Bearish Chanos Shifts Stance, Embraces US Gambling Boom on ‘Bad Bettors’ Trend

Bearish Chanos Shifts Stance, Embraces US Gambling Boom on 'Bad Bettors' Trend

Hedge fund manager Jim Chanos has switched to a bullish stance on the US gambling industry’s prospects after assessing that Americans lured in by novel wagers are surprisingly “bad bettors”.

The comments mark a change of tune for the short seller who last month told investors he was shutting his main short-focused hedge funds after more than three decades in business and who previously had a high-profile bet against online bookmaker DraftKings.

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Chanos began shorting DraftKings in May 2021, arguing publicly that its business model was flawed because of its massive spending on marketing and uncertain path to profitability. But in July last year Chanos & Co exited the short position, which accounted for only about 2 per cent of the fund, booking a $10mn profit.

Best known for betting against energy group Enron before its bankruptcy in 2001, Chanos said he had reassessed his pessimism about online sports betting, which has boomed since a Supreme Court verdict liberalised the industry five years ago.

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“The betting numbers have continued to be strong in the US, stronger than we thought they’d be,” he told the Financial Times. “The thing that we underestimated — that I think is going to be a benefit for all these companies for a while anyway — is what bad bettors the US gamblers are.”

Chanos closed his short after witnessing the growth in riskier forms of betting through which operators are able to boost margins because the odds are less transparent. These include in-game bets, proposition bets where gamblers wager on certain events happening and multi-string, accumulator bets.

During the 2022-23 National Football League season, Chanos realised that gamblers were rapidly switching from pre-game wagers, where competition to attract those who shop around for the best odds forces sports gambling groups to keep their margins at about 5 per cent, to these new types of bets.

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Shrabani Sarkar is a celebrity news author who has been covering the latest gossip and scandals in the entertainment industry for Panasiabiz. Shrabani is passionate about celebrity news and enjoys sharing her insights and opinions with her loyal fans. Shrabani can be reached at [email protected]