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Sports Betting ETF Soars on Mega-Event Fervor

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Sports betting has been gaining immense popularity globally following the legalization of gambling in the United States by the Supreme Court in 2018. About 22 states have legalized sports betting in the United States and more working toward it.

The U.S. sports betting market is expected to be worth about $1.5 billion next year and $2.75 billion by 2023, according to a study by GamblingCompliance. H2 Gambling Capital estimates it to be worth $81 billion by 2030. According to the American Gaming Association, about $150 billion is wagered illegally on sports through the likes of bookies and offshore sites every year (read: Most Interesting New ETFs: Sports Betting & Telemedicine).

Now, a mega sports event in the United States has set the stage for an online betting boom in the weeks ahead. This is because the National Hockey League and National Basketball Association playoffs have been pushed to September due to the pandemic. This is the first time in the history of America that these two sports along with the U.S. Open tennis finals will overlap with week one of the National Football League (NFL) season.

The professional basketball and hockey playoffs simultaneously will be a boon for sportsbooks. Notably, the NFL’s 2020 Kickoff game on Sep 10 between Kansas City Chiefs and Houston Texans drew 19.3 million viewers. Though it is down 12% from last year, the game was easily the most-watched sporting event since the pandemic started in March.

FanDuel is expecting one of the biggest betting weekends of the year. Total “Thursday Night Football” gambling increased about 300% year over year as the gaming company is now legal and operational in several states for the first time, including Colorado and Illinois. DraftKings (DKNG - Free Report) , which has dominance in New Jersey’s betting market with FanDuel, saw “record engagement across its sportsbook and daily fantasy products” on Sep 10 for NFL’s opening Kansas City Chiefs-Houston Texans game. Early this week, DraftKings became the exclusive provider of daily fantasy sports and a co-exclusive partner for gambling link-outs from ESPN through an agreement.

PointsBet, a premier global sportsbook operator, also announced its entry in the Illinois sports betting market on Sep 12 through the launch of multiple retail sportsbooks.

Given the rise in demand for mega-sports betting, Roundhill Sports Betting & iGaming ETF (BETZ - Free Report) soared 5% in the Sep 14 trading session. The ETF has easily surpassed more than $100 million in AUM in just three months.

BETZ in Focus

This ETF is designed to offer retail and institutional investors exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. The fund holds 36 stocks in its basket with each accounting for less than 9.6% share. PointsBet, William Hill and DraftKings are the top three holdings. The product charges 75 bps in annual fees and trades in an average daily volume of 306,000 shares (read: Buy the Dip With These ETFs Under $20).

What Lies Ahead?

The solid trend is likely to continue given that the pandemic has led to digitalization and accelerated betting on digital platforms like online poker, online casino games, lottery and sports betting via the Internet.

In the long term too, online sports betting, which comprises remote gaming activities by means of the Internet using desktop and mobile devices, will boom further. An upsurge in smartphone adoption and improving internet infrastructure across the world will drive growth. Various new technologies like Virtual Reality, 3D Animation, Live Table Games, Blockchain, IoT and VR Headsets are brightening the outlook for the gaming market over the coming years (read: Should You Invest in Tech ETFs After a Sharp Sell-Off?).

Per a research report by Global Market Insights Inc., the online gambling market would likely exceed $160 billion by the end of 2026. Grandview Research stated that the global online gambling market size was valued at $53.7 billion in 2019 and is expected to witness a compound annual growth rate of 11.5% from 2020 to 2027. Per the data by Statista, the global online gambling market is expected to grow to more than $92.9 billion in 2023 from the current $59 billion. The sports betting market revenues are projected to exceed $134.5 billion by 2027, according to data provided by Transparency Market Research.

ResearchAndMarkets.com projects the global online gambling market to grow from $58.9 billion in 2019 to $66.7 billion in 2020 at a rate of 13.2% and then to 92.9 billion in 2023 at 11.64%.

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