Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with the launch of six funds that track Democratic and Republican control of the White House, Senate, and House, set to take place on May 5, according to Bloomberg ETF analyst James Seyffart. These funds, including the Roundhill Democratic President ETF (BLUP), Republican President ETF (REDP), Democratic Senate ETF (BLUS), Republican Senate ETF (REDS), Democratic House ETF (BLUH), and Republican House ETF (REDH), will provide exposure to election outcomes through swap agreements referencing binary event contracts traded on CFTC-regulated markets. If the targeted party does not win, the fund's value will decrease substantially, as stated in the prospectus.
Roundhill's approach differs from other companies, such as Bitwise and GraniteShares, which have also filed for similar products. The introduction of these ETFs could expand access to prediction markets, allowing them to be held in ordinary brokerage accounts and some retirement accounts, and comes after the CFTC withdrew a proposal that would have banned political event contracts.