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 May 5, as reported by Bloomberg ETF analyst James Seyffart. These funds will be linked to the outcome of whether the Democratic or Republican party controls the White House, Senate, and House. 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.
The House and Senate products are tied to the outcome of the November 3, 2026 elections, while the presidential products are linked to the November 7, 2028 election. The funds will gain exposure 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. A warning in the prospectus cautions that if the targeted party does not win, the fund will lose nearly all its value. Roundhill has stated that it will not 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 will treat the outcome as decided and roll into the next cycle. Other companies, such as Bitwise and GraniteShares, have also filed to launch similar products, with Bitwise using a 'PredictionShares' brand. The introduction of these ETFs could expand access to prediction markets 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 in several states continue to challenge these contracts in court.
Additionally, Roundhill has filed to list non-political prediction market ETFs tied to the likelihood of a US recession.