2 Gambling ETFs for Q1 2022
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The gambling industry is thriving. In 2021, combined revenue from traditional casino gaming, sports betting and iGaming in the U.S. reached $48.3 billion in the first 11 months of the year, the latest numbers available. That shattered the industry’s full-year record in 2019, before the start of the COVID-19 pandemic. Sports gambling in particular has grown at a tremendous pace, with monthly bet totals increasing more than 20-fold to $7 billion between June 2018 and Oct. 2021. 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 wish to seek 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 Evolution AB and Shs Swedish depository receipts of Kindred Group PLC, respectively.
Only two distinct gambling ETFs trade in the United States. While 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 1-year trailing total return of 24.0% as of Jan. 13, 2022. Based on performance over the past year, the best-performing gambling ETF is the VanEck Gaming ETF (BJK).
We looked at both gambling ETFs below. All numbers below are as of Jan. 13, 2022.
- Performance Over One-Year: -9.3%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 0.46%
- Three-Month Average Daily Volume: 31,229
- Assets Under Management: $92.6 million
- Inception Date: Jan. 22, 2008
- Issuer: VanEck
BJK is a multi-cap fund that targets the MVIS Global Gaming Index. The index is comprised of companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology, and gaming equipment. Companies included in the fund's portfolio must derive at least 50% of revenues from the global gaming industry. Just under 90% of holdings are represented by the consumer discretionary sector, with real estate names making up the bulk of the remainder. Nearly half of its holdings are based in the U.S. The company invests in a blend of value and growth stocks.
The top holdings of BJK include Evolution AB (EVO:OME), a Sweden-based maker of B2B live casino solutions; Aristocrat Leisure Limited (ALL:ASX), an Australia-based maker of gambling machines; and Flutter Entertainment Plc (FLTR:DUB), an Ireland-based bookmaking holding company.
- Performance Over One-Year: -18.9%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.25%
- Three-Month Average Daily Volume: 177,468
- Assets Under Management: $271.0 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 mainly provides exposure to online gambling by investing in three categories: companies that operate in-person or online sports books; companies that operate online/internet gambling platforms, and companies that provide infrastructure or technology to the industry. The multi-cap fund is geographically diversified across a number of developed markets, though U.S.-based companies receive the largest allocation at just over a third of the portfolio. It follows a blended strategy, investing in a mix of growth and value stocks across the market capitalization spectrum.
The fund’s top three holdings are Shs Swedish depository receipts of Kindred Group PLC (KIND:OME), a Sweden-based online gambling platform operator; Class B shares of Kambi Group PLC (KAMBI:OME), a Sweden-based provider of sports betting services to licensed gaming operators; and Entain PLC (ENT:LON), a U.K.-based sports betting and gambling company.
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