In brief
- Bitwise, Roundhill, and GraniteShares have filed for election-linked prediction market ETFs.
- Experts say demand and liquidity could be strong from hedge funds, but warn that political event markets also raise manipulation and insider information risks.
- The filings land as U.S. midterms approach and the CFTC moves to assert federal authority over prediction markets.
Wall Street’s latest push into political prediction markets is drawing both strong liquidity expectations and warnings of manipulation from industry experts, as major ETF issuers race to launch election-linked funds ahead of the U.S. midterms.
Fund managers Bitwise Asset Management, Roundhill Investments, and GraniteShares are seeking to launch prediction-market ETFs, with Bitwise products falling under a new platform brand, PredictionShares, offering exposure to contracts tied to the 2028 U.S. presidential race and the 2026 House and Senate midterms.
The listed funds cover the 2028 U.S. presidential election and the 2026 congressional midterms, including separate products for whether Democrats or Republicans win the presidency in 2028, and whether Democrats or Republicans control the Senate and the House in 2026.
“Given the level of interest in these event markets, providing liquidity would be very attractive for various hedge funds and quant trading firms,” Ganesh Mahidhar, Investment Professional at Further Ventures, told Decrypt, pointing to surging demand for contracts tied to U.S. election outcomes.
Meanwhile, Kadan Stadelmann, CTO at Komodo Platform, told Decrypt that “political prediction markets create opportunities for insiders to trade on classified information and can also open the elections up to manipulation.”
U.S. midterm elections are widely treated as referendums on the sitting administration, and historically, the president’s party rarely gains seats across both chambers, dynamics that tend to increase hedging and speculative activity around outcome probabilities.
On prediction market Myriad, owned by Decrypt’s parent company Dastan, President Trump’s approval rating is edging past the midpoint at 50.1%.
Mahidhar said political polarization and policy uncertainty have supercharged activity on platforms such as Polymarket and Kalshi, where traders already speculate on elections and macro events.
“Regulating these markets and making it accessible to the broader retail audience is the next step in the evolution of event contracts,” he said, adding that market makers are drawn to volatility and tight spreads.
Stadelmann, however, said timing also reflects market conditions and product competition, with U.S. crypto funds seeing weeks of outflows and spot Bitcoin ETFs delivering muted momentum, issuers are searching for new themes.
Bitwise is positioning early, he said, to capture opportunity “before regulators catch up with the technology.” He added that demand could still be strong: “In the U.S., gambling has become a part of life’s fabric… I suspect liquidity will be robust.”
Meanwhile, prediction market operators are facing enforcement actions across multiple states.
Regulators in Nevada, Massachusetts, and other states have moved against election and sports event contracts on platforms like Kalshi and Polymarket, saying they amount to unlicensed gambling, with court fights now underway over state versus federal authority.
That jurisdiction fight is increasingly being taken up by the Commodity Futures Trading Commission, with Chairman Michael Selig saying on Tuesday that the agency has filed an amicus brief in a federal appeals court asserting its authority over prediction markets and event contracts.
In a Wall Street Journal op-ed, Selig wrote that the CFTC “will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets,” and said event contracts operate under CFTC rules as swaps rather than gambling.