Increasingly, vices that were demonized for decades are becoming legalized and normalized. The most recent example of this is sports gambling.
It's a massive change from a few decades ago when sports gambling was never openly discussed in the media, other than maybe a couple of comments about unusual movements on betting lines. Now, the sports leagues are being sponsored by casinos and online gambling websites with these companies given prominent placement. Additionally, the media is openly talking about it including having experts on air to give their own recommendations.
The upside for it is pretty understandable. Politicians see a new source of tax revenue, especially as it's not like there was no sports gambling when it was illegal, the money simply flowed to organized crime or criminals. Sports leagues have an insatiable appetite for growth, and this is juicing revenues especially as gambling is one of the main reasons that many people watch sports. The media is always starved for advertising dollars, so they are fine with this as well.
However, there are increasing signs of the negative externalities that are resulting from legalized sports gambling. And, it's a fair question of whether or not the tradeoffs are worth it.
For one, the sports gambling apps are designed with the same UX that makes social media so addictive. There is also a constant stream of rewards to entice people to bet and give people an 'early win' so that they become addicted to dopamine. It feels more like a game but playing the game wrong can lead to devastating consequences for people's finances.
Another factor is that people are carrying their phones around their pockets which means that they are only a couple of clicks away from making wagers. Before, there was at least some friction such as going to a casino with a sports book or getting in touch with a bookie.
Now, all sportsbooks are available to bettors which is proving to be too much of a temptation for many people. Only time will tell if this legalization will prove to be positive, or if the negatives will overwhelm the positives.
Currently, there are a few gambling-focused exchange-traded funds (ETF), including the VanEck Gaming ETF (NASDAQ: BJK) and the Roundhill Sports Betting & iGaming ETF (NYSE: BETZ). Both of these funds are underperforming the broader market, with BJK down 25% and BETZ down 45%.