Sports Gambling ETFs That Are Worth A Look

ETFs, otherwise known as exchange-traded funds, are an amalgamation of individual stocks (like mutual funds) held under a single traded fund, allowing investors to diversify their portfolio within a particular industry or commodity for typically lower fees than other funds. The performance of an ETF is tracked and the assets within the fund managed by a fund provider. The provider owns the funds but sells shares of the fund to investors like you under a special ticker.

ETFs can be bought, sold, and traded as easily as any stock through a brokerage account. Unlike mutual fund prices, which are calculated at the end of the day, investors can track ETFs throughout the day and make decisions as quickly as the stock market allows. There are eight different types of ETFs to choose from: index, sector-based, bond, commodity, international, thematic, factor-based, and leveraged ETFs — here, by the way, is everything you need to know about leveraged ETFs — making it possible to cover a range of possibilities, including sports gambling ETFs.

While there are advantages, what you need to know about investing in ETFs is that there are also risks. With sports gambling, everything from taxation, changes in regulations, to a potentially hyper-inflated market not reflecting the true future value of the fund could hurt you if you aren't paying attention.

Considering how much sports betting has impacted the economy, it's not too surprising that a fund provider would place a few sports gaming stocks in a single basket and sell shares of those stocks to investors.

Between 2022 and 2023, the VanEck Gaming ETF (NASDAQ: BJK) grew 24.21% with returns of more than 3% for investors. The ETF (inception date: January 22, 2008) focuses on the performance of casinos, lotteries, gaming tech and equipment, and sports betting tied to the MVIS Global Gaming Index. The prerequisite for inclusion is the gaming profit generated by the companies must account for half of their revenue.

As of July 25, 2024, the VanEck fund is worth $35.72 million in total assets with a share price of $39.78. Its share price hit a peak of $55.39 in April 2021. The ETF currently has 38 holdings in its fund portfolio, with the top 10 containing big names in sports betting like DraftKings and the Las Vegas Sands Corporation, which make up more than half (59.61%) of its net assets.

According to Statista, the U.S. esports market has the potential to earn just over a billion dollars in revenue — $1.07 billion — in 2024, with the betting category accounting for the lion's share of that at $721.2 billion. Meanwhile, Market.US reports the global esports market is projected to reach $10.9 billion by 2033. Understandably, interest in being part of this growing industry is something many investors may want in on, and Roundhill Video Games ETF (NASDAQ: NERD) allows just that.

Unlike other sports gambling ETFs that have a wide range of sports-related options, this ETF is focused specifically on esports and online gambling, with a portfolio that leans into video game and gaming hardware companies. If you're looking for access to casino gambling, this isn't the ETF for you. However, owing to more online sportsbooks like DraftKings and FanDuel, plus competitions like The International (which in 2021, raised $40M in a crowdfunded prize pool), gambling on esports has become quite lucrative.

Best of all, with ETFs like this, you don't even have to know what even money means in sports betting to get a piece of the industry. However, whether it's sports gambling ETFs or regular stocks, you should know what you need to do before you start investing and how to get started.

This last sports gambling ETF goes back to more traditional sports betting, including online and brick-and-mortar gambling. The Roundhill Sports Betting & iGaming ETF (NYSEARCA: BETZ) also adopts the picks-and-shovels play of investing in companies that provide the infrastructure for sports gambling. The fund is global in its considerations, with its three largest holdings being the Irish-British Flutter Entertainment, U.S.-based DraftKings, and U.S.-based Churchill Downs Inc. Sweden-based Evolution AB is fourth.

Honestly, this ETF has taken a beating since hitting a peak of about $32 a share in 2021 before sliding down to ~$17. That said, in 2021, the ETF nearly doubled its share price following its 2020 summer launch. Since May of 2022, the ETF has hovered around the $17 range, with its high during that period being in July 2023 when it reached $18.54. A year later, the ETF's share price sat at $17.54 on July 26. The lowest prices for this ETF during that time, meanwhile, were $12.97 in September 2022 and then $14.31 in October 2023.