Market Overview

Sports Betting ETF Quickly Finds Fans On Robinhood

Sports Betting ETF Quickly Finds Fans On Robinhood

The Roundhill Sports Betting & iGaming ETF (NYSE: BETZ) debuted last Thursday and the first exchange-traded fund dedicated to the rapidly growing online betting and sports wagering themes is already attracting investors in a predictable venue.

What Happened: Younger investors are already showing an affinity for BETZ, particularly those on the popular Robinhood app. Last Friday was merely the second day of trading for BETZ, but when markets closed that day, more 8,600 Robinhood users were holding the rookie ETF.

That's good for a 273% increase from the prior day, making BETZ the biggest gainer on a percentage basis in terms of one-day additions among Robinhood account users, according to the brokerage app.

Why It's Important: Yes, Robinhood is a retail platform and the average account size there is likely on the small side. That doesn't diminish the rapid influx of user to BETZ because many new ETFs, regardless of how compelling the underlying investment thesis, struggle to attract an audience. That's even more true of funds sponsored by smaller and independent issuers.

The good news for BETZ and investors embracing the fund right out of the gates is that iGaming and sports betting are big-time growth industries and there are growing signs that investors like the asset-light models offered by BETZ holdings, such as DraftKings (NASDAQ: DKNG) and FanDuel parent Flutter Entertainment (OTC: PDYPY).

Those stocks combine for almost 13% of the BETZ roster, making the ETF the first to feature either for size in its lineup. Moreover, the fund is the first credible play on the next generation of wagering as technology and iGaming companies combine for 41.6% of the BETZ lineup.

What's Next: Timing can help new ETFs. Specific to BETZ, a strong case can be made that timing is on the ETF's side. BETZ debuted after a May in which downloads of sports betting apps like DraftKings and FanDuel more than tripled.

Thinks about that for a minute. Gamblers were rushing to download those apps and others when the May sports menu was basically a charity golf match, a few NASCAR races, some UFC fight nights and Korean baseball.

To the point of good timing for BETZ and some of its holdings, the PGA Tour returns later this week. Formula 1 resumes in early July while the NHL and NBA return later next month. If Major League Baseball can finally start its 2020 season over the near-term, BETZ would really be cooking with gas and at a time when we're still months away from football season.


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