Roundhill Sports Betting & iGaming ETF (BETZ)

The Roundhill Sports Betting & iGaming ETF (trading as BETZ) is an actively managed exchange-traded fund that invests in publicly traded companies whose primary business involves sports betting, online gaming, or closely related digital-entertainment services. Rather than passively tracking an index, the fund’s managers select individual stocks from a universe of companies whose revenues or profits depend heavily on wagering and gaming, including sportsbooks, online gaming platforms, lottery operators, and gaming-technology providers. For investors seeking exposure to the growth of legal sports betting and online gaming in North America and elsewhere, BETZ offers a single security focused on this thematic opportunity.

The emergence of a regulated sports-betting industry

For decades, sports betting in the United States was largely confined to Las Vegas and a handful of tribal casinos. The prohibition on sports betting was federal law, upheld through the Professional and Amateur Sports Protection Act, which barred states from authorizing sportsbooks except in Nevada and a few grandfathered cases. This regulatory regime began to fracture in 2018 when the U.S. Supreme Court struck down the federal prohibition, opening the door for individual states to legalize and regulate sports betting.

The consequence was rapid. By the early 2020s, nearly half the states had legalized sports betting in some form — some through in-person sportsbooks, most through online platforms. This legalization created a new category of publicly traded companies and expanded existing ones. Large casino operators like DraftKings, FanDuel (owned by Flutter Entertainment), and MGM Resorts began dedicating serious capital to sportsbooks and mobile betting apps. Technology companies that had built betting and gaming platforms found new customers. Existing gambling operators, including lotteries and tribal casinos, began to compete online.

The growth was explosive. Revenue from legal sports betting in the United States climbed from nearly zero in 2018 to tens of billions by the mid-2020s, and projections suggested it would continue expanding as more states legalized and as consumer adoption deepened.

The fund’s creation and strategy

Roundhill Investments launched BETZ to capture this thematic opportunity. The fund’s strategy is to invest in companies whose earnings or revenues derive significantly from sports betting, iGaming (online gaming), and adjacent sectors such as sports leagues, gaming technology, payment processors serving gambling platforms, and related entertainment. The fund is actively managed, meaning a team of portfolio managers selects stocks rather than holding a fixed index — they aim to pick winners among the many companies benefiting from the trend, overweight those they see as strongest, and avoid or underweight weaker players.

The holdings have included major sportsbook operators (DraftKings, Caesars Entertainment, MGM Resorts, Penn Entertainment), iGaming platforms, lottery operators, sports-league stocks (if they generate meaningful revenue from betting), gaming-technology providers, and sometimes payment processors or mobile platforms that derive significant revenue from gaming. The exact composition shifts as managers make active bets on which companies will outperform.

Active management and costs

Because BETZ is actively managed, it carries a higher expense ratio than a passive index fund. The fund’s managers are paid from that fee, and they are compensated to outperform a benchmark — typically an index of gaming or hospitality stocks, or simply the broader market. Active management introduces the possibility of outperformance but also of underperformance; there is no guarantee the fund’s stock picks will beat a simple index approach.

The fund’s liquidity depends on the liquidity of its underlying holdings. Most of BETZ’s positions are stocks of large, publicly traded companies that trade with tight bid-ask spreads, so the fund itself generally trades with good liquidity. However, if the fund shifts into smaller-cap or less-liquid stocks, bid-ask spreads can widen and trading costs can rise.

Sector concentration and betting-market risks

BETZ is a concentrated bet on the sports-betting and iGaming sector. Its returns depend on how that sector performs as a whole. Regulatory risks are material: if a state were to ban or sharply curtail sports betting, or if the federal government were to reimpose restrictions, revenue for many companies in the fund would shrink. Conversely, if more states legalize or if consumer adoption accelerates, the tailwind could be substantial.

The profitability of sportsbooks and gaming platforms depends on the “hold” — the percentage of wagered money that the operator retains as revenue after paying out winning bets. Competitive pressures, player acquisition costs, and promotional spending can shrink the hold and compress margins. Some betting operators have struggled to achieve profitability in competitive markets, burning cash to acquire customers. An investor in BETZ is exposed to the economics of this competition.

Betting and gaming are also cyclical. During economic downturns, consumers may reduce discretionary entertainment spending, including wagering. The fund would be exposed to that downturn risk.

How to research BETZ

Investors interested in BETZ should begin by reading the fund’s prospectus and latest fact sheet, which detail the current holdings, the fund’s investment strategy, the manager’s approach, and the expense ratio. The fund’s website typically provides current holdings and historical performance.

To understand the sector, follow regulatory developments in key states (New York, Florida, California, Illinois, and others), track operator earnings reports and customer-acquisition costs, and monitor sports-betting market growth projections. Key questions to research include: which states are closest to legalizing; how profitably is each major operator running; what is the outlook for market saturation; and how quickly is consumer adoption moving. BETZ’s performance will be determined by answers to these questions, not by the fund’s active management decisions alone. Because sports betting and iGaming are young, competitive, and growing, the fund is appropriate for investors who believe the sector’s tailwinds will persist and who are comfortable with the regulatory and competitive risks the sector faces.