There are different ways to gamble on sports and some don’t require wagers to be directly placed on games. The Roundhill Sports Betting & iGaming exchange-traded fund (ETF) has seen a decent amount of success since it was first introduced last year and another company is hoping to follow suit. ETF Series Solutions (ESS) has a new alternative in mind that would allow investors to wager on the success of the gaming industry.
Gaming ETF Planned for NASDAQ
Late last week, ESS submitted an application with the Securities and Exchange Commission (SEC) to introduce its iBet Sports Betting and Gaming ETF. The company hopes to be able to put it on the NASDAQ exchange under the ticker IBET, but will have to be approved by the financial regulator before that happens. According to the prospectus included with the application, the fund would cover “[operating] casinos or racetracks; operating an online multiplayer video game competition platform; operating a mobile sports betting platform; owning real estate primarily used for gaming activities, operating online communities for gaming; and developing educational tools for online gaming.”
Roundhill introduced its ETF, BETZ, in June of last year on the NYSE Arca exchange. It has enjoyed significant success since then, now reporting around $404 million in assets under management. The ESS alternative is likely to have more difficulty finding acceptance, at least initially, as it has several key differences that might sour interest. BETZ is based off the Roundhill Sports Betting & iGaming Index, making it a passive fund. IBET, however, would be actively managed, with these types of funds typically more expensive for investors. IBET plans on charging an annual fee of 0.79%, which is four basis points above what BETZ charges.
More Questions to be Answered
The exact nature of the IBET ETF hasn’t yet been defined. ESS doesn’t mention what type of assets would be included or how the fund would be structured. However, it has some strong support behind its launch, with Inherent Wealth Fund acting as an adviser along with Penserra Capital Management. Jeffrey Kamys, Inherent’s CEO and chief investment strategist, will manage the fund, bringing in his experience from the sports betting ecosystem to provide additional support. Kamys founded Dr. Stats Fantasy Sports in 1995, a company that remained operational until 2012.
ESS adds in its filing with the SEC, “Under normal circumstances, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of companies in the Casinos & Gaming sub-industry, or companies whose primary business consists of owning, developing, or operating sports betting or gaming (including iGaming and esports) venues, software, media content, or electronic platforms.”