Hedge funds profit from short positions in gambling stocks

(AsiaGameHub) –   The Financial Times has reported that hedge funds have earned millions by

UK.- The Financial Times has reported that hedge funds have raked in at least $2.3bn (€1.96bn) so far this year by shorting publicly listed online gambling firms. As shares of Flutter Entertainment have dropped 55 percent, and DraftKings and Entain both fell 30 percent year-to-date, short sellers have booked profits of roughly $2bn, $351m, and $35m respectively, per the newspaper.

The market downturn has spread to smaller gambling operators, with Stockholm-listed Betsson also down one-third this year, and Malta-based affiliate company Raketech falling nearly 10 percent. Paris-listed FDJ United, owner of Unibet, has seen just a 1 percent drop year-to-date but slid almost 9 percent over the past month following its Q1 earnings results.

A number of listed operators have bucked the trend. Playtech, Evolution AB and Rank Group have held steady while Evoke Plc, the former 888 holdings, is up 56 percent in the year to date, though it remains down 37.5 percent year-on-year amid a takeover offer priced at 50p per share from Bally’s Intralot.

Amid regulatory headwinds, rising gambling taxes across Europe, and the competitive challenge posed by the growth of prediction platforms, major gambling stocks could continue to face downward pressure.

JP Morgan Chase recently trimmed its stake in Entain to under 3 percent just 10 days after increasing its position to 7 percent. On the flip side, the Canadian Imperial Bank of Commerce has disclosed a 5.3 percent stake in FanFuel owner Flutter, while BlackRock has lifted its stake to over 5 percent and Kenneth Dart, the largest private shareholder, has expanded his control to 27 percent.