US Elections to See First Prediction Market ETFs Launched on Wall Street

Roundhill Investments is poised to unveil the inaugural US exchange-traded funds tied to prediction markets, with two additional asset managers preparing similar offerings. A filing with the US Securities and Exchange Commission reveals that Roundhill will list six funds linked to Democratic or Republican control of the White House, Senate, and House.

According to Bloomberg ETF analyst James Seyffart, the launch is scheduled for May 5. The funds include the Roundhill Democratic President ETF (BLUP), Republican President ETF (REDP), Democratic Senate ETF (BLUS), Republican Senate ETF (REDS), Democratic House ETF (BLUH), and Republican House ETF (REDH).

The House and Senate products are tied to the outcome of the November 3, 2026 elections, while the presidential products are linked to the November 7, 2028 election. The funds achieve exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets, which settle at $1 if the outcome occurs and $0 if it does not.

The prospectus warns that if the targeted party does not win, the fund will incur substantial losses. Roundhill will not terminate the funds after settlement; instead, once the market prices a winner above $0.995 or below $0.005 for five consecutive trading days, the fund treats the outcome as decided and transitions into the next cycle. The prospectus notes that if the market is later proven incorrect, shareholders will have no recourse.

Bitwise and GraniteShares have filed identical six-fund slates in February, with Bitwise utilizing a 'PredictionShares' brand; their structures differ as Bitwise's funds terminate shortly after each outcome is determined, while GraniteShares, like Roundhill, transitions into the next election. Although political event contracts are already traded on prediction markets like Polymarket and Kalshi, wrapping them in ETFs could expand accessibility by allowing them to be held in ordinary brokerage accounts and certain retirement accounts.

This development follows the CFTC's withdrawal of a Biden-era proposal in February that would have banned political event contracts, despite ongoing challenges from state regulators in Massachusetts, New York, Nevada, and elsewhere. Roundhill has also filed to list non-political prediction market ETFs tied to the likelihood of a US recession, as flagged by Bloomberg ETF analyst Eric Balchunas.