Hedge fund short sellers have made at least $2.3bn this year by betting against listed online gambling companies. The gains came as shares in major operators fell under pressure from prediction markets, tax risk and weaker investor confidence.
The biggest short positions targeted Flutter Entertainment, DraftKings and Entain. Those companies have all faced sharp share price falls during 2026.
Flutter shorts produced biggest gains
Flutter generated most of the profit for short sellers. The FanDuel owner’s share price has fallen heavily this year, giving short funds about $2bn in paper gains.
DraftKings has also been a major target. Short sellers made about $351m from bets against the U.S. sportsbook operator after its shares dropped sharply.
Entain produced smaller but still positive gains for short sellers. Funds made about $35m from positions against the Ladbrokes and Coral owner.
Prediction markets hurt sportsbook sentiment
Prediction markets have become one of the main concerns for investors in U.S.-focused betting stocks. Platforms such as Kalshi and Polymarket have moved further into sports-event contracts, creating a new competitive and regulatory threat.
Some prediction market platforms operate under federal derivatives rules rather than state sports betting licences. If those products keep expanding, they could take attention and trading volume from licensed sportsbooks.
The uncertainty has hurt companies with large U.S. businesses. Flutter and DraftKings are the clearest examples because FanDuel and DraftKings lead the U.S. online sports betting market.
UK tax changes add pressure
UK gambling tax changes have created more pressure for operators with British businesses. Higher duties on online betting and casino games have raised concerns about future margins.
Entain has been affected by that issue because it has a large UK-facing business. Flutter also has UK exposure through brands including Paddy Power and Sky Bet. Tax pressure gives investors another reason to question earnings forecasts. It also makes cost control and international diversification more important for listed operators.
Some short positions failed
Not every short position against gambling stocks has worked. Evoke, the owner of William Hill and 888, produced losses for short sellers after its share price recovered on takeover speculation. The mixed results show that shorting the sector is not a one-way trade. Gambling stocks remain sensitive to earnings updates, tax policy, prediction market rulings and deal rumours
