Wall Street Embraces Sports Betting with Hundreds of New Team ETFs

Decades after Pete Rose’s lifetime ban from Major League Baseball for gambling violations, the line between sports wagering and financial investing appears to be vanishing on Wall Street. In a significant shift, multiple asset management firms have filed with the Securities and Exchange Commission (SEC) for hundreds of exchange-traded funds (ETFs) that track the single-season performance of professional sports teams.

Companies including VolatilityShares, LeagueShares, Roundhill Investments, and Rex Financial have submitted proposals for funds tied to NHL and MLB teams. These ETFs would be built on futures contracts listed by CME Group, which track team statistics such as runs scored, strikeouts, and stolen bases rather than traditional equity ownership.

While none of the products have begun trading, the filings signal an aggressive expansion into sports-themed finance. Greg King, CEO of Alpha Sports, a subsidiary of Rex Financial, stated that the initiative aims to create a “liquid, transparent investment product tied directly to what happens in live games” for passionate fans.

However, finance experts are sharply critical of the trend. Robert Johnson, a professor of finance at Creighton University, argued that the distinction between gambling and investing has been “erased.” He characterized the new structures not as assets, but as “gambling dressed up as investing,” noting that individual investors placing bets on team performance do not facilitate any natural hedging position.

“In the aggregate, they destroy wealth,” Johnson said. Alex Michalka of Wealthfront echoed this sentiment, suggesting that most retail investors will use these funds for entertainment or loyalty displays rather than sound economic purposes. “Just because sports betting has an ETF wrapper, it does not change the risk associated with it,” he added.

The SEC is currently reviewing novel ETF structures following a public comment period. Nate Geraci, president of NovaDius Wealth Management, expects the commissions to approve the sports team ETFs, provided the underlying futures contracts establish sufficient liquidity. He noted the irony that ETFs, originally designed for low-cost broad-market exposure, have morphed into vehicles for narrow speculation.

Risks highlighted in preliminary analyses include potential manipulation, wide bid-ask spreads, and severe illiquidity during the offseason, which can last up to four months. Todd Sohn of Baird Strategas warned that while sports may be an asset class for a select few, “democratizing” access through these products introduces significant dangers for average investors.

Financial advisors caution against mixing emotional fandom with retirement savings. Evan Mills of Scholar Advising warned that tying a team’s performance to a portfolio can lead to devastating outcomes when losses occur both emotionally and financially. “For avid sports gamblers and sports fanatics, their team can already break their heart with a loss. Now there’s a way it can break your heart and break your retirement fund at the same time,” Mills said.

Not all sports-related ETFs rely on futures. Amplify ETFs has filed for a fund tracking public and private companies that own teams or venues, while Gabelli Funds’ GOLS ETF, trading since January, holds shares in organizations like MSG Sports and Manchester United, though it also includes media and entertainment giants like Disney.