The First Prediction Market ETFs for US Elections Are Set to Launch on Wall Street

Roundhill Investments is poised to introduce the inaugural US exchange-traded funds tied to prediction markets, with the launch of six funds that will be listed, focusing on the control of the White House, Senate, and House by Democrats or Republicans. According to a recent filing 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 include the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF, with the House and Senate products linked to the outcome of the November 3, 2026 elections, and the presidential products tied to the November 7, 2028 election.

These funds will gain exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets, with the contracts settling at $1 if the outcome occurs and $0 if it does not. The prospectus highlights in capitalized text that if the targeted party does not 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 will treat the outcome as decided and transition into the next cycle. The prospectus also notes that if the market is later proved incorrect, there will be no recourse for shareholders.

Other companies, such as Bitwise and GraniteShares, have filed similar proposals, with Bitwise using a PredictionShares brand, and their structures differ as Bitwise's funds will terminate shortly after each outcome is determined, while GraniteShares, like Roundhill, will roll into the next election. Although political event contracts are already traded on prediction markets, wrapping them in ETFs could expand access by allowing them to be held in standard brokerage accounts and some retirement accounts. This development comes after the CFTC withdrew a proposal that would have banned political event contracts, although state regulators 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 reported by Bloomberg ETF analyst Eric Balchunas.