Volatility Shares has filed to launch an exchange-traded fund for every NHL team, a set of products unlike anything currently trading. The registration, filed Aug. 14, covers all 32 teams alphabetically from an Anaheim Ducks ETF to a Winnipeg Jets ETF, each tied to one franchise's on-ice performance.Every fund would hold futures contracts tied to a CME FutureSports Performance Index built for that one team. The indexes, which the CME announced just three days earlier, are calculated by an independent administrator called FutureSports and are based on official real-time NHL data.
Each index turns a team's play into a single number that starts every season at 7,500, moves in real time as games are played, and resets once the postseason ends. Good plays push the index up, while bad ones drag it down.FutureSports says the indexes draw on 55 statistical measures plus wins, losses and ties, but neither the specific measures nor their weights appear in the filing or on the index pages.Thus, how much a goal moves the index versus a blocked shot, and which stats are most important, is not currently clear. The idea of an ETF that moves based on hockey stats would have been unfathomable to anyone just a few years ago.
But the line between investing and gambling has been blurring for years. Robinhood already lets users trade sports event contracts through prediction markets. And on the ETF side, leveraged single-stock ETFs, which let traders make risky bets on one company's daily moves, are already used extensively.These funds would push the envelope even further, bringing sports betting directly inside ETFs.To be fair, CME frames the underlying futures as a hedging tool, describing them as a way for sponsors, broadcasters, arena operators and vendors to manage the financial risk tied to a team's performance.
But while that framing may be helpful for getting the contracts approved by regulators, the marginal buyer of the funds would likely be speculators or gamblers. Whether there turns out to be much demand for the funds remains to be seen. As noted, people can already bet on sports, including hockey, through prediction markets or sports betting apps.
What makes this different is that most sports wagers are binary. You pick a side, the game ends, you win or lose. In contrast, these ETFs would be continuous, season-long bets that drifts up and down with cumulative performance.Still, the ETF industry is inching toward the binary version too.
Some issuers have filed prediction-market ETFs tied to event contracts, though those center on elections, the economy and crypto. The SEC paused them in May pending more disclosure, and no one has filed a sports version yet. But sports already make up the vast majority of trading on the prediction-market platforms, so if those funds are approved and these hockey funds are approved, a binary sports-outcome ETF starts to look less like an if than a when.
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