000 shares of Flutter Entertainment, the parent company of FanDuel, valued at approximately $5.0 million. It also purchased 150,000 shares of DraftKings, valued at approximately $3.2 million. DraftKings stock is down 54% from its all-time high of $74.38 reached in 2021, while Flutter shares have shown more resilience, declining 22% from their 2023 peak.
The valuation gap between the two leaders has narrowed. DraftKings currently trades at a forward price-to-sales ratio of 2.8, while Flutter trades at 2.5. This compares to the S&P 500’s aggregate forward P/S ratio of 2.9. For context, at the sector's peak in 2021, DraftKings traded at a forward P/S exceeding 18. The combined US market share of FanDuel and DraftKings is estimated at 72%, creating a powerful duopoly.
| Metric | DraftKings | Flutter Entertainment (FanDuel) |
|---|
| Scion Position Value | $3.2 million | $5.0 million |
| YTD Stock Performance | -8% | +4% |
| US Market Share | ~35% | ~37% |
Analysis — what it means for markets / sectors / tickers
Burry’s investment signals a potential bottom in sentiment for regulated online gambling operators. A fading regulatory threat would disproportionately benefit the largest players, Flutter and DraftKings, which possess the resources to manage complex compliance landscapes. Smaller, less capitalized competitors like Rush Street Interactive and BetMGM (a joint venture of MGM Resorts and Entain) could face intensified margin pressure as the market consolidates around the duopoly.
A key counter-argument is that fundamental demand could weaken in a potential economic downturn, as sports betting is a discretionary expense. state-level regulatory battles are ongoing and unpredictable. Institutional positioning data shows hedge funds have been net sellers of gaming stocks for three consecutive quarters, making Burry’s entry a notable outlier. Flow data indicates short interest in DraftKings remains elevated at 12% of float, setting the stage for a potential short squeeze on positive news.
Outlook — what to watch next
The next major catalyst for the sector is the Q2 2026 earnings season, commencing July 24 with DraftKings reporting. Analysts will scrutinize guidance for user acquisition costs and commentary on state-level regulatory developments. Key levels to watch for DraftKings stock include technical resistance at $28, a level it has failed to breach decisively in 2026.
Investors should monitor legislative outcomes in populous states like Texas and California, where legalization efforts are active but face significant hurdles. Any progress there could represent substantial upside. The Consumer Price Index report on August 12 will also be critical; weaker inflation data could reinforce the case for rate cuts, reducing financing costs for these capex-heavy firms. Support for Flutter shares rests at its 200-day moving average of $125.
Frequently Asked Questions
What other stocks did Michael Burry buy in Q2 2026?
Beyond the Flutter and DraftKings positions, Scion’s 13F filing showed new investments in a regional bank ETF, signaling a bet on a soft landing for the US economy. The firm also increased its stake in a private prison operator, a historically controversial holding that aligns with Burry’s value-focused, contrarian strategy. These moves indicate a portfolio repositioning towards out-of-favor sectors perceived to have limited downside risk.
How does this investment compare to Burry’s bet against housing?
The scale and nature of the sports betting investment are fundamentally different from the subprime mortgage trade. The housing short was a macro bet on a systemic credit collapse, implemented through complex credit default swaps. The Flutter and DraftKings positions are long equity investments in specific companies within a beaten-down sector. This suggests a classic value investment thesis based on mean reversion rather than a prediction of broad market failure.
What is the long-term growth potential for online sports betting?
The US online sports betting total addressable market is estimated to reach $40 billion in annual revenue by 2030, up from approximately $15 billion in 2026. Growth will be driven by further state legalization, the integration of betting into media broadcasts, and product expansion into adjacent verticals like online casino games. Market leaders are projected to achieve EBITDA margins of 25-30% at maturity, making the current valuations attractive if growth targets are met.
Bottom Line
Michael Burry’s stake signals a bet that regulatory headwinds for US online sports betting have peaked, creating a value opportunity in the dominant market leaders.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
