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ETFs to Win From the DraftKings- Caesars-ESPN Deal

Sanghamitra Saha

The gaming industry has been booming this year buoyed by the pandemic as people are mostly stuck at home. As a result, spending on video games in the United States skyrocketed to new heights in the past few months (read: August Clocks Monster Gains: 5 ETF Areas Up At Least 20%).

To add more allure to gaming investing, DraftKings DKNG and Caesars CZR recently announced a multi-year deal with ESPN that will feature their content on the network's digital and TV platforms. Shares of DraftKings and Caesars jumped as much as 17.5% and 10.5%, respectively, on Sep 14.

Per the deal, DraftKings will be the exclusive provider of daily fantasy sports and a co-exclusive partner for gambling link-outs from ESPN, the company said, as quoted on CNBC. Shares of DraftKings are up about 300% this year.

ESPN's vice president of business development and innovation, called the deals "the next significant milestone for ESPN to diversify our exposure and deepen our commitment in the sports betting space,” as quoted on CNN.

The timing of the agreement is strategic as last week marked the return of the National Football League. Not only this, the pandemic has sent the National Hockey League and National Basketball Association playoffs to September, superimposing with Week One of the NFL season for the first time ever, a CNBC article noted.

Notably, ESPN partnered with Caesars Entertainment last year to build a new ESPN-branded studio at its LINQ Hotel and Casino in Las Vegas. The studio, which acts as the network's center for sports-betting content, was launched last week, per CNN.

Gambling, which was once considered something off-limits in the sports field, is gradually becoming mainstream after the Supreme Court annulled a ban on betting in 2018 in a 6-3 ruling. The ruling paved the way for several states to legalize sports betting.

Disney-owned ESPN has broadcast rights to the majority of the key U.S. sports. And demand for sports betting has popped even further lately on the rolling over of major sporting events in September. Against this backdrop, below we highlight a few ETFs that could stand to gain on ESPN’s deal with DraftKings and Caesars.

ETFs in Focus 

VanEck Vectors Gaming ETF (BJK)

The underlying MVIS Global Gaming Index tracks the overall performance of companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment. The fund puts 4.75% weight in DraftKings. Caesars Entertainment has about 2.68% weight in the fund.

Roundhill Sports Betting & iGaming ETF (BETZ)

The underlying Roundhill Sports Betting & iGaming Index tracks the performance of a tiered-weight portfolio of globally-listed equity securities of companies that are actively involved in the sports betting industry. DraftKings has 5.20% weight in the fund (read: Most Interesting New ETFs: Sports Betting & Telemedicine).

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Caesars Entertainment, Inc. (CZR) : Free Stock Analysis Report
 
VanEck Vectors Gaming ETF (BJK): ETF Research Reports
 
DraftKings Inc. (DKNG) : Free Stock Analysis Report
 
Roundhill Sports Betting iGaming ETF (BETZ): ETF Research Reports
 
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