In just about four months, the Roundhill Sports Betting & iGaming ETF (NYSE:BETZ) is up almost 36% and has drawn in $137 million in assets under management, making it one of this year's most impressive new exchange-traded funds.
What Happened: Much of the ebullience surrounding BETZ is tied to long-term expectations. Last year in the U.S., sports betting was a roughly $1 billion market. However, some analysts see the iGaming and sports gambling markets topping $20 billion in 2025 and, in some cases, there are forecasts for $30 billion to $40 billion and beyond for 2030.
Impressive forecasts to be sure, but there's plenty of activity happening now that could propel BETZ higher over the near-term.
“Operating and capital formation momentum are building rapidly in this space. A return to live sports on television is driving increased player engagement, and fundraising and partnerships are expanding,” said Canaccord Genuity analysts Micahel Graham and Maria Ripps in a recent note.
Why It's Important: The unusually busy sports calendar is providing an assist to BETZ and that much is confirmed by the ETF's one-month return of 13.05%. There's more on the way that could help BETZ, including an enhanced slate of college football and expectations that NCAA basketball will start around the time it usually does every year.
“The NFL has completed four weeks of its season with one game having been postponed due to a COVID-19 outbreak, and while several other players have tested positive the schedule is proceeding as planned,” said Canaccord analysts. “College football is also ongoing with a limited number of postponements due to COVID-19, and the Big Ten and Pac-12 have both voted to play in the fall, while college basketball is targeting to begin its season on 11/25.”
BETZ is higher by half a percent over the past week, a decent showing considering two of its marquee components – DraftKings (NASDAQ:DKNG) and Penn National Gaming (NASDAQ:PENN) – are low by an average of 14% over that period.
What's Next: In addition to more teams and sports coming back into the fold, the next catalysts for BETZ could come on Election Day.
“Tennessee's launch of mobile sports betting is expected to take place in November; Virginia was legalized in July, with expectations of a launch in early 2021; Louisiana, Maryland, and South Dakota all have legalization measures on ballots this year,” according to Canaccord.
The Louisiana ballot measure is almost certain to pass because it will be determined on a parish-by-parish basis, not statewide.
Disclosure: The author owns shares of DKNG and PENN.