US Elections to See First Prediction Market ETFs Launched by 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 track the potential control of the White House, Senate, and House by Democrats or Republicans. According to a US Securities and Exchange Commission filing, 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. The House and Senate products are linked to the outcome of the November 3, 2026 elections, while the presidential products are tied to the November 7, 2028 election.

Exposure is gained 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 explicitly warns 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 above $0.995 or below $0.005 for five consecutive trading days, the fund treats the outcome as decided and rolls into the next cycle. For the midterm funds, this means exposure to the 2028 House and Senate elections, and for the presidential funds, exposure to the 2032 presidential race.

The prospectus notes that if the market is later proved incorrect, there will be no recourse for shareholders. Bitwise and GraniteShares have filed identical six-fund slates in February, with Bitwise using a 'PredictionShares' brand, although their structures differ as Bitwise's funds terminate shortly after each outcome is determined, while GraniteShares, like Roundhill, rolls into the next election. While political event contracts are already traded on prediction markets such as Polymarket and Kalshi, the introduction of ETFs could expand access by allowing them to be held in ordinary brokerage accounts and some retirement accounts.

This development comes after the CFTC withdrew a proposal in February that would have banned political event contracts, although state regulators in Massachusetts, New York, Nevada, and elsewhere 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, according to a filing flagged by Bloomberg ETF analyst Eric Balchunas.