As people continue to search for ways to stay entertained during the pandemic, Americans have turned to the world of online gambling and sports betting. Following the Super Bowl, betting interest continues to explode and related ETFs have surged to record numbers.
An ETF, or an exchange-traded fund, is a security type that involves a collection of securities—such as stocks—that often tracks an underlying index. Gambling ETFs can be evaluated using one metric known as Gambling Involvement. Gambling Involvement is calculated as the percentage of a portfolio’s market value exposed to companies with affiliations to gambling in operation, support, licensing, or ownership categories.
There are currently two primary ETF funds, the Roundhill Sports Betting & iGaming (BETZ) and the VanEck Vectors Gaming ETF (BJK), both of which launched in the past year and have seen significant jumps in price.
VanEck’s ETF offers consumers a mix of casino stocks and gambling names, including Wynn Resorts and Las Vegas Sands. Traditional casino stocks were hit hard in the past year by travel and leisure limitations because of the pandemic. However, the VanEck ETF has roughly $74 million in assets under management as of December 2020.
Meanwhile, BETZ is a global pure play on digital gaming stocks like the online bookmaker PointsBet, the Canadian betting firm Score Media, and a handful of SPACs focused on sports betting technology and data providers. Since June 2020, BETZ has seen a historic rise in price, growing 96% since it launched.
Unsurprising to most, Super Bowl Sunday, the biggest day of the year for American sports, helped to spur extra betting activity. Current betting totals show that $444 million in regulated wagers were placed on the Super Bowl on a state-by-state basis, with seven states left to report. Analysts from PlayUSA expect the final tally to top $500 million in legal Super Bowl bets this year.
Much of the sports betting interest is being aided by the rapid rise of online gambling sites like FanDuel and DraftKings.
DraftKings, one of VanEck’s top holdings, had 565,000 monthly active users as of November 2020, up from 485,000 in the year prior. The company has more room to grow as the legalization of daily fantasy sports betting across the U.S. continues to increase.
“We expect as the U.S. market matures and more states come online, that’s going to shift, and it’s going to mean revenues for sports book operators. But maybe more importantly, it’s going to mean tax dollars for state legislators,” said Will Hershey, co-founder and CEO of Roundhill Investments.
Currently, sports betting is legal in 21 states, but some of the largest states, including California, Florida, and Texas, have yet to follow suit. Still, people like Hershey expect 10 to 12 more states to legalize online sports gambling.
