Archives for June 2020

Legalization of sports betting by state legislatures is spreading across the United States, with casino/racetrack companies Churchill Downs, Inc. and Penn National Gaming already in on the action.  Individual investors are able to play this trend, as well as capitalize on wagering at established foreign sports books, by buying a brand-new exchange traded fund, or ETF, with the symbol BETZ.  The BETZ ETF endeavors to track the Roundhill Sports Betting & iGaming index and it is the first ETF with the theme of international online betting and sports wagering.

(An ETF owns a portfolio of stocks or bonds and trades on a stock exchange throughout the day just like an individual corporate stock.)

BETZ began trading on June 3, 2020, and was an immediate hit, especially with traders on the Robinhood app so popular with younger people.  By the close of its second day of trading, 8,600 Robinhood users had purchased BETZ, which was a 273% increase from the first day of trading. By June 12, BETZ had $70 million invested in it.

Following are the top ten BETZ holdings, and these account for about 55% of total holdings:

This article is informational and is not a recommendation to buy BETZ. As with investing in any equity, BETZ is potentially risky owing to price fluctuations. Moreover, its newness means it has very little track record. The ETF’s expense ratio of 0.75% is also a consideration. Therefore, individuals should exercise due diligence before buying. 

(Full disclosure:  I do not currently have a position in BETZ and was not compensated in any way to write this article.)

Copyright © 2020 Horse Racing Business

In my many years following horse racing, I’ve always admired how refreshingly apolitical it is.  While there are occasionally small groups of anti-racing protestors at racetracks, their complaints don’t pertain to mainstream societal issues of the day. 

So far, horse racing has avoided the politically charged controversies and turmoil seen in many other sports.  Thankfully, racetracks, off-track betting facilities, and race telecasts still provide an oasis where people of diverse backgrounds and viewpoints can get away from the constant harangue of the outside world for several hours.

America’s most popular sport, The National Football League, used to be like that, but no more.  Regardless of one’s opinion on the subject of players and coaches kneeling or sitting during the presentation of colors and playing of the National Anthem, all can agree that the symbolic gesture is provocative and thus invites commercially negative consequences because a sizeable contingent of fans are sure to be upset.  Many who are offended will choose to not buy tickets or watch on television.  Already, organized NFL boycotts are underway on social media and radio programs are full of callers apparently fed up with the NFL.

It is never, ever a good idea for an organization competing in a competitive and often fickle marketplace to purposely run off customers.  Quite the opposite: Employees are trained to cultivate and cater to all-important existing and potential customers, a point evidently lost on many NFL players and a few coaches.

The NFL and a number of other sports have lost sight of the fact that a major draw of sporting events is that sports traditionally have provided fans with a respite from real-world problems, a fantasy retreat like going to Disney World or a concert.  Their raison d’ê·tre has always been entertainment and escapism.

Fortunately, at Saratoga, Del Mar, Royal Ascot, and other racetracks, the crowd is a marvelous admixture of fans from all walks of life and financial means, who seem to eschew political bickering.  The jockeys, at least in the United States, are largely Hispanic, similar to the demographic profile of players in Major League Baseball.  Moreover, betting on horses is merit-based in that the folks with the winning tickets collect and the losers don’t, irrespective of their economic status or personal characteristics. 

Keeping my fingers crossed that horse racing continues to be a refuge, where people can enjoy themselves without being condescendingly preached to against their wishes.

Copyright © 2020 Horse Racing Business

With less than three months to the rescheduled 2020 Kentucky Derby on September 5, a key question is whether the race will be run?  The answer is almost certainly affirmative because the wagering would be huge even if it came exclusively via internet and phone.  The speculative question is whether fans will be in attendance at the racetrack.

About a month ago, Churchill Downs released an understandably vague statement that read in part:

“Our team relishes the challenge of the September Derby and is deeply committed to holding the very best Kentucky Derby ever and certainly the most unique in any of our lifetimes.  September 5 is still 4 months away.  A lot can happen in our country, and I expect that it will.  We will adjust and respond to whatever the circumstances and will work tirelessly with state and local officials to develop any and all necessary protocols and procedures to make our event a safe and responsible spectator event.”

A respected poll recently found that 66% of the American public intends to avoid crowds.  This will have to change dramatically for events like the Indianapolis 500 in late August and the Kentucky Derby in early September to attract a typically large crowd, even if the events go off as planned.  An effective vaccine could be the catalyst for reducing much of the fear of large crowds, but the most optimistic estimate I’ve seen for a vaccine is mid-to-late fall.

The view here is that the health after effects of the recent crowd gatherings over incidents of police brutality in the United States will provide an early quantitative fact-based indicator of whether a September Kentucky Derby, with on-track fans, will be feasible.  Health officials expressed concerns about the protest crowds spreading the coronavirus.  Dr. Anthony Fauci, the federal government’s top infectious diseases expert, said: “It’s a perfect set-up for further spread of the virus in terms of creating some blips that could turn into some surges.  There certainly is a risk.”

Ominously, multiple soldiers from the D.C. National Guard have already tested positive for Covid 19 after assisting the police with crowd control during protests and looting.

If coronavirus cases markedly spike, especially among people who attended the protests, that would obviously be a very negative sign for holding a Kentucky Derby with fans in attendance.  On the other hand, if pandemic cases do not spike, the chances improve for a Derby with on-track spectators. 

Unfortunately, Johns Hopkins University’s tally of five-day moving averages of the number of new coronavirus cases already shows Arizona, California, Texas, and other states experiencing a rise in confirmed cases as they lift restrictions intended to slow the virus. This certainly does not bode well for fans in the stands at fall 2020 sporting events.

It seems logical that if the Kentucky Derby can’t proceed with on-track fans in September, then neither can other sporting events like college and NFL football. 

As the summer of 2020 continues, Horse Racing Business will have at least one more assessment of the chances for a Kentucky Derby with fans at the track.

Copyright © 2020 Horse Racing Business