From prediction markets to professional sports team ETFs, Wall Street is finding new ways to turn fandom into financial products. But is that really investing?

I’ve been a sports fan for as long as I can remember.

Growing up in Wisconsin, rooting for the Green Bay Packers wasn’t really a choice. It was practically a birthright.

And if you’ve followed my work for any length of time, you know my passion for sports hasn’t diminished. Whether it’s watching the Packers, suffering through another Wisconsin Badgers football season, or spending time watching my son play sports, athletics have always been a big part of my life.

I’m also a big believer in the democratization of investing.

Over the past several decades, financial innovation has made investing more accessible, affordable and efficient. ETFs, in particular, have transformed how investors build portfolios, access different asset classes and manage risk.

So, you would think combining two of my favorite things—sports and investment innovation—would be right up my alley.

Not so fast.

Wall Street is increasingly finding ways to turn professional sports into investment products. And while some of these innovations may offer legitimate opportunities, others have me wondering whether we’re continuing to blur the line between investing and gambling.

Just because Wall Street can turn something into an ETF doesn’t mean it belongs in an investment portfolio.

From Owning a Team to Betting on One

For years, the idea of owning a professional sports team was little more than a fantasy for most fans.

Unless you were a billionaire, or happened to own a share of the Green Bay Packers, opportunities to participate in professional sports ownership were limited.

The Packers are a particularly interesting example.

Fans have been able to purchase shares in the organization through periodic stock offerings. But let’s not confuse those shares with traditional common stock.

Packers shareholders don’t receive dividends, can’t freely trade their shares and have very limited economic rights.

The financial return on investment?

Well, let’s just say you’re probably better off measuring it in bragging rights and emotional attachment than dollars.

Of course, the Packers aren’t the only example of public access to professional sports ownership. The Boston Celtics were publicly traded for a period, and investors have had other opportunities to gain exposure to professional sports businesses through publicly traded companies.

But owning an interest in a business that generates revenue, earnings and cash flow is fundamentally different from placing a financial wager on how a team performs.

And that’s where the conversation gets interesting.

Prediction Markets Changed the Conversation

Sports gambling isn’t new. People have been wagering on sporting events for generations. What’s changed is the accessibility, sophistication and increasingly financialized nature of those wagers.

Prediction markets have accelerated that evolution. Rather than simply betting on the outcome of a football game through a traditional sportsbook, participants can buy and sell contracts tied to the probability of a particular outcome.

Those contracts trade in markets, prices fluctuate and participants can potentially exit positions before an event is completed.

Sound familiar?

The mechanics increasingly resemble financial trading. And that’s precisely why the line between investing and gambling has become so blurry.

I’ve written previously about prediction markets and their potential value to investors. I believe they can provide useful information.

Markets that aggregate the expectations of many participants may offer insights into probabilities, sentiment and changing expectations.

But there’s a significant difference between using a market as an information source and treating the contracts traded on that market as long-term investments.

A market can provide useful information without necessarily offering a suitable investment.

Even the NFL has entered the regulatory debate, arguing that sports prediction contracts should be subject to state gambling oversight.

Meanwhile, the financial industry continues exploring new ways to package sports-related outcomes into products that look and trade like investments.

Which brings us to the latest development.

Now Wall Street Wants to Put Your Favorite Team in an ETF

The ETF industry has been one of the great financial innovations of my professional lifetime. ETFs have lowered investment costs, increased transparency, expanded access to asset classes and given investors tremendous flexibility in building portfolios.

I’m a fan. But not every new ETF is necessarily a good investment.

Recent regulatory filings have outlined proposals for ETFs tied to the performance of individual professional sports teams.

Other proposed products would provide exposure to the businesses and assets associated with professional sports ownership.

Those are two very different ideas.

Let’s start with the latter.

Investing in a company that owns a professional sports franchise, broadcasting rights, stadium assets or other sports-related businesses can represent a legitimate investment opportunity.

There are revenues, expenses, assets, liabilities and potential future cash flows to evaluate. You can analyze the business. You can estimate its value. You can determine whether the investment offers an attractive expected return relative to the risks.

That’s investing.

But an ETF whose returns are primarily tied to a team’s performance on the field? That’s a very different proposition.

If the Packers win 14 games, does that automatically create more economic value for the ETF investor?

Does the investor receive a share of the team’s ticket revenue, merchandise sales or media rights?

Is there an underlying business whose future cash flows can be evaluated?

Or is the investment’s value primarily determined by a contractual payoff tied to the team’s results?

If it’s the latter, I have a hard time calling that fundamental investing.

Putting a jersey on speculation doesn’t make it investing.

And putting that speculation inside an ETF wrapper doesn’t change its underlying economics.

Democratizing Access Isn’t the Same as Improving Outcomes

I want to be clear about something.

I’m not against innovation. Quite the opposite.

I believe financial innovation has the potential to improve portfolio construction, expand investment opportunities and ultimately help investors achieve better outcomes. But I also believe innovation should serve a purpose.

Consider what some of the most successful ETF innovations have accomplished.

Broad-market ETFs made diversified equity exposure more accessible and affordable.

Bond ETFs provided investors with efficient access to fixed-income markets.

Active ETFs expanded access to professional investment management.

These products didn’t eliminate investment risk, but they offered investors tools that could address genuine portfolio needs.

So what investment problem does an ETF tied to the weekly performance of a professional sports team solve?

Does it improve diversification?

Does it provide a reliable source of long-term return?

Does it offer an attractive risk-adjusted return profile?

Does it help investors manage portfolio volatility or achieve financial goals?

Maybe sponsors will eventually make a compelling case.

But I’m skeptical.

To me, many of these products appear designed less around solving an investment problem and more around creating another way for people to speculate. And that’s an important distinction.

Democratizing access to an investment doesn’t automatically democratize good investment outcomes.

Sometimes greater access simply makes it easier for investors to take risks they don’t fully understand.

Are We Confusing Speculation With Investing?

I’ve always considered myself a fundamental investor.

I believe investing involves evaluating an asset’s underlying economics, understanding what drives its value and determining whether its expected return justifies the risk.

That doesn’t mean every investment needs to pay a dividend or generate immediate cash flow. But there should be a reasonable framework for evaluating its long-term economic value.

Speculation is different.

Speculation often depends on anticipating what someone else will pay, predicting a short-term outcome or correctly forecasting an event.

And gambling is generally about risking money on an uncertain outcome with a payoff determined by the rules of the wager.

These categories can overlap.

But I think investors should understand which activity they’re participating in. There’s nothing wrong with enjoying a wager on a football game.

I understand the entertainment value. But I don’t consider that part of my investment portfolio. And I certainly wouldn’t argue that a financial product becomes more suitable for long-term investors simply because it trades on an exchange.

An ETF is a vehicle. It isn’t an investment thesis.

The wrapper doesn’t determine whether something is investing or speculation. The underlying exposure does.

What Happens When the Music Stops?

There’s another aspect of this trend that concerns me.

I’ve been around financial markets long enough to recognize that some of the most questionable investment products tend to emerge when markets are strong, investors are enthusiastic and risk appetite is elevated.

When everything seems to be working, it’s easy to convince investors that almost anything can be an investment opportunity.

We’ve seen variations of this throughout market history. New themes emerge. Investors become excited. Product manufacturers respond to demand.

And eventually, some products prove to have considerably less long-term investment value than their initial marketing suggested.

I’m not saying the introduction of sports-team ETFs signals an imminent market top.

It doesn’t.

But I do think the proliferation of increasingly speculative products tells us something about investor behavior. It suggests there’s demand for excitement, access and the possibility of quick returns.

Those aren’t necessarily the same things as demand for sound investments.

And it raises an important question:

How will these products perform through a full market cycle?

What happens when enthusiasm fades?

What happens when liquidity becomes scarce?

What happens when volatility increases and investors begin reducing speculative exposures?

How will futures-related costs, bid-ask spreads, management fees and the structure of the underlying contracts affect long-term returns?

And perhaps most importantly, what happens when investors discover that something marketed as an investment behaves more like a wager?

Those are questions worth answering before committing capital, not after.

The View From 6,230

I love sports.

I love the ETF industry.

And I strongly believe investors benefit when financial innovation creates more access, greater efficiency and better portfolio-construction tools. But that doesn’t mean I believe every new investment product is a good idea.

There’s a legitimate investment opportunity in the business of professional sports. Teams, media rights, entertainment properties and other sports-related assets can generate economic value that investors can analyze.

But creating an ETF tied to whether my favorite team wins on Sunday is something entirely different. That’s not the kind of innovation I believe improves long-term investment outcomes.

It’s speculation packaged in a familiar investment vehicle.

And while investors should be free to make their own decisions, I think the financial industry has a responsibility to be clear about what these products actually represent.

We shouldn’t confuse accessibility with suitability. We shouldn’t confuse entertainment with portfolio construction. And we certainly shouldn’t confuse speculation with investing simply because the product happens to trade on an exchange.

I’ll continue cheering for the Packers.

I’ll continue believing in the power of ETFs to make investing better.

And I’ll continue looking for innovations that help investors build stronger portfolios.

But I don’t need an ETF to financially participate in every touchdown. Sometimes being a fan is enough.

Just because Wall Street can turn something into an ETF doesn’t mean it belongs in your portfolio.