Prediction markets have been making waves lately, pulling consumers away from traditional sports betting platforms and toward services like Kalshi, Polymarket, and Robinhood where they can wager on everything from sports to entertainment to politics. Now Roundhill Investments, an ETF issuer known for creative thematic funds, wants to package that action into exchange-traded products.

Six New Political ETFs Enter the Arena

Roundhill has built a reputation for launching ETFs that track trendy themes—Magnificent Seven tech stocks, sports betting companies, even meme stocks. Their latest SEC filing takes things in a bold new direction: six ETFs focused entirely on U.S. political outcomes.

The lineup includes the Roundhill Democratic President ETF (BLUP), Roundhill Republican President ETF (REDP), Roundhill Democratic Senate ETF (BLUS), Roundhill Republican Senate ETF (REDS), Roundhill Democratic House ETF (BLUH), and Roundhill Republican House ETF (REDH).

These funds would invest in political outcomes tied to the 2026 and 2028 elections, essentially letting investors speculate on which party wins control of the presidency, Senate, or House of Representatives—and potentially profit from those results.

Here's where it gets interesting. According to the filing, the Democratic President ETF aims to deliver capital appreciation if a Democrat wins the 2028 presidential race. If that doesn't happen, "the fund will lose substantially all of its value." The same risk applies to the Republican version and to the House and Senate funds linked to the 2026 elections.

The ETFs will invest in event contracts regulated under the Commodity Exchange Act and overseen by the CFTC. The filing doesn't specify which exchange will provide the contracts, suggesting Roundhill may source them from multiple venues.

Despite the high-stakes nature of these bets, losing funds won't simply shut down. Instead, they'll determine the winner, then redirect their focus to the next election cycle. Winning funds will undergo a reverse stock split.

The SEC hasn't approved these ETFs yet, and it remains to be seen whether these first-of-their-kind products will actually hit the market.

Prediction Markets Keep Growing

The momentum behind prediction markets is real. Robinhood Markets (HOOD) recently highlighted strong prediction market contract records in its quarterly earnings, noting the segment as a key growth driver for the financial services company.

Meanwhile, DraftKings Inc (DKNG) quarterly results pointed to prediction markets' potential in states without legalized online sports betting, though the company's guidance may have hinted that giants like Kalshi and Polymarket are eating into sports betting market share.

Roundhill CEO Dave Mazza pushed back on that narrative in a recent interview, arguing that sportsbooks aren't being displaced. "Sportsbooks still win on product depth, user experience, media reach, and regulatory positioning," he said.

Mazza explained that prediction markets offer simplicity for users and different pricing mechanics. "Regulation will determine how fast this converges, but it's not a zero-sum game. Ultimately, we see innovative disruption as an indication that the sports betting and gambling markets have longevity."

The Roundhill Sports Betting & iGaming ETF (BETZ) was the first ETF for the sports betting sector in the U.S. Now the same company that launched that sports betting ETF could be the first to bring prediction market ETFs to investors—a full circle moment for a sector that's both growing and disrupting traditional gambling models.