The First U.S. Election Prediction Market ETFs Are Set to Launch on Wall Street

Roundhill Investments is poised to introduce the first U.S. exchange-traded funds tied to prediction markets, with the launch of six funds scheduled for May 5, as reported by Bloomberg ETF analyst James Seyffart. These funds will be listed on the exchange and will track the potential outcomes of Democrats or Republicans controlling the White House, Senate, and House. The funds in question are 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 linked to the outcome of the November 3, 2026, elections, while the presidential products are focused on the November 7, 2028, election. The funds will gain exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets, which settle at $1 if the predicted outcome occurs and $0 if it does not. A warning in the prospectus cautions that if the targeted party does not win, the fund will lose nearly all its value.

Roundhill has opted not to terminate the funds after the settlement. Instead, once the market prices a winner at above $0.995 or below $0.005 for five consecutive trading days, the fund will treat the outcome as decided and transition into the next cycle. The 2028 House and Senate exposure will be used for the midterm funds, and the 2032 presidential race will be used for BLUP and REDP.

However, the prospectus notes that if the market is later proven incorrect, there will be no recourse for shareholders. Other companies, such as Bitwise and GraniteShares, have also filed to list similar funds, although their structures differ. Bitwise's funds will terminate shortly after each outcome is determined, while GraniteShares will roll into the next election, similar to Roundhill. The introduction of these ETFs could expand access to prediction markets, allowing them to be held in ordinary brokerage accounts and some retirement accounts.

This development comes after the CFTC withdrew a proposal that would have banned political event contracts. Despite this, state regulators in several states continue to challenge the underlying contracts in court. Roundhill has also filed to list non-political prediction market ETFs tied to the possibility of the U.S. entering a recession.