Closely followed investor Michael Burry says he's placing bets against prediction markets such as Kalshi and Polymarket, which he expects to be curbed by regulations.

In a Substack article, Burry said that he has opened new positions in sportsbooks DraftKings (NASDAQ: $DKNG) and Flutter Entertainment (NYSE: $FLUT).

Burry writes that regulators are likely to crackdown on prediction markets in coming months and that DraftKings and Flutter are likely to see an influx of business as a result.

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Burry said he bought Flutter's stock at $107 U.S. a share and DraftKings at around 26 U.S. per share. He added that he might increase each position over time.

The investor, whose bet against the U.S. housing market in 2008 was chronicled in the book "The Big Short," said both companies are attractive businesses whose shares have been hurt by the rapid growth of prediction markets.

"I believe that the political climate will not tolerate this," Burry wrote in his latest Substack post. "In time, prediction markets will be subsumed into regulation and taxation."

Shares of DraftKings have fallen 45% from their 52-week high last September, while Flutter's stock has declined 65% from a peak last August.

Burry notes that DraftKings and Flutter are regulated and established businesses that have begun exploring their own prediction market offerings, positioning them to benefit from the likely crackdown on Kalshi and Polymarket.