Michael Burry, the investor famous for betting against the housing market before the 2008 financial crisis, is now placing a different kind of bet: on sportsbooks. In a Wednesday post on his Substack newsletter "Cassandra Unchained," Burry revealed he has taken long positions in DraftKings Inc. (DKNG) and Flutter Entertainment plc (FLUT), the parent company of FanDuel. But he's not bullish on everything—he's warning that prediction markets like Kalshi and Polymarket are living on borrowed time.

Burry Bets on Sportsbooks

Burry sees both DraftKings and Flutter as reaching an inflection point after years of spending heavily to grab market share. "DraftKings is inflecting as an operating business and the value is in the transition I foresee in the near future," he wrote, according to CNBC. "Flutter has been hurt by capital misallocation in the past, but is a fundamentally very good operating business with terrific scale."

His comments highlight a shift in focus from top-line growth to cash generation and scale. In a crowded U.S. sports betting market, that's a notable pivot.

Context: Flutter's Missteps and DraftKings' Pivot

Flutter has faced investor skepticism due to uneven U.S. growth and capital deployment that squeezed margins. Burry's view suggests those issues are largely in the rearview mirror. With a global footprint and the powerful FanDuel brand, Flutter may be well-positioned as capital allocation improves.

DraftKings, meanwhile, spent aggressively on customer acquisition in its early years. Now, it's emphasizing profitability and disciplined promotions. Burry's "inflecting" language signals a shift from a land-grab strategy toward sustainable earnings as the market consolidates.

Bearish on Prediction Markets

Despite backing regulated sportsbooks, Burry is skeptical of prediction markets—platforms like Kalshi and Polymarket that let users trade on outcomes such as elections and economic data. "I believe that the political climate will not tolerate this," Burry said. "Prediction markets exist in a loophole adjacent to a heavily regulated and taxed industry. In time, prediction markets will be subsumed into regulation and taxation."

Regulators are already moving in that direction. The U.S. Commodity Futures Trading Commission has proposed rules to bring parts of the sector under derivatives oversight. Legal experts also cite concerns about manipulation and insider trading, especially on offshore crypto-native platforms.

DKNG, FLUT Stock Price Activity: DraftKings stock was up 0.99% at $27.44, and Flutter shares were up 0.51% at $111.89 during after-hours trading on Wednesday.