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Sports Betting ETF Adds 3 New Holdings, Including Pair Of SPACs

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Sports Betting ETF Adds 3 New Holdings, Including Pair Of SPACs

The legend of the Roundhill Sports Betting & iGaming ETF (NYSE: BETZ) continues growing. Barely more than four months old, the first and only exchange-traded fund dedicated to the fast-growing online casinos and sports betting theme has $152 million in assets under management.

What Happened: BETZ is proving investors want to wager on sports betting and the fund is rewarding their faith, returning 36% since inception. However, there's more to the story.

BETZ is an index-based ETF – it tracks the Roundhill Sports Betting & iGaming Index – but since it debuted, the fund has displayed flexibility, adjusting positions based on unusual demand and adding some compelling names at various rebalances.

Why It's Important: That tradition continued on Friday when BETZ made room for three new holdings, including two special purpose acquisition companies (SPACs). In July, BETZ added Tilman Fertitta's Landcadia Holdings II (NASDAQ: LCA) to its roster, becoming one of the first ETFs to include a blank-check company in its lineup.

On Friday, the number of SPACs in BETZ tripled with the additions of DMY Technology Group (NYSE: DMYT) and Flying Eagle Acquisition (NASDAQ: FEAC). Those stocks combine for 4.46% of the ETF's weight and its total blank-check exposure is now almost 6.70%.

TokyoTokeiba, a Japanese horse betting firm that offers mobile wagering, is the other fresh face in BETZ, joining the ETF at a weight of 2.29%.

What's Next: What's important about the SPACs being added to BETZ is that the ETF isn't taking fliers. All three blank-check equities on the fund's roster have announced deals.

In addition to Landcadia II serving as the avenue for Golden Nugget Online Gaming (GNOG) to eventually come public, DMY previously announced a merger with online gaming and sports betting company Rush Street Interactive, valuing that operator at $1.8 billion.

Flying Eagle has a deal in place to merge with online and social games purveyor Skillz, a transaction that values the latter at $3.5 billion. BETZ joins the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSE: NERD) as the Roundhill ETFs with exposure to Flying Eagle.

Although it's new, BETZ has established success with SPACs. It was one of the first ETFs featuring a stake in DraftKings (NASDAQ: DKNG), a company that went public via a blank-check merger. With an almost 5% weight to DraftKings, BETZ remains one of the largest ETF holders of the sportsbook operator's shares.

Disclosure: The author owns shares of DraftKings.

 

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