A groundbreaking development is underway as Roundhill Investments prepares to unveil the first U.S. exchange-traded funds tied to prediction markets. This move is slated to take place next week, with two additional asset managers poised to introduce similar products. According to a filing with the U.S.
Securities and Exchange Commission, Roundhill will list six funds tied to the control of the White House, Senate, and House by Democrats or Republicans. The launch date has been confirmed as May 5 by Bloomberg ETF analyst James Seyffart. The funds in question include the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF.
These products are linked to the outcome of the November 3, 2026, elections for the House and Senate, as well as the November 7, 2028, presidential election. The funds achieve exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets, which settle at $1 if the specified outcome occurs and $0 if it does not. A warning in the prospectus, emphasized in capitalized text, cautions that if the targeted party does not emerge victorious, the fund will suffer substantial losses. Notably, Roundhill has opted not to terminate the funds after settlement.
Instead, 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 transitions into the next cycle. This means the 2028 House and Senate exposure for the midterm funds and the 2032 presidential race for the other funds. However, the prospectus also notes that if the market is later proven incorrect, shareholders will have no recourse.
Other companies, such as Bitwise and GraniteShares, have filed similar proposals, albeit with differing structures. Bitwise's funds are set to terminate shortly after each outcome is determined, whereas GraniteShares, like Roundhill, will roll into the next election.
The introduction of these ETFs could potentially expand access to prediction markets, 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 in several jurisdictions continue to challenge these contracts in court. Furthermore, Roundhill has also filed to list non-political prediction market ETFs, including one tied to the likelihood of the U.S. entering a recession.