Programming note: This is a somewhat special edition of Money Stuff, because sports gambling ETF. Also this week’s episode of the Money Stuff podcast is out now, in which Katie and I discuss no-Elon ETFs, index rebalancing and egg Libor. You can listen to it here.

Sports gambling ETF:

The Subversive All Season Sports ETF … is an actively managed exchange-traded fund (“ETF”) that seeks to provide capital appreciation through exposure to a portfolio of derivative instruments known as “event contracts” across a variety of sporting events. … 

The Fund seeks to mitigate the risk of loss on exposure to any individual event contract by holding a portfolio with exposure to approximately 40 to 80 different event contracts across the sports events noted above.

The Fund will hold exposure to event contracts that are based on the aggregate outcomes of the sporting events only (i.e., final scores of games, point differentials, win-loss records, tournament advancement and team or individual statistical performance compiled over an entire game or season). Such event contracts will settle based on objective and verifiable settlement criteria and will be based on events that are coordinated by relevant sports governing bodies.

The Adviser will allocate exposure based on its assessment of relative value and market-implied probabilities of certain outcomes and actively manages position sizing and allocation among the categories of event contracts noted above. 

That is a filing from Tidal Investments LLC and Subversive Capital, who are also responsible for the no-Elon-Musk index ETFs that we discussed yesterday. You give the sports ETF your money, and the ETF uses your money to make 40 to 80 sports bets. (The bets will be on “North American professional sports leagues,” “National Collegiate Athletic Association championships,” “international sporting events such as the World Cup or English Premier League,” and “other sporting events, such as individual golf or tennis championships, mixed martial arts fights or boxing matches.”) If it wins those bets, it uses the winnings to make more bets and you make money. If it loses the bets, you lose money. It is an ETF for making sports bets.^[1] It will trade on the stock exchange, you can buy it from your stockbroker, and it will make sports bets.

We have talked any number of times about my prediction that there would be a sports gambling ETF by March 2027, and here we are. The filing is not effective yet, and, as we have discussed, the SEC is still considering whether and how to allow sports gambling ETFs. This might never actually launch. But we remain ahead of schedule.

When we discussed sports gambling structured notes a while back, I proposed that they were a way to combine (1) the fun of sports gambling with (2) a boring normal socially acceptable investment product. You could buy a note that paid off more if your team won and less if it lost. “No one is going to be like ‘honey I think you might have a problem’ about your structured notes portfolio,” I wrote. I sort of imagined sports gambling ETFs working the same way; that is, I imagined a Knicks Win ETF, or a Jets/Bills Over ETF or whatever, where you could bet on sports in an ETF wrapper. You’d get the fun of sports gambling, but in your ETF portfolio.

But that is very hard to implement in practice: Sports bets mostly resolve quickly, and the main imperative of an ETF manager is to continue managing the ETF. So the implementation has to be more or less like what Subversive and Tidal are doing: a diversified portfolio of sports bets, actively managed by professional gamblers, aiming to achieve long-term capital appreciation. If you buy this, you are not betting on the Knicks; you are betting on some gambler to outperform in the long run. I’m not sure if that’s quite what you want in a sports gambling ETF. I suppose if this flourishes there can be a wider variety of more tailored sports gambling ETFs — the Basketball ETF, the Diversified Sports Gambling ETF But We Try to Bet on the Knicks, etc. — though you’re never going to get quite the thrill of making your own prop bets. I’m not sure you’ll even know what bets the actively managed sports gambling ETF has on in real time. You’ll be watching the big game, not knowing which way your ETF manager has bet.

Also: I have half-joked once or twice about passive, rules-based sports gambling exchange-traded funds, or passive prediction market ETFs more generally. The rough shape of the idea is: “Certain bets are systematically mispriced for retail supply and demand reasons. For instance, people might not want to make straight-up bets on heavy favorites in college football: Betting $2,000 on the favorite to win $100 is no fun, while betting $100 on the underdog to win $2,000 is fun. Therefore, taking the unpopular side of this bet should offer a positive expected return. An ETF that systematically bet on huge favorites could have positive returns with no correlation to the stock market.” We have discussed a guy named Mike Wohl, who actually ran a fund doing that for a while in the early 2010s, though that was back in the dark ages before sports bets traded on regulated US commodities exchanges. Now you can do these sorts of bets on Kalshi.

(Similarly, we have discussed a few times a prediction-market strategy of the form “bet No on everything, because the public is systematically biased in favor of stuff happening, so No offers positive expected returns.” Again, this is the sort of thing that could be systematized in an ETF.)

Notice a problem with this idea, though. The essential idea is: “Dumb public money is systematically on one side of certain bets, which makes the expected value of the other side positive.” That idea might be correct; it might be a good reason for you to take the other side of the bet. But once you raise an ETF to take the other side, you have a problem. The problem is that the ETF is dumb public money. Or smart, whatever. But the point is:

1. If you raise a bunch of money to take the unpopular side of the bet, that will, by definition, make it more popular. You’ll move the odds against you.
2. If you systematically take the unpopular side of the bet — “bet on the favorites to win when the spread is 30 points or more” or whatever — then your actions are predictable and you can get picked off. Sharp gamblers will think “that ETF systematically bets on favorites, which makes the favorites overpriced, so I should hunt for bargain long-shots.”

You see some of this dynamic in regular ETFs, or maybe not “regular” ETFs but ETFs involving stocks anyway. There are a lot of long and short leveraged ETFs on single stocks, and those leveraged ETFs do very predictable mechanical trades (buying when the underlying stock goes up, selling when it goes down) that are often bad for their own performance. Some number of sophisticated traders like to trade against them, for fairly straightforward reasons of “there’s a lot of dumb retail money mechanically doing one thing so I should take the other side.” Last year, someone launched an ETF to take the other side of those ETFs’ trades. Every sophisticated trade eventually gets put into an ETF, even trades like “trade against ETFs.” It’s the Russell’s paradox of ETFs: Does the ETF that shorts every ETF short itself?

I put this all out there because:

1. Somebody had better launch a passive sports gambling ETF soon, but
2. If you’re doing it, maybe think about this problem. Or don’t. My interest in all of this is strictly comedic, and if you launch a bet-against-dumb-money sports-gambling ETF that gets huge and becomes the dumb money, that is great for my comedic purposes. Also I’ll get to say that I predicted it.

But for now, there is an actively managed sports gambling ETF, or at least, we are well on our way there. I predicted this last March partly as a joke, and as a response to someone posting a joke about an ETF that would buy lottery tickets. “Clearly,” I wrote, sports gambling as an asset class “is the future and I am the past and financial markets are for betting now. Why shouldn’t all the technology of finance be applied to emerging asset classes like gambling?” Imagine how naive I was, thinking I was kidding.

Also I’ve written before about the difficulties of getting leverage in prediction markets. So, why not: By July 2028, we’ll have a 2x levered sports gambling ETF. 

One thing that happens to me with frankly weird regularity is that I get emails from readers suggesting that it might be a good deal to spend X years in prison if it left you with $Y million when you got out. For instance, I still don’t really understand the whereabouts of Bill Hwang’s money, I have joked that it’s buried in his backyard, and people sometimes email me to be like “see, good trade.” I strongly disagree. My discount rate for prison-now-money-later is nearly infinite and I think yours should be too. I do not think that I would spend a week in prison to get a billion dollars at the end of it, and anyway that trade is not on offer. I guess this one is, though, sort of:

A Brooklyn man who admitted illegally making more than $2.2 million by using information from companies’ electronic regulatory filings before they were released to the public was sentenced to more than two years in prison.

US District Judge Orelia Merchant sentenced Justin Chen to 27 months in prison at a hearing Tuesday, saying his crimes “wither away the public’s trust in the markets, which cannot be condoned.” … 

Prosecutors said that because Chen failed to show remorse or disclose what happened to the money he made on the stocks, he should serve as much as 57 months in prison. …

Prosecutors argued that Chen always planned to send the money to China where he could live off the proceeds after he was released from prison. Nick Axelrod, an assistant US attorney, told Merchant Tuesday that while the government still believed Chen’s crimes merited some period of imprisonment, the government would have “likely” sought a lesser term if he had paid back the money.

We talked about Chen last year: He helped companies prepare Securities and Exchange Commission filings, and he traded on those filings before they were public. “Not a bad trade,” said a reader who sent me this story, and perhaps Chen agrees now, but let’s see how he feels after two years in prison.

I don’t think this worked?

BUKIT MERTAJAM, Malaysia, July 07, 2026 (GLOBE NEWSWIRE) -- CCHH, doing business as Chicken Claypot and restaurant franchises business (Nasdaq: CCHH) (“CCHH” or the “Company”), a Nasdaq-listed company primarily engaged in chain restaurant operations, today announced that its wholly-owned subsidiary has entered into a definitive three-year sales and service agreement with several strategic clients. The identity of the counterparties remains confidential pursuant to a binding non-disclosure agreement between the parties.

Under the agreement, the Company will provide maintenance services solution to the undisclosed client in support of data center infrastructure projects in Malaysia, one of Southeast Asia’s increasingly important digital infrastructure and computing hubs. The total contract value under the agreement is US$50 million over the three-year term.

In addition to maintenance services solution for Malaysian data center projects, the agreement provides the client with comprehensive technical and operational support, including computing capacity allocation, deployment coordination, technical consultation and operational advisory services for data center facilities. The service scope may further expand to additional countries and regions in line with the client’s global capacity rollout plan.

The stock is down quite a bit since this was announced Tuesday, though it was down quite a bit before then too. Obviously this trade — “we have a company with a stock that is down, so we should pivot to providing AI infrastructure” — is a popular one. We have talked about a sneaker company that did it, and a karaoke company, and a digital asset treasury company. (We’ve also talked about a food seasoning company, and a toilet company, that happened to make critical supplies for AI infrastructure anyway and didn’t even have to pivot.) Some of the oomph might be going out of it though. There are actual AI companies on the stock exchange! SK Hynix sold $26.5 billion of stock yesterday! It makes memory chips that are crucial to the AI buildout! In real life! The chicken claypot pivot is less compelling by comparisoon.

I have no idea what sorts of “computing capacity allocation” the chicken claypot restaurant is providing for its unnamed strategic clients. But I guess if I ran a chicken restaurant business, I would probably pitch big AI companies on opening franchises at their campuses, or running food trucks at their data center construction sites. And then I’d put out a press release like “We have signed a definitive agreement to provide crucial AI infrastructure services to Big AI Company.” The services would be chicken. Everyone knows that it’s good business to sell picks and shovels in a gold rush, but the gold miners have to eat too.

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