2 ETFs to Invest in the Gambling Industry

If you're an investor who plays the stock market, you're used to gambling with your money. After all, you are taking a risk by putting your money into stocks. But what if you're interested in jumping into the gambling industry, which is a thriving market in the United States? Consider an exchange-traded fund (ETF).

As booming as the industry is, though, there aren't very many choices. In fact, there are only two ETFs that focus specifically on gambling in the U.S., excluding inverse and leveraged funds as well as those with under $50 million in assets under management (AUM). Though there is no benchmark for the gambling industry, the performance of these funds can be compared against the broader market.

In this article, we look at both of these options. All numbers below are as of Oct. 12, 2022. In order to focus on their investment strategies, the top holdings listed for each ETF exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.

The Gambling Industry

Before we dive into the two ETFs, let's take a look at the gambling industry itself. This industry includes traditional casino gaming, sports betting, and iGaming in the U.S.

Combined revenue for the industry hit $53 billion in 2021. This figure 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 during that period.

This growth was driven by the increase in legalized online sports betting and an accelerated shift toward online entertainment trends during the pandemic. The online gaming market alone is expected to reach $172 billion by 2030.

As noted above, investors who want to capitalize on the growth of casino and gambling companies may consider the following ETFs, which provide access to a basket of stocks, diversity, and minimization of risk.

1. VanEck Gaming ETF (BJK)

• Performance Over One-Year: -31.72%
• Expense Ratio: 0.62%
• Annual Dividend Yield: 0.99%
• 30-Day Average Daily Volume: 10,719
• Assets Under Management: $60.6 million
• Inception Date: Jan. 22, 2008
• Issuer: VanEck

The VanEck Gaming ETF (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 (48.34%) of the ETF's holdings are based in the U.S., with the remaining holdings based in other countries throughout the world. About 85% 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:

• Flutter Entertainment PLC (FLTR), an Ireland-based provider of mobile and online gambling services
• Vici Properties (VICI), a real estate investment trust (REIT) that owns a portfolio of gaming, hospitality, and entertainment properties
• Aristocrat Leisure (ACB), an Australian-based manufacturer of gambling machines

2. Roundhill Sports Betting & iGaming ETF (BETZ)

• Performance Over One-Year: -57.29%
• Expense Ratio: 0.75%
• Annual Dividend Yield: 0.25%
• 30-Day Average Daily Volume: 54,762
• Assets Under Management: $108 million
• Inception Date: June 4, 2020
• Issuer: Roundhill Investments

Roundhill Sports Betting & iGaming ETF (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:

• Flutter Entertainment
• DraftKings (DKNG), a fantasy sports and sports betting company
• Genius Sports (GENI), a U.K.-based sports data and technology company

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