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

Roundhill Investments is poised to unveil the inaugural 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 filings with the US Securities and Exchange Commission, 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 products are linked to the control of the House and Senate following the November 3, 2026 elections, and the presidential race on November 7, 2028. The funds gain exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets, with these contracts settling at $1 if the 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 opted 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 rolls into the next cycle. For the midterm funds, this means exposure to the 2028 House and Senate elections, while the presidential funds will focus on the 2032 race.

The prospectus notes that if the market is later proved incorrect, there will be no recourse for shareholders. Other asset managers, such as Bitwise and GraniteShares, have also filed to launch similar products, albeit with differing structures. While political event contracts are already traded on prediction markets like Polymarket and Kalshi, the introduction of ETFs could expand access 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. Roundhill has also filed to list non-political prediction market ETFs, including one tied to the possibility of the US entering a recession.