US Elections to See Launch of First Prediction Market ETFs on Wall Street

Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with a launch date set for May 5, as reported by Bloomberg ETF analyst James Seyffart. This move is accompanied by two other asset managers preparing similar products. According to a filing with the US Securities and Exchange Commission, Roundhill will list six funds linked to the control of the White House, Senate, and House by Democrats or Republicans.

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. While the House and Senate products are tied to the outcome of the November 3, 2026, elections, the presidential products look ahead to the November 7, 2028, race. Exposure is gained through swap agreements that reference binary event contracts traded on CFTC-regulated markets, with these contracts settling at $1 if the outcome occurs and $0 if it does not.

A warning in the prospectus, emphasized in capitalized text, states that if the targeted party does not win, the fund will lose nearly all its value. Roundhill has no plans to terminate the 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. This means the 2028 House and Senate exposure for the midterm funds and the 2032 presidential race for the other funds.

The prospectus also notes that if the market is later proved incorrect, there will be no recourse for shareholders. Other companies, such as Bitwise and GraniteShares, have filed for similar products, with structures differing in terms of fund termination and continuation. The introduction of these ETFs could expand access to political event contracts, which are already traded on prediction markets like Polymarket and Kalshi, by allowing them to be held in ordinary brokerage accounts and some retirement accounts. This development follows the CFTC's withdrawal of a proposal that would have banned political event contracts, although state regulators continue to challenge these contracts in court.

Furthermore, Roundhill has filed to list non-political prediction market ETFs tied to the possibility of the US entering a recession, as flagged by Bloomberg ETF analyst Eric Balchunas.