Wall Street is launching the first ever prediction market ETFs for U.S. elections

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Wall Street is launching the first ever prediction market ETFs for U.S. elections SEC-regulated funds use swaps tied to binary-event contracts and aim to expand access to election trading through retail brokerage accounts. What to know: - Roundhill is launching six political prediction market ETFs (e.g., BLUP, REDP) on May 5, tracking party control of the White House, Senate, and House. - The SEC-regulated funds use swaps tied to binary event contracts and aim to expand access to election trading via retail brokerage accounts. - Funds face substantial loss if the target party doesn't win; Roundhill's structure rolls the exposure into the next election cycle, unlike competitors' products. Roundhill Investments is set to launch the first U.S. exchange-traded funds (ETFs) tied to prediction markets next week, with two other asset managers preparing similar products. According to a filing with the U.S. Securities and Exchange Commission (SEC), Roundhill will list six funds tied to whether Democrats or Republicans control the White House, Senate and House. The launch is set for May 5, according to Bloomberg ETF analyst James Seyffart. The funds are the Roundhill Democratic President ETF (BLUP), Republican President ETF (REDP), Democratic Senate ETF (BLUS), Republican Senate ETF (REDS), Democratic House ETF (BLUH) and Republican House ETF (REDH). The House and Senate products are tied to who controls them after the Nov. 3, 2026, elections, while the presidential products point to the Nov. 7, 2028, race. The funds gain exposure through swap agreements referencing binary event contracts traded on CFTC-regulated markets. These contracts settle at $1 if an outcome occurs and $0 if it does not. The prospectus warns in capitalized text that if the targeted party does not win, "the fund will lose substantially all of its value." Roundhill won't terminate the funds after settlement. 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, the 2028 House and Senate exposure for the midterm funds, and the 2032 presidential race for BLUP and REDP. The prospectus notes that if the market is later proved wrong, "there will be no recourse" for shareholders. Bitwise and GraniteShares filed identical six-fund slates in February, with Bitwise using a "PredictionShares" brand. Their structures differ as Bitwise's funds terminate shortly after each outcome is determined, while GraniteShares, like Roundhill, rolls into the next election. Political event contracts are already traded on prediction markets such as Polymarket and Kalshi, but wrapping them in ETFs could expand access by allowing them to be held in ordinary brokerage accounts and some retirement accounts. The push comes after the CFTC withdrew a Biden-era proposal in February that would have banned political event contracts, though state regulators in Massachusetts, New York, Nevada and elsewhere continue to challenge the underlying contracts in court. Roundhill has also filed to list non-political prediction market ETFs tied to whether the U.S. will enter a recession, according to a filing flagged by Bloomberg ETF analyst Eric Balchunas. More For You The Czech Central Bank purchased $1 million in bitcoin in October to run tests and conduct a study and found it is more efficient than stocks and gold but much too risky. What to know: - Czech central bank governor Aleš Michl said adding bitcoin to reserves could improve portfolio performance but stressed its extreme volatility and risk, including the possibility it could go to zero. - A Czech National Bank study found bitcoin’s low long-term correlation with traditional assets can enhance returns without significantly increasing overall...

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