New ETF proposals aim to bring election betting to mainstream investors
A set of ETF filings has emerged that could fundamentally change how investors interact with political risk. Roundhill, GraniteShares, and Bitwise’s PredictionShares brand have all submitted proposals for funds that track binary event contracts tied to U.S. political outcomes. These would let investors bet on which party wins the presidency or controls Congress through ordinary brokerage accounts.
The funds would trade between $0 and $1, essentially representing probability estimates. If the predicted outcome happens, the contract settles at $1. If not, it goes to $0. Roundhill’s prospectus is particularly direct about the risks, warning investors could lose “substantially all” of their investment if they bet on the wrong outcome.
The wrapper changes everything
What makes this significant isn’t the event contracts themselves—those already exist in prediction markets. It’s the packaging. ETFs have become familiar financial products that sit comfortably in retirement accounts and brokerage apps alongside index funds and stocks. That familiarity changes the nature of the activity.
When you open a specialized prediction market account, you’re making a deliberate choice to participate in what many would call gambling. But when election odds appear as tickers in your regular brokerage account, the activity becomes ambient. It feels less like betting and more like just another financial product.
I think this shift matters because it changes how people perceive political risk. Suddenly, election outcomes become something you can hedge against or speculate on with the same tools you use for stock market investments.
Structural details that matter
The filings include some interesting structural choices. Roundhill’s proposal includes tickers like BLUP (Blue President) and REDP (Red President), creating what they call a “translation layer between cable news and brokerage rails.” This makes the products instantly understandable to investors who follow political news.
Perhaps more importantly, the filings include an “early determination” mechanism. If prices stay near $1 or $0 for several consecutive trading days, the fund can treat the outcome as essentially decided and begin exiting positions before the actual election results are certified. This creates a separation between the political timeline and the market timeline.
The definition of “control” also gets interesting. For Congressional control, Roundhill ties the outcome to which party holds leadership positions (Speaker of the House, President pro tempore) rather than just seat counts. This means you could be right about which party has more seats but still lose your bet if leadership negotiations go differently.
Regulatory implications and market effects
These filings arrive at a tense moment in regulatory politics. The SEC and CFTC have been wrestling over jurisdiction around event contracts. By putting these products in ETF wrappers, the issuers are bringing that fight directly under the SEC’s umbrella.
The timing matters for crypto too. Prediction markets like Polymarket have offered election betting through crypto wallets. If these ETFs get approved, some of that demand might shift to mainstream financial products. Fewer people would need crypto wallets to bet on elections.
But there’s another angle. Election outcomes shape crypto regulation—who gets appointed to key positions, what enforcement priorities emerge, whether new legislation passes. An election-outcome ETF could give crypto investors a way to hedge their political risk alongside their crypto holdings.
Human consequences of binary payoffs
Traditional ETFs teach investors to expect diversification and limited downside. These election funds offer something completely different: binary outcomes where you either win big or lose everything. The contracts might drift around the middle for months, then converge rapidly as consensus forms.
This structure amplifies the emotional connection between political identity and financial outcomes. Your gains or losses become tied directly to partisan results. And if there’s a gap between what people think they’re betting on (seat counts) and what the contract actually pays for (leadership selection), confusion and frustration could follow.
These filings force regulators to answer a question that’s been circulating for years: Is pricing democracy through markets a useful financial tool, or does it create problematic incentives? The answer will shape not just these specific products, but how we think about the relationship between finance and politics more broadly.
