Should Gamblers Invest in a Gambling ETF?

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3D illustration of a neon cryptocurrency gambling chip.
BetMGM Dec 04, 2023, 3:05 AM

Online casino games have become a mainstay of the modern gaming era. So much so that online casinos have become household names over the last 20 years. More recently, online betting and casino companies have embraced new technologies like cryptocurrency to stay relevant in an ever-changing world. It only stands to reason then that with such massive growth, investors have flocked to buy online gambling stocks in recent times. 

A relatively new investment vehicle in this high-growth industry is the gambling ETF (Exchange-Traded Fund). As a regular player or even a recreational gambler, find out what these gambling ETFs are, the best online gambling ETFs to invest in, and how your investment can keep you playing for years to come.  

What Is an ETF?

An ETF is a type of investment that you can buy and sell on stock exchanges, just like stocks. But instead of buying shares in a single company, an ETF allows you to club your money together with others to invest in a diversified portfolio of assets, such as stocks, bonds, or commodities. ETFs are similar to mutual funds, with one key difference – they can be traded on a stock exchange, whereas mutual funds can’t. 

There are a number of different types of ETFs, but some of the most popular ETFs track a specific industry or sector rather than a diverse variety of stocks, bonds, and commodities. 

What Is a Gambling ETF?

Gambling ETFs simply track the gambling sector and spread their investments across the many publicly traded gambling stocks. In other words, money in the fund is invested in companies like land-based casinos, online casinos, and iGaming developers. 

Pros and Cons of Gambling ETFs

Gambling ETFs are a great way to diversify your investment portfolio, but as with any investment product, they have pros and cons. 

Pros

Targeted diversification: Investing in gambling ETFs allows you to diversify your portfolio while still targeting a high-growth sector. It’s kind of like playing multiple casino table games at the same time when slots are just not yielding as high a return.

Lower risk: Gambling ETFs allow you to spread your risk across multiple stocks in the gambling sector, from casinos to sports betting and game development, without having to bet only one. This means you won’t lose everything if one stock goes down. 

Lower costs: One of the big wins with gambling ETFs is the lower cost. This is because, unlike mutual funds, which require brokers to actively manage the investments, ETFs tend to be more passive. As a result, there are lower management fees, marketing costs, and broker fees. 

Flexibility: Again, unlike mutual funds, the fact that ETFs are traded on the stock exchange means that ETF stocks can be traded throughout the day. This also allows investors to trade futures and options, watch daily pricing, trade accordingly, and buy ETFs on margin and then short them. 

Cons

Low risk, low reward: As with any type of gamble, the lower the risk, the lower the yield. However, the professional gamblers know that the real value is in the long game. Shooting for quick returns is for the jackpot-chasing slot pundits, not serious players who understand the odds. 

Affordability: While the cost of managing your ETF portfolio is lower than a mutual fund or stock portfolio, the price of ETF stocks tends to be higher. Think of it in terms of your bankroll. You’re not going to risk a small budget on a high-stakes game. Similarly, ETFs tend to require bigger budgets to see better returns. 

Trading day: Remember that flexibility mentioned earlier? While it allows investors to maximize the value of their ETFs, it can also be quite onerous to have to actively manage the portfolio on a daily basis. It is probably best to treat ETFs as passive long-term investments rather than daily traded stocks. 

Best Performing Gambling ETFs

As someone who spends a fair amount of time online playing blackjack with a live dealer, you know firsthand that this industry is not about to slow down anytime soon. It is no surprise, then, that gambling ETFs are among the fastest-growing sector ETFs on the NYSE. The charge is led by VanEck Vectors Gaming ETF (BJK) and Roundhill Sports Betting & iGaming ETF (BETZ), the two best-performing gambling ETFs.

VanEck Vectors Gaming ETF (BJK)

VanEck’s ETF comprises a more conventional blend of casino stocks and gambling entities, including Wynn Resorts and Las Vegas Sands. The ETF was severely impacted by the challenges faced by the travel and leisure industry during COVID-19 but has since recovered significantly and remains the best-performing gambling ETF on the NYSE. 

Roundhill Sports Betting & iGaming ETF (BETZ)

BETZ is a global fund that focuses exclusively on digital gaming stocks, such as online betting company PointsBet, Canadian betting firm Score Media, and even several Special Purpose Acquisition Companies (SPAC) that concentrate on sports betting technology and data providers. 

How Will Gambling ETFs Help Online Gambling?

It isn’t difficult to see how the recent leaps made in Artificial Intelligence (AI) and cryptocurrency will contribute to the continued rapid growth in online gambling. These are just some of the innovations that drive the sector forward for consumers. 

However, investing in gambling ETFs also provides much-needed capital for these companies to keep innovating for growth. As a player, you enjoy the value of the games; as an investor, you can earn real value from the online casinos you love. 

BetMGM Is a Solid Investment

Now that you understand how to invest in the companies that bring you the best online casino games and sports betting experiences, register with BetMGM to invest in your own leisure by playing their vast array of online live dealer games, slots, bingo, and table games. 

Actress Vanessa Hudgens flipping casino chips next to the text "The King of Casinos"
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Our BetMGM editors and authors are sports experts with a wealth of knowledge of the sports industry at all levels. Their coverage includes sports news, previews and predictions, fun facts, and betting.

Our BetMGM editors and authors are sports experts with a wealth of knowledge of the sports industry at all levels. Their coverage includes sports news, previews and predictions, fun facts, and betting.