The blurring line between sports gambling and investing is poised to get even blurrier with the planned launch of a series of futures indexes that aim to track the on-ice performance of each of the 32 NHL teams — and a U.S. advisory firm’s proposal to offer a set of individual ETFs that will make trading on that performance accessible to ordinary retail investors.
Last week, the CME Group announced that it plans to launch a set of futures contracts based on a novel series of indexes — the CME FutureSports Performance Indexes that will create benchmarks tied to team performance on the ice.
FutureSports, the Chicago-based firm that developed and will administer the indexes, indicated that it will aim to translate “live, play-by-play statistical data into rules-based, benchmark financial indexes that may be referenced by exchange-listed financial products.”
The indexes will start the season at a standard base value, which is continuously adjusted based on the team’s performance in 55 statistical measures using official league statistics — including game results, such as wins and losses, but also in-game events, such as scoring goals, surrendering goals and taking penalties. Positive actions add points to the team’s index value and negative actions deduct points.
The firm indicated that the indexes will be administered in line with the principles for financial benchmarks set out by the International Organization of Securities Commissions (IOSCO).
The proposed new futures based on those indexes — which are subject to regulatory approval by the U.S. Commodity Futures Trading Commission (CFTC) — are expected to launch on Sept. 28 to coincide with the start of the NHL season.
At the same time, a U.S.-based advisory firm, Volatility Shares LLC, which currently offers a series of crypto ETFs, has also filed with the U.S. Securities and Exchange Commission (SEC) to launch a series of ETFs based on the index futures.
In that filing, the firm says that the investment performance of the funds will be linked to the “on-ice statistical performance of a single NHL team during the regular season and, if applicable, the playoffs.”
The preliminary filing doesn’t yet include any disclosure of expected fees and operating expenses for the proposed funds, but it does cite a long list of risk factors associated with the ETFs that will be familiar to most long-suffering sports fans.
“A team may enter a season with high expectations based on roster strength, coaching hires, or offseason acquisitions, only to underperform due to chemistry issues, unexpected injuries to key players, player slumps, or tactical mismatches against divisional opponents,” its filing said.