First-Ever US Election Prediction Market ETFs to be Launched on Wall Street

Roundhill Investments is poised to introduce the first US-based exchange-traded funds tied to prediction markets, with the launch of six funds scheduled for next week, while two other asset managers are preparing similar offerings. According to a recent filing with the US Securities and Exchange Commission, Roundhill will list funds that track the potential control of the White House, Senate, and House by either Democrats or Republicans. The launch is anticipated to take place 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 connected to the outcomes of the November 3, 2026, elections for the House and Senate, and the November 7, 2028, presidential election. Exposure is gained through swap agreements referencing 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 no plans to terminate the funds after the 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 transitions 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 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 also filed for similar six-fund offerings, with distinct structures. While Bitwise's funds will terminate shortly after each outcome is determined, GraniteShares, like Roundhill, will roll into the next election.

Prediction markets, including Polymarket and Kalshi, already trade political event contracts, but incorporating them into ETFs could increase accessibility by allowing them to be held in standard 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 the contracts in court. Roundhill has also filed to list non-political prediction market ETFs, which will track the likelihood of the US entering a recession, as reported by Bloomberg ETF analyst Eric Balchunas.