Prediction markets like Kalshi and Polymarket are exploiting a regulatory gap that lets them offer sports-style contracts without sportsbook licensing or taxes — a direct challenge to DraftKings’ model.

As liquidity migrates toward these decentralized betting and event-trading platforms, investors are reassessing the sustainability of regulated sportsbook economics, and DKNG has become the primary vehicle for expressing that skepticism.

DKNG Positioning Dynamics

Short Interest:Rose from 30M → 34M shares (+12%) between Sept 1–Oct 13, following DKNG’s pullback from its year-to-date high reached on August 28, +3M shares since the last exchange. DKNG share price is -30% over that time span.

Short positioning aligns with surging prediction-market activity — from Robinhood’s event-contract push to Polymarket and Kalshi volume spikes — as traders short DKNG as a thematic hedge on the disruption of regulated wagering.

Active Long Interest: DKNG’s active longs have declined 6% YTD, per S3’s Long Interest data — evidence of fading conviction among active institutional investors.

Active capital remains net long, but Long-to-Short ratio has compressed to 5.3x, the lowest since May 2023, after peaking near 10x in Dec 2024.

S3 Insight: Real-time short interest continues to climb since the last exchange SI release, while the Long-to-Short ratio falls — signaling growing bearish conviction as shorts build and active longs retreat.

Comparative Context

Across listed U.S. operators, short interest has risen since early September in DKNG (+12 %) and RSI (+12 %), while PENN (–8 %) and MGM (+3 %) have been flat to lower, underscoring that bearish capital is concentrating in digital-first names most exposed to wagering-model disruption; year-to-date, short interest is higher across all four stocks.

Across fintech peers, short interest has climbed since the start of September in Robinhood (HOOD) (+82%) and Coinbase (COIN) (+12%), though both moves appear to have mechanical rather than directional motivations. HOOD’s spike likely in part reflects index-arbitrage flows tied to its S&P 500 inclusion, with similar pre-inclusion short builds in Palantir (Sept 2024 +34%) and AppLovin (Sept 2025 +51%) displaying a similar pattern. COIN’s uptick followed its August convertible issuance and likely represents convert-arbitrage hedging.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.

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