With the casino business starting to recover and iGaming and sports wagering taking off, the VanEck Vectors Gaming ETF (NasdaqGM: BJK) is an industry exchange traded fund to consider in 2021.
BJK tries to reflect the performance of the MVIS Global Gaming Index. For index eligibility, companies must generate at least 50% of their revenues from gaming. Gaming includes casinos and casino hotels, sports betting (including internet gambling and racetracks), and lottery services as well as gaming services, gaming technology, and gaming equipment.
BJK provides investors with a mix of land-based casino operators and companies involved in the fast-growing iGaming and online sports wagering segments, the latter two of which are the places to be in the gambling investment space.
“2020 was a huge year for online sportsbooks, and 2021 might just go down as the most important year in the industry’s history,” according to Microsmallcap.com.
Sports Betting Increasingly Legalized, But Increasingly Regulated
While several states approved sports betting last year, the sports calendar was out of whack due to the coronavirus pandemic. Several more signed off on it on Election Day, meaning there’s significant opportunity for BJK components to grab market share and generate more revenue this year.
New York Governor Andrew Cuomo is supporting legalizing wagers on sporting events, but it remains to be seen whether or not the Empire State will open itself to multiple operators.
While investors have turned to sports betting operators and sector-related ETF in hopes of legalization of the businesses in populous states, Cuomo’s announcement underscored that the economics would flow back into the state of New York in the form of taxes, rather than to shareholders of betting operators, Barron’s reports.
This potential shakeup raises the risk that New York and other big states, like California and Texas, could move to control online sports gambling through a lottery-type system or heavily tax the industry, like Pennsylvania, which could leave little left for sports betting operators.
“Heading into 2021, the online sports betting industry has a broader reach and a larger user base than ever before, all as major league sports are returning to action. Major legislative breakthroughs in key markets are expected to continue into 2021,” adds Microsmallcap.com.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.