Roundhill Investments is looking to launch the first exchange-traded fund linked to sports betting. The ETF will seek to capitalize on the fast-growing sports betting markets in the US. This dedicated fund will aim to capture the growth of this market.

ETF filed with the SEC

Roundhill filed for its Roundhill Sports Betting & iGaming ETF with the Securities and Exchange Commission (SEC) recently. The ETF product would trade on the New York Stock Exchange with the “BETZ” ticker. It is unclear if the regulator will allow this ETF to float in the market. The product is expected to follow mythology similar to the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSE: NERD).

The ETF will provide higher weightage to pure-play online sportsbooks instead of companies that primarily deal in physical casinos. The methodology was revealed by Will Hersey, the co-founder, and CEO of Roundhill. The comments of the index will include brick-and-mortar as well as online sportsbooks alongside infrastructure providers and purveyors of gambling platforms on the internet.

Information still undisclosed

Detailed information about the ETF has not been made available publicly yet. However, the filing may include Roundhill’s definitions of “Core” and “pure-play” companies.

Pure play entities, may include firms

“whose primary business model and/or growth prospects are directly linked to the Sports Betting and/or iGaming Industry. For these companies, continued growth in the Sports Betting and/or iGaming Industry is expected to be critical to their economic success going forward.”

On the other hand, core companies will be those entities that have substantial operations and/or those that have considerable growth prospects linked directly with the iGaming and/or sports betting industry.

The index is expected to have at least 20 components. It is likely that companies like PointsBet, Flutter Entertainment and FanDuel could be on the list. Hershey suggested that DraftKings’s entry into the public markets via its special purpose acquisition corporation (SPAC)- Diamond Eagle Acquisition Corp. (NYSE: DEAC) may also be included in the index.

Roundhill’s index for betting companies comes at a time when 20 sports in the US have legalized sports betting in their jurisdictions, breaking Nevada’s monopoly. BETZ could help investors capitalize on the growth prospects of these companies as they establish themselves in the nascent market. Note that Jeffries estimated EBITDA for sports betting companies in the US to be around $5 billion by 2023.