Kirsten Chang, senior industry analyst at VettaFi, joined Nate Geraci on this week’s ETF Prime to discuss recent filings for prediction market ETFs from Roundhill, Bitwise, and GraniteShares. The filings target election outcomes including control of the White House, House, and Senate through event contracts traded on platforms like Kalshi and Polymarket.
Read more: Three Firms Race to Launch First Prediction Market ETFs
The platforms have exploded, with the industry reaching $40 billion in trading volume, up from less than $10 billion two years ago, according to Chang. Monthly trading volume grew from under $100 million in early 2024 to over $13 billion by late 2025. Kalshi and Polymarket control 90% of the global prediction market space.
Event contracts are binary, all-or-nothing derivatives priced between $0 and $1, reflecting the probability of an outcome. If an event occurs, the contract pays $1. Otherwise it goes to zero. The investment case rests on the wisdom of the crowd concept, where collective predictions often prove more accurate than individual experts. A Federal Reserve study concluded these markets are valuable tools for researchers and policymakers, Chang said.
Operational Problems Loom
Chang expressed concerns about liquidity, creation and redemption mechanics, and early exit provisions. The ETFs would exit positions if market certainty exceeds 99.5% for five consecutive days, creating timing risks if outcomes are contested. Thinly traded markets could cause authorized participants to step back during stress periods, leading to wider spreads and price dislocations, she said.
The ETF wrapper democratizes access by removing friction like managing crypto wallets for platforms like Polymarket, Chang noted. Investors could simply search for a ticker in their brokerage accounts rather than opening separate platform accounts.
But approval odds are slim. Chang placed the probability at 10–20%, noting the Security and Exchange Commission’s historical caution toward gambling-like products despite a friendlier current administration. Regulatory jurisdiction remains murky between the CFTC and state gaming authorities, according to Chang.
Chris Marangi, co-chief investment officer at Gabelli Funds, discussed the Gabelli Opportunities in Live and Sports ETF (GOLS). The fund uses a private market value approach, seeking companies trading below what an informed buyer would pay, Marangi said. Holdings include the Atlanta Braves (BATRK), MSG Sports (MSGS), and Manchester United (MANU). Sports franchise values in the “Big Four” leagues have compounded at 15–16% over the past dozen years, outpacing the S&P 500, he added.
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