Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with the launch of six funds that focus on the control of the White House, Senate, and House by Democrats or Republicans. According to a 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, all of which gain exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets. These contracts settle at $1 if the predicted outcome occurs and $0 if it does not, with the prospectus warning that if the targeted party does not win, the fund will lose nearly all its value.
Once the market prices a winner at above $0.995 or below $0.005 for five consecutive trading days, the fund treats the outcome as decided and rolls into the next cycle, with no plans for termination. Other companies, such as Bitwise and GraniteShares, have also filed for similar ETFs, 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 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 contracts in court. Roundhill has also filed to list non-political prediction market ETFs focused on the possibility of a US recession.