The gambling industry is thriving. Combined revenue from traditional casino gaming, sports betting, and iGaming in the U.S. reached $53.0 billion last year. That shattered the industry’s previous record set in 2019, before the start of the COVID-19 pandemic. Sports Betting and iGaming in particular have grown at a tremendous pace. Sports betting revenue is up 366.2% since 2019 while revenue from iGaming is up 614.0% over the same period. This has been driven by the increased legalization of online sports betting and an accelerated shift toward online entertainment trends during the pandemic.
Investors looking to capitalize on the growth of casino and gambling companies may consider exchange-traded funds (ETFs). ETFs provide access to a basket of stocks, increasing portfolio diversity and minimizing risk.
- The two gambling exchange-traded funds that trade in the U.S. are BJK and BETZ.
- Both ETFs significantly underperformed the broader market in the past year.
- The top holdings for these funds are Vici Properties Inc. and shares of Swedish depository receipts of Kindred Group PLC, respectively.
Only two distinct gambling ETFs trade in the U.S. Though there is no benchmark for the gambling industry, the performance of these funds can be compared against the broader market. The S&P 500 has provided a one-year trailing total return of -0.4% as of May 17, 2022. Based on performance over the past year, the best-performing gambling ETF is the VanEck Gaming ETF (BJK).
We look at both gambling ETFs below. All numbers below are as of May 17, 2022.
In 2018, the Supreme Court gave U.S. states permission to legalize sports betting if they wish to do so. It is still fully illegal in 11 states, including Georgia, Vermont, and Texas. In four other states, there is some form of pending legislation.
- Performance Over One-Year: -31.4%
- Expense Ratio: 0.62%
- Annual Dividend Yield: 0.46%
- Three-Month Average Daily Volume: 14,126
- Assets Under Management: $72.9 million
- Inception Date: Jan. 22, 2008
- Issuer: VanEck
BJK aims to track the MVIS Global Gaming Index, which is designed to gauge the performance of companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology, and gaming equipment. Companies included in the index must derive at least half of their revenue from the global gaming industry. Close to half (48%) of the ETF's holdings are based in the U.S., with the other half based in a range of other countries throughout the world. About 88% of the fund is allocated to companies operating within the consumer discretionary sector. The fund follows a blended strategy of investing in a mix of growth and value stocks across the market cap spectrum. The top three holdings of BJK include Vici Properties Inc. (VICI), a real estate investment trust (REIT) that owns a portfolio of gaming, hospitality, and entertainment properties; Flutter Entertainment PLC (FLTR:DUB), an Ireland-based provider of mobile and online gambling services; and Evolution AB (EVO:OME), a Sweden-based maker of B2B live casino solutions.
- Performance Over One-Year: -44.0%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.25%
- Three-Month Average Daily Volume: 99,402
- Assets Under Management: $144.0 million
- Inception Date: June 4, 2020
- Issuer: Roundhill Investments
BETZ tracks the Roundhill Sports Betting & iGaming Index, which is designed to gauge the performance of the sports betting and iGaming industry. The ETF provides exposure to companies involved in sports books and in-person and online gambling as well as companies providing infrastructure or technology to such companies. The fund is geographically diversified across a number of countries, though U.S.-based companies receive the largest allocation at nearly a third of the portfolio. It follows a blended strategy, investing in a mix of value and growth stocks of various market caps. The fund’s top three holdings are shares of Swedish depository receipts of Kindred Group PLC (KIND:OME), a Malta-based provider of online gambling services; Flutter Entertainment; and Super Group (SGHC) Ltd. (SGHC), a Guernsey-based provider of online sports betting and gaming solutions.
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