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Sports Betting ETFs, Stocks to Surge on More Legalization

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Sports betting has been growing rapidly across the globe in recent years powered by legalization of gambling in the United States by the Supreme Court in 2018. According to the American Gaming Association, about 19 states and Washington, D.C. have legalized sports betting in the United States while 25 states allow casino gambling (read: Why Sports Betting Stocks & ETF Are Booming).

Legalization in More States

The election has paved the way for three more states to legalize the sports gambling and three others to either approve or expand casino gambling. Maryland, South Dakota and Louisiana approved sports betting. Meanwhile, Virginia approved casino gambling in four locations while Nebraska authorized adding casino games at its horse racing tracks. Colorado expanded the number and type of casino games it can offer, apart from eliminating some wagering limits.

The new additions bring the total to 26 states (plus Washington, D.C.) that have either launched legal sports betting or passed the legislation and are waiting to launch. The rapid expansion of legal sports betting would continue to drive this industry.

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. Data Bridge Market Research projects global sports betting market to witness a CAGR of 9.99% in the forecast period of 2020 to 2027.

Online Betting: A Hot Spot

Most of the growth will be driven by online sports betting, which comprises remote gaming activities by means of the Internet using desktop and mobile devices. An upsurge in smartphone adoption and improving Internet infrastructure across the world will fuel strong growth in the gambling market. Various new technologies like Virtual Reality, 3D Animation, Live Table Games, Blockchain, IoT and VR Headsets are driving the outlook for the gaming market over the coming years (read: ETFs to Soar on Resurgence in Coronavirus Cases).

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 CAGR 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 revenue is 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 CAGR of 11.64%.

Given the bullish outlook, investors should tap the upcoming growth in the sports betting with the following ETFs and stocks:

Roundhill Sports Betting & iGaming ETF (BETZ - Free Report)

This ETF debuted in early June and has attracted $128.8 million in AUM. It is designed to offer retail and institutional investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. Sportsbook comprises 42.7% share while technology, and casinos & others round off the next two spots with double-digit exposure each. The fund holds 39 stocks in its basket. It charges 75 bps in annual fees and trades in average daily volume of 234,000 shares.

VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report)

This fund offers exposure to global companies involved in video game development, esports, and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. It holds 25 stocks in its basket with American firms accounting for nearly one-third of the portfolio, while Japan and China round off the next two with a double-digit allocation each. The fund has gathered $559.6 million in its asset base while trading in an average daily volume of 162,000 shares. It charges 55 bps in annual fees from investors (read: Video Game Sales to Keep Rising in Holiday Season: ETFs to Gain).

Global X Video Games & Esports ETF (HERO - Free Report)

This ETF offers exposure to companies that develop or publish video games, facilitate streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. This can be easily done by the Solactive Video Games & Esports Index. Holding 40 securities in its basket, the fund has AUM of $367.7 million and charges 50 bps in annual fees. It trades in an average daily volume of 173,000 shares.

Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD - Free Report)

This fund offers retail and institutional investors exposure to 32 esports & digital entertainment stocks, It follows the Roundhill BITKRAFT Esports Index, charging investors 50 bps in annual fees. From a country exposure, the United States and China and take the largest share at 25.5% and 24.8%, respectively, while Taiwan and Sweden round off the next two spots. NERD has accumulated $45.1 million in its asset base while trading in an average daily volume of 40,000 shares.

Penn National Gaming Inc. (PENN - Free Report)

This company is a leading, multi-jurisdictional owner and manager of gaming and racing facilities with video gaming terminal operations, and a focus on slot machine entertainment. It saw positive earnings estimate revision of 77 cents for this year and 21 cents for the next year over the past month. The stock has a Zacks Rank #3 (Hold).

Boyd Gaming Corporation (BYD - Free Report)

This is a multi-jurisdictional gaming company. It owns and operates gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. The company saw positive earnings estimate revision of 69 cents for this year and 94 cents for the next year over the past month. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Monarch Casino Resort Inc. (MCRI - Free Report)

This company, through its subsidiaries, owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada, and the Monarch Casino Black Hawk in Black Hawk, Colorado, approximately 40 miles west of Denver. It saw solid earnings estimate revision of 92 cents for this year and 58 cents for the next year over the past month. The stock has a Zacks Rank #2.

Caesars Entertainment Inc. (CZR - Free Report)

This casino-entertainment company is engaged in development of new resorts, expansions and acquisitions. It saw positive earnings estimate revision of 19 cents for this year and 10 cents for the next year over the past month. The stock has a Zacks Rank #3.

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