Hedge Funds Reap $2.3B Profit Betting Against Flutter and Sportsbook Rivals
Posted on: May 26, 2026, 03:01h.
Last updated on: May 27, 2026, 04:33h.
- Short sellers have accumulated over $2.3 billion in paper profits betting against three dominant online gambling operators
- Flutter bore the brunt of the attack with $2 billion in short profits, followed by $351 million from DraftKings and $35 million from Entain
- The massive, short momentum is slowing slightly, showing early signs of modest short covering as positions begin to close
A wave of short selling targeting marquee sportsbook stocks has generated an estimated $2.3 billion in paper profits for hedge funds so far this year.
Since the start of 2026, bearish hedge funds targeted DraftKings (NASDAQ: DKNG), Entain Plc (OTC: GMVHY) and FanDuel owner Flutter Entertainment (NYSE: FLUT). Those bearish bets are paying off because DraftKings and Coral owner Entain are each off about 30% year-to-date while Flutter shares have tumbled nearly 56%.
A new report by The Financial Times indicates short sellers have made $2 billion, $351 million, and $35 million, respectively, shorting Flutter, DraftKings and Entain.
That estimate is in paper profits, meaning the hedge funds still hold those positions, though data indicate portions of the positions have been covered. The short sportsbook stock trade is drawing a who’s who of hedge funds.
Several major hedge funds have increased bearish positions against Flutter during 2026, including DE Shaw, Two Sigma, AQR Capital Management, Marshall Wace and Balyasny Asset Management,” according to HedgeWeek. “Marshall Wace, Millennium Management and Capital Fund Management have also built notable short positions in Entain.”
Short interest in Entain, which owns half of BetMGM, is relatively light while Flutter’s short interest if 5.57%, according to Seeking Alpha data. DraftKings’ short interest resides at 7.27%, according to Seeking Alpha.
Familiar Culprits Stoke Short Selling of Sportsbook Stocks
In terms of what’s compelling hedge funds and other bearish traders to target sportsbook stocks, it’s a movie investors are familiar and one that started airing last year.
It largely boils down to the competitive threat courtesy of prediction markets and a hostile UK regulatory regime. Higher wagering taxes in the UK are particularly onerous for Entain and Flutter because those two companies are among the largest operators in that country.
DraftKings avoids that problem because it operates exclusively in North America, but some analysts believe the rise of platforms such as Kalshi and Polymarket casts a pall over DraftKings and is disruptive to the sports betting investment thesis.
While sportsbook stocks have been dangerous places to be this year for long investors, the opposite is true of iGaming-centric operators with little in the way of prediction vulnerabilities.
For example, shares of Rush Street Interactive (NYSE: RSI) and Super Group (NYSE: SGHC), which doesn’t do business in the US, are up 35.87% and 9.21%, respectively, year-to-date.
Risks in Shorting Sportsbook Stocks
Short selling is an inherently risky endeavor because there’s no cap on how high a stock can rise, meaning short sellers face the specter of unlimited losses. Obviously, professionals don’t let things reach that point, but there are risks accompanying bearish bets on DraftKings, Entain and Flutter.
Specific to Entain, there’s speculation MGM Resorts International (NYSE: MGM) could make another run at acquiring the company or buy it out of BetMGM. In either situation, Entain shares would likely rise, perhaps forcing shorts to cover.
Regarding DraftKings and Flutter, both have their own prediction market platforms and if they show investors they’re making progress on that front, that could stoke some upside for the stocks, potentially making shorts uncomfortable in the process.
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