Roundhill Sports Betting and iGaming ETF is an innovative esports ETF that has increased in value by 28.5% since its launch a year ago. Although this year’s basketball and hockey season is postponed, investors can now wager on a niche exchanged-traded fund investing in digital sports betting and online casinos, ticker: BETZ.
According to Roundhill, its exchange-traded fund will track the online casino and online sports betting sector. Roundhill further describes it as the very first ETF “designed to globally track the online sports betting and online casino sector.”
The Roundhill Sports Betting and iGaming ETF Index is the first index designed to globally track the performance of the sports betting as well as the iGaming industry. The Index is composed of a tiered weight portfolio of globally-listed companies involved in the iGaming and sports betting industry.
What we cover
A Well-Rounded Sports Betting and iGaming ETF
The Roundhill Sports Betting and iGaming ETF holdings include well-known mobile betting platforms like FanDuel parent Flutter Entertainment (FLTR: Ireland) and DraftKings, (DKNG). It even includes more traditional gaming companies like Penn National Gaming (PENN) and Eldorado Resorts (ERI). Finally, it also includes companies that provide the technology and infrastructure to companies like Gan (GAN) and Kambi Group (KMBIF: Sweden).
The esports ETF has quite a long name; Roundhill BITKRAFT Esports and Digital Entertainment ETF (NERD). The Roundhill esports exchange-traded fund has assets of $17 million. The new Roundhill Sports Betting and iGaming ETF have $1.5 million in assets under management.
The Roundhill Esports Index is the first rules-based index that tracks the performance of electronic sports, or “esports”. The Index is composed of a modified equal-weighted portfolio of globally-listed companies involved in the world of competitive video gaming. The portfolio’s classification includes, but is not limited to: video game tournaments and leagues, video game publishers, streaming networks, competitive teams, and hardware companies.
Thematic ETFs are the Way of the Future
Thematic ETFs are gaining in popularity, especially those that are suitable for a stay-at-home environment for many around the world. These include robotics, cloud computing, and videogames, noted Todd Rosenbluth, head of ETF and mutual fund research at CFRA. This makes the Roundhill Sports Betting and iGaming ETF ideal.
“Investors need to really believe in the long term investment of the theme. Using a small part of their portfolio’s assets to either of these themes is high risk and the reward is much higher,” Rosenbluth said, about the themes of the two digital gambling ETFs.
Roundhill co-founder Will Hershey says his company looks for sectors it considers a secular growth story; online and esports betting fit that bill perfectly.
“In the case of online casino and online sports betting, you not only have tailwinds from a shift from brick and mortar casinos and sportsbooks to digital, but also regulatory momentum, especially in the U.S.,” Hershey said.
Online Gambling Companies Could be a Hot Investment
Although more than 15 states have legalized online sports betting in some way, only a few such as New Jersey, Nevada, and Pennsylvania offer online casino games. However, budget deficits caused by the Covid-19 shutdowns have led some bullish investors to speculate more states will expand their gambling options to raise tax revenue.
“When it comes to the regulatory side, I expect some states to move quickly towards full legalization, especially because of the budget deficits that have arisen due to COVID-19 shutdowns,” Hershey added.
The hottest name in the Roundhill Sports Betting and iGaming ETF is DraftKings; the online sportsbook went public in April when it merged with Diamond Eagle Acquisition, a special-purpose acquisition firm. Even with major league sports paused due to the COVID-19 shutdowns, DraftKings found innovative alternatives, such as Korean baseball, ping pong, and even professional video game tournaments to help fill the void. Since the Diamond Eagle merger on April 27, DraftKings stock has posted triple-digit percentage gains.
Altogether, the Roundhill Sports Betting and iGaming ETF have exposure to 13 countries with 30 holdings. Recently, the ETF was up 1.7% to $15.87.
