2 ETFs To Invest in the Gambling Industry

Gambling is a thriving market in the United States and can be invested in like any other industry. If you're an investor interested in putting some of your money into the gambling industry, consider an exchange-traded fund (ETF).

As booming as the gambling industry is, though, there aren't very many investment 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 September 27, 2023. 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 United States.

Combined revenue for the industry was over $60 billion in 2022, even higher than the industry's previous record-shattering revenue of $53 billion in 2021. Sports Betting and iGaming in particular have grown at a tremendous pace since 2019.

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: 24.21%
• YTD Returns: 3.31%
• Expense Ratio: 0.65%
• Average Daily Volume: 10,896
• Assets Under Management: $61.11 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 (FLUT), 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
• Las Vegas Sanda Corp (LVS), an American casino and resort company

2. Roundhill Sports Betting & iGaming ETF (BETZ)

• Performance Over One-Year: 22.22%
• YTD Returns: 11.31%
• Expense Ratio: 0.75%
• Average Daily Volume: 16,925
• Assets Under Management: $99 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:

• DraftKings Inc. (DKNG), a fantasy sports and sports betting company
• Penn Entertainment Inc. (PENN), an American company that integrates entertainment, sports, and casino gambling
• Tabcorp Holdings (TABCF), Australia's largest gambling company

The Bottom Line

Like any other sector of the economy, there are opportunities to invest in the gambling industry. Gambling is a booming industry in the United States. One of the best ways to do this is to invest in gambling exchange-traded funds (ETFs). The two gambling ETF available to investors in the U.S. are BJK and BETZ.

BJK, which tracks the MVIS Global Gaming Index, is offered by VanEck. BETZ is offered by Roundhill Investments. It tracks the Roundhill Sports Betting and iGaming Index. Both funds have holdings of U.S. and international companies involved in sports betting, casino gaming, iGaming, and other kinds of gambling.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Correction—March. 6, 2024: This article has been corrected to state that Flutter's stock ticker is FLUT.