TLDR Hedge funds have made at least $2.3 billion in paper gains betting against gambling stocks in 2026, with Flutter Entertainment accounting for roughly $2 billion of that total. Flutter has lost more than half its market value this year, while DraftKings and Entain are each down around 30%. Short sellers Muddy Waters and Callisto triggered a 20%-plus single-day crash in Sportradar shares after accusing the company of ties to illegal gambling operators. Tax increases in European markets and the rise of US prediction markets are squeezing margins and creating uncertainty across the sector. Some analysts still see recovery potential, with Macquarie maintaining a bullish price target on Flutter and Genius Sports rebounding more than 20% from its lows.
The gambling industry’s rough 2026 has become a payday for hedge funds. According to the Financial Times, traders who bet against online gambling stocks have collected at least $2.3 billion in paper gains so far this year.
The bulk of those profits came from one company. Flutter Entertainment, which owns FanDuel and Paddy Power, has lost more than half its market value in 2026. Short sellers made roughly $2 billion from that decline alone.
DraftKings and Entain have also taken heavy hits. Both stocks are down around 30% this year. Short positions against DraftKings generated an estimated $351 million, while bets against Entain added tens of millions more.
Tax Hikes and Prediction Markets Pressure the Sector
The selloff has not been limited to the biggest names. In Sweden, Betsson has dropped roughly a third of its value this year. Raketech has also slipped. In France, FDJ United stumbled after its first-quarter earnings despite avoiding the worst of the downturn.
Several forces are hitting the industry at the same time. Tax increases across European markets, particularly in the UK,