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

Roundhill Investments is poised to introduce the inaugural US exchange-traded funds tied to prediction markets, with the launch of six funds that will track the likelihood of Democratic or Republican control of the White House, Senate, and House, as per a filing with the US Securities and Exchange Commission. The introduction of these funds is scheduled for May 5, as stated by Bloomberg ETF analyst James Seyffart. The funds in question are the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF. These products are linked to the outcomes of the November 3, 2026, elections for the House and Senate, and the November 7, 2028, presidential 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 fails to win, the fund will likely lose nearly all its value. Notably, Roundhill will not terminate these funds after 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 prospectus also notes that if the market is later proven incorrect, there will be no recourse for shareholders.

Other asset managers, such as Bitwise and GraniteShares, have filed similar proposals, with distinct structures in terms of fund termination and rollover into subsequent election cycles. The introduction of these ETFs could potentially expand access to prediction markets, allowing them to be held in ordinary brokerage accounts and certain retirement accounts.

This development follows the CFTC's withdrawal of a proposal that would have banned political event contracts, although state regulators in several states continue to challenge these contracts in court. Additionally, Roundhill has filed to list non-political prediction market ETFs, including those tied to the likelihood of a US recession.