Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with the launch of six funds focused on the control of the White House, Senate, and House by Democrats or Republicans. According to SEC filings, these funds, set to launch on May 5, will be listed as 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 will be tied to the outcome of the November 3, 2026 elections, while the presidential products will focus on the November 7, 2028, election. Exposure will be 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 highlights the significant risk of substantial loss if the targeted party does not win, emphasizing that "the fund will lose substantially all of its value" in such cases. Rather than terminating the funds after settlement, Roundhill will roll them into the next cycle once the market prices a winner at above $0.995 or below $0.005 for five consecutive trading days.
Other asset managers, such as Bitwise and GraniteShares, have filed similar products, with differing structures, including termination after each outcome is determined. The introduction of these ETFs could expand access to political event contracts, currently traded on prediction markets like Polymarket and Kalshi, 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, although state regulators continue to challenge these contracts in court. Additionally, Roundhill has filed to list non-political prediction market ETFs focused on the likelihood of a US recession.