Short Sellers Have Made $2.3 Billion Betting Against Flutter, DraftKings, and Entain This Year

Hedge fund short sellers have accumulated at least $2.3 billion in estimated profits betting against online gambling companies in 2026, according to data from financial analytics firm S3 Partners. The profits reflect a brutal year for gambling stocks, with Flutter Entertainment, parent company of FanDuel and the world’s largest publicly traded gambling company, seeing its share price fall more than 50 percent since the start of the year. Traders short on Flutter have made an estimated $2 billion in paper gains. Short positions against DraftKings have generated approximately $351 million, while shorts on UK-based Entain have produced around $35 million in gains.

The scale of the short-selling profits is extraordinary given how recently these companies were among the market’s darlings. Flutter, DraftKings, and their sector peers rode the legalization wave of U.S. sports betting through 2018 to 2023, attracting billions in investment based on projections of long-term market dominance. What has unraveled that narrative in 2026 is a combination of new competitive threats and regulatory pressures that were not fully priced into earlier valuations.

Prediction Markets and UK Tax Hikes Leading the Pressure

Two forces have accelerated the decline in gambling stocks. The first is the explosive growth of prediction market platforms in the United States. Platforms such as Kalshi, Polymarket, and DraftKings Predictions have pulled users away from traditional sportsbooks by offering contract-based wagering on political, financial, and sporting outcomes outside the conventional sports betting regulatory framework. The platforms have grown rapidly and created real uncertainty about the long-term competitive position of legacy sportsbook operators.

The second pressure is fiscal. UK regulators have imposed steeper tax obligations on gambling companies operating in Britain, squeezing margins for Flutter and Entain, both of which have significant UK operations. Flutter reported a 17 percent increase in first-quarter revenue but a 38 percent decline in net income, illustrating how rising costs are compressing profitability even as the top line continues to grow.

What Bettors and Industry Watchers Should Know

For sports bettors using DraftKings or FanDuel, the short-selling activity does not carry any immediate implications for platform access or customer accounts. Both companies continue to operate their sportsbooks and iGaming products normally, and the stock price pressure has not translated into operational disruptions. The more relevant question for bettors is whether the competitive pressure from prediction markets continues to accelerate, which would likely drive changes in product offerings and promotional spend from the major operators.

The regulatory picture could shift quickly. Several states have introduced legislation to restrict prediction market platforms, and Rhode Island has filed a lawsuit against Kalshi and Polymarket arguing they have damaged state lottery revenue. Tennessee signed a law creating a new crime for prediction market manipulation in May 2026. A federal framework that defines the legal status of prediction markets more clearly could either validate the threat or limit it, depending on how lawmakers and regulators ultimately draw the lines. Until that clarity arrives, the short thesis against traditional gambling operators remains intact.