Video games gambling ETF
Video games specialist ETF provider Roundhill is listing a new ETF that invests in companies that provide video games gambling venues and services.
For the uninitiated – betting on the outcomes of competitive video gaming has become increasingly popular in recent years. While competitive video gaming – called “eSports” by some – has historically been a purely social and grass roots activity, it has increasingly entered the mainstream of late.
The Roundhill Sports Betting & iGaming ETF (BETZ), which will list on the NYSE, will take a similar approach to its other video games ETF (NERD). The new fund – like the old – will use a tiered weighting methodology to buy stocks. This is where index weighting is built like a wedding cake: those with the highest revenue purity fall in the top tier.
Some of the stocks likely to be at the top of the cake are British gambling company Flutter Entertainment and Australian gambler PointsBet.
Analysis – fragmented IP, and Facebook, Amazon, Google
Video games is a bit of an interesting fish when it comes to investing. On the one hand, the major value in the video games industry is in the games and those who develop them. Companies that hit it big with a great game get really rich. Some publicly traded examples: CD Projekt (The Witcher), Nintendo (Zelda, Mario, Smash Bros), Blizzard (World of Warcraft), Tencent (League of Legends).
Yet on the other hand video games IP is fragmented and any sports-like success for the industry will likely be bagged by broadcasters -- as it was for actual sports. For this reason, if it were my money, and I were betting on the increased mainstreaming of video games, I’d buy Facebook Amazon and Google. Google because of Stadia and YouTube; Amazon because of Twitch; Facebook because of its ambitions here.
For me, any gambling aspect would come a distant second – only after the broadcasting had been mainstreamed.