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 focused on the 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 reported 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 achieve exposure 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 includes a warning that if the targeted party fails to win, the fund will lose nearly all its value.

Rather than terminating the funds after settlement, Roundhill will roll them into the next cycle once the market prices a winner at above $0.995 or below $0.005 for five consecutive trading days. The prospectus also notes that if the market's prediction is later proven incorrect, shareholders will have no recourse. Other companies, such as Bitwise and GraniteShares, have filed similar proposals, with Bitwise's funds terminating after each outcome is determined and GraniteShares rolling into the next election.

While political event contracts are already traded on prediction markets like Polymarket and Kalshi, the introduction of ETFs could expand accessibility by 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.

Roundhill has also filed to list non-political prediction market ETFs focused on the likelihood of a US recession.