Prediction Market ETFs Could Be on the Way. Here’s What You Need To Know About Them.

Investment firms are moving to bring prediction markets into mainstream finance, with several asset managers filing to launch exchange-traded funds tied to political outcomes and other real-world events.

At least three firms, Roundhill Investments, Bitwise Asset Management, and GraniteShares, have submitted applications to the US Securities and Exchange Commission seeking approval for ETFs that would hold event contracts based on US election results. These derivatives typically pay out based on binary outcomes such as which party wins control of Congress or the presidency.

From Niche Betting Tool to Institutional Product

Prediction markets, once seen as speculative or niche, have surged in popularity thanks to platforms such as Kalshi and Polymarket, where traders can buy contracts tied to events ranging from economic data releases to political outcomes.

The proposed ETFs would effectively package those contracts into regulated investment vehicles, potentially making them accessible to institutional investors in the same way crypto ETFs helped legitimize digital assets.

Bitwise CIO Matt Hougan said prediction markets may be on a “similar journey” to crypto, suggesting ETFs could become a milestone in their acceptance as investable assets.

Wall Street Wants In

Major derivatives and trading firms are already exploring the space:

CME Group partnered with FanDuel on a prediction trading app.
Cboe Global Markets is reportedly discussing binary-style contracts with brokerages.
Tradeweb Markets has partnered with Kalshi to distribute prediction-market data to institutional clients.

Analysts say the push reflects growing demand for simple, event-driven financial instruments that function more like wagers than traditional investments.

High Risk, Binary Outcomes

Unlike stocks or bonds, these products could lose nearly all their value if the predicted event does not occur. Regulatory filings note that funds betting on a particular election outcome would “substantially lose” value if the opposite result happens.

Some proposed structures would close after contracts settle, while others would roll into new event contracts tied to future elections.

If regulators approve them, prediction-market ETFs could mark a major shift in investing, blending finance, forecasting, and speculation into a new asset class that Wall Street increasingly wants to offer.

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