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 track the potential control of the White House, Senate, and House by Democrats or Republicans. According to SEC filings, the funds will be listed on May 5, as confirmed by Bloomberg ETF analyst James Seyffart. The funds in question include the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF. These funds are connected to the outcome of the November 3, 2026, elections for the House and Senate products, and the November 7, 2028, presidential election for the presidential products.

Exposure is gained through swap agreements tied to binary event contracts traded on CFTC-regulated markets, which settle at $1 if the predicted outcome occurs and $0 if it does not. The prospectus explicitly warns that if the targeted party fails to win, the fund will lose nearly all its value. Roundhill has decided not 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 moves into the next cycle.

For the midterm funds, this means the 2028 House and Senate exposure, while for BLUP and REDP, it means the 2032 presidential race. 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 filed similar proposals, with Bitwise's funds terminating 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, wrapping them in ETFs could expand accessibility by allowing them to be held in ordinary brokerage accounts and some retirement accounts. This development follows the CFTC's withdrawal of a Biden-era 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.