Investor Michael Burry Bets on Prediction Market Regulation

There’s still a lot to be determined regarding the possibility of prediction market regulation. But investor Michael Burry has made his wager — and it’s against prediction markets’ future.

Burry, an investor who rose to prominence by predicting the 2008 housing crash, revealed that he had purchased large shares of both DraftKings and Flutter Entertainment, the parent company of FanDuel. He added that he might eventually increase his holdings in both companies, signaling his expectations that traditional sportsbooks will win the battle with prediction markets.

“Prediction markets exist in a loophole adjacent to a heavily regulated and taxed industry,” Burry wrote. “In time, prediction markets will be subsumed into regulation and taxation.”

That’s been a major sticking point with numerous state governments in 2026. So far, prediction markets have avoided taxation by claiming that regulation is left to the federal government, specifically the Commodity Futures Trading Commission. However, Burry believes that current political climates won’t last for long, and the next one will be far more willing to pursue prediction market regulation.

Why Has This Political Climate Opposed Prediction Market Regulation?

President Donald Trump has openly taken the side of prediction markets, as has the federal government. Since Trump stated a need to oppose prediction market regulation in June, the CFTC and the federal government have aggressively targeted states that attempt to rein in and restrict prediction markets.

Most of these have appeared to be political clashes for Trump, as most states restricting prediction markets have Democrats as attorneys general. But that changed in late June, when the CFTC also sued Kentucky. Although Kentucky has a Democratic governor, attorney general Russell Coleman is a Republican.

That marked the first time the CFTC sued a Republican attorney general over prediction market regulation. It also signals that a shifting political climate might be coming soon. Trump is term-limited and cannot seek re-election in 2029, and a drastic policy shift might follow his exit.

Why Is Burry Buying Into Sports Betting Now?

Burry is well-known for investing in entities at or near their lowest points. He believes that over the long term, traditional sportsbooks represent the better investment.

That’s because sportsbooks are fully legalized and taxed at the state level in 38 locations, and rollback seems highly unlikely. Only Ohio and Maryland have had any real discussions about a rollback, and neither has made much traction.

Both Flutter and DraftKings’ stocks have taken a beating in 2026. Flutter has seen its share price fall 53%, while DraftKings has dropped 26%. But if prediction market regulation becomes common at the state level, both companies would likely see their stocks rebound.

What Could the Political Climate Look Like Long-Term?

If the attorneys general are any indication, both red states and blue states want to rein them in. Since Massachusetts became the first state to sue Kalshi, most attorneys general have either taken similar actions or filed briefs in support of Massachusetts.

In April, 38 attorneys general filed to support action against Kalshi, ranging politically from conservative Utah to liberal Vermont. That suggests that the federal government’s opposition to prediction market regulation is limited to Trump and his supporters.

With Trump on his way out in 2029, the next administration might be far more willing to regulate prediction markets, regardless of party. That appears to be exactly what Burry is expecting.