Prediction-market ETFs may open the door to all sorts of Wall Street tomfoolery

MarketWatch

by Gordon Gottsegen

February 20, 2026

AI-Generated Deep Dive Summary

Several asset managers, including Bitwise, Roundhill Investments, and GraniteShares, have filed applications with the Securities and Exchange Commission (SEC) to offer exchange-traded funds (ETFs) linked directly to election-related prediction markets. These ETFs aim to provide investors with exposure to markets that predict outcomes of U.S. elections, a concept already accessible through platforms like Webull and Robinhood for events such as college basketball games or the Winter Olympics. Prediction markets allow participants to trade based on their expectations of future events, offering insights into potential election outcomes. These markets have gained traction among retail investors due to their availability on popular trading platforms, but the proposed ETFs could make them even more mainstream by integrating them into traditional brokerage accounts. This move could democratize access to such markets, enabling a broader range of investors to participate in predicting and profiting from political events. While these ETFs could provide new opportunities for retail traders, they also raise important questions about market integrity and regulatory oversight. Critics argue that prediction markets are prone to manipulation, and the integration into ETFs might amplify risks. Additionally, the impact on election-related markets could influence voter behavior or introduce new challenges in maintaining fair and accurate predictions. For financial professionals and investors, these developments highlight a shift toward more niche and speculative investment vehicles. While they may offer potential returns, especially for those with expertise in political forecasting, they also come with heightened volatility and uncertainty. As the SEC evaluates these proposals, the broader implications for market regulation and investor behavior will likely be under close scrutiny. In summary, the proposed ETFs tied to election-related prediction markets represent a significant step in expanding retail access to such instruments, blending traditional investment vehicles with speculative trading platforms. While they may provide new opportunities, their introduction also raises important questions about market integrity and regulatory oversight that investors and policymakers must address.

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Originally published on MarketWatch on 2/20/2026