Roundhill Ditches Passive Index to Actively Manage Famous BETZ Gambling ETF

• The Roundhill Sports Betting & iGaming ETF (BETZ) will officially convert to an actively managed fund immediately following the market close on Thursday, June 18
• The move means the ETF will stop tracking its rigid benchmark, the Morningstar Sports Betting & iGaming Select Index, freeing managers to dynamically adjust holdings
• Launched in 2020 as the first ETF dedicated entirely to online gaming and sports wagering equities, BETZ is now the marketplace’s sole surviving pure-play gambling fund

The Roundhill Sports Betting & iGaming ETF (NYSE: BETZ), the first exchange traded fund (ETF) focusing on iGaming and sports wagering stocks, will soon shed its label as a passive fund.

On Thursday, June 18, BETZ will become an actively managed ETF and halt tracking the Morningstar Sports Betting & iGaming Select Index — its current benchmark. New York-based Roundhill made the announcement on Monday (June 15).

The Fund will continue to focus on the sports betting and iGaming industry. Its holdings will generally include companies involved in online and retail sports betting, online casino gaming, and the technology and services that support them,” according to the issuer.

Roundhill didn’t provide a reason for shifting BETZ to an active ETF from its current passive posture.

BETZ History

The Roundhill fund caught lightning in a bottle when it debuted in June 2020. At the time, the legal US sports betting landscape was expanding rapidly following the Supreme Court’s 2018 strike-down of the Professional and Amateur Sports Protection Act (PASPA).

Furthermore, the ETF hit the market at a unique historical moment—right as the coronavirus pandemic had forced land-based casinos nationwide to close their doors.

That “bubble” popped in 2021 and as some of the marquee domestic sports wagering stocks slumped, retail investors lost enthusiasm for the space with some pulling capital from BETZ. Today, the 30-stock ETF has $51.37 million in assets under management, according to issuer data.

To its credit, BETZ has vanquished competition in the betting ETF space as the fund is the only remaining ETF dedicated to wagering stocks. Other ETFs that hold casino, iGaming and sports wagering equities also feature exposure to other internet and leisure themes.

What to Expect When BETZ Goes Active

At this juncture, forecasting changes, if anything, to the BETZ roster when the fund converts to actively managed status is difficult because Roundhill hasn’t provided details to that effect. One certainty is that active funds have more flexibility as they’re not confined by the rules laid out by indexes.

So it’s possible that when BETZ goes active, the managers can tinker with the lineup, adding or trimming sports betting exposure or allocations to international stocks, but for now that’s just speculation.

Entering today, the ETF’s largest US-traded holdings were Rush Street Interactive (NYSE: RSI), Super Group (NYSE: SGHC) and DraftKings. That trio combines for nearly 20% of the BETZ roster.