In a recent update, renowned short seller Jim Chanos revealed a change of heart when it comes to sports wagering equities. Chanos, the founder of Kynikos Associates, initially took a short position in DraftKings in late 2021, describing the company’s business model as “flawed.” However, he has now reversed course and is bullish on US sports betting stocks.

This change in sentiment stems from Chanos’ realization that US bettors are not particularly skilled at sports wagering. Furthermore, he noted that gaming companies like DraftKings have found a way to profit from exotic, long-odds wagers that attract bettors seeking substantial payouts.

Specifically, Chanos highlighted the growing popularity of in-game bets and same-game parlays offered by companies like DraftKings, BetMGM, and FanDuel. These types of wagers have helped these companies improve their profit margins, as they typically offer unfavorable odds for bettors.

In the interview with The Financial Times, Chanos emphasized that while in-game bets and same-game parlays may not be favorable for clients, they represent a lucrative business model for operators. He also noted that there is significant potential for growth in live wagering in the US, with these types of bets currently accounting for only a quarter of total wagers, compared to as much as 80% in more mature sports betting markets like Europe and the UK.

Despite his newfound optimism for sports wagering equities, Chanos did not specifically mention which companies he is bullish on. The largest pure-play name in this space is currently DraftKings, but with the upcoming listing of FanDuel parent company Flutter Entertainment on the New York Stock Exchange, there are multiple options for investors looking to capitalize on the potential growth in the US sports betting market.

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