Hedge Funds Pocket Billions as Gambling Stocks Slide Under Regulatory and Market Pressure

Hedge funds have generated enormous profits this year by betting against publicly traded gambling companies, as a wave of declining share prices across the online betting sector delivered billions in gains to short sellers.

Hedge funds have earned at least $2.3bn in 2025 through short positions targeting major online gambling operators. The profits came as several of the industry’s largest listed companies suffered steep market declines amid increasing regulatory pressure, tax hikes and rising competition from emerging betting alternatives.

Among the hardest-hit companies was Flutter Entertainment, whose share price has fallen approximately 55% since the start of the year. The sharp decline alone is estimated to have generated around $2bn in profits for investors holding short positions against the company.

DraftKings and Entain also experienced significant declines, with both operators losing roughly 30% of their market value year to date. According to Financial Times estimates, hedge funds earned approximately $351m from shorting DraftKings shares and around $35m from positions against Entain.

The weakness has not been limited to the largest operators. Stockholm-listed Betsson has also endured a difficult year, with its stock falling by around one-third. Meanwhile, Malta-based affiliate company Raketech has declined nearly 10%.

Paris-listed FDJ United, the parent company of Unibet, has remained comparatively stable on a year-to-date basis, slipping only around 1%. However, investor sentiment deteriorated sharply over the past month after the company released its first-quarter financial results, triggering a decline of almost 9%.

Not every gambling-related stock has suffered equally. Several companies have managed to outperform the broader sector despite the difficult conditions affecting the market.

Playtech, Evolution AB and Rank Group all demonstrated greater resilience than many of their peers, avoiding the severe losses seen elsewhere in the industry.

Evoke Plc, previously known as 888 Holdings, has emerged as one of the few standout performers this year. The company’s stock has risen approximately 56% since January, although shares remain around 37.5% lower than they were a year ago. The recent rally comes amid a reported 50p-per-share takeover approach from Bally’s Intralot.

The Financial Times linked the broader sector downturn to several overlapping pressures that continue to weigh heavily on investor confidence. Increased gambling regulation across multiple jurisdictions, rising taxation in parts of Europe and intensifying competition from prediction market platforms have all contributed to uncertainty surrounding future earnings growth.

Prediction platforms, which allow users to speculate on outcomes through market-style trading mechanisms, have become an increasingly disruptive force within the betting landscape, adding further pressure to traditional gambling operators.

As concerns over profitability and long-term growth intensified, hedge funds and other institutional investors moved aggressively to capitalize on declining valuations through short selling strategies.

At the same time, major shareholders and institutional investors have been reshuffling their positions in several gambling companies.

JP Morgan Chase reduced its ownership stake in Entain to below 3% after previously increasing its holding to approximately 7%.

Meanwhile, the Canadian Imperial Bank of Commerce disclosed a roughly 5.3% stake in Flutter Entertainment, the owner of FanDuel.

BlackRock has also strengthened its position in Flutter, increasing its shareholding to more than 5%.

In addition, billionaire investor Kenneth Dart — described by the Financial Times as Flutter’s largest private shareholder — has expanded his ownership stake to approximately 27%.

The movements among institutional investors reflect a sector increasingly divided between those betting on a long-term recovery and those profiting from continued turbulence across the global gambling industry.

By fLEXI tEAM