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

Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with the launch of six funds that will be listed, focusing on the control of the White House, Senate, and House by either Democrats or Republicans. A filing with the US Securities and Exchange Commission reveals that the funds will be listed on May 5, as confirmed 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 funds are tied to the outcomes of the elections, with the House and Senate products being linked to the results of the November 3, 2026 elections, and the presidential products pointing to the November 7, 2028, election.

The funds gain exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets, which settle at $1 if the specified outcome occurs and $0 if it does not. A warning in the prospectus cautions that if the targeted party does not emerge victorious, 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 roll into the next cycle.

The prospectus also notes that if the market is later proven incorrect, there will be no recourse for shareholders. Other companies, such as Bitwise and GraniteShares, have filed similar proposals, with Bitwise using a 'PredictionShares' brand, and their structures differ in that Bitwise's funds will terminate shortly after each outcome is determined, while GraniteShares, like Roundhill, will roll into the next election.

Although political event contracts are already traded on prediction markets such as Polymarket and Kalshi, the introduction of ETFs could expand accessibility by 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, although 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 US entering a recession, as flagged by Bloomberg ETF analyst Eric Balchunas.