Roundhill Files for Prediction Market ETFs Amid Insider Unease
Roundhill Investments filed Friday for approval to launch ETFs tied to prediction markets on the presidential race and other U.S. elections. If approved, the funds would be the latest sign of TradFi’s growing embrace of prediction markets.
These ETFs would also be binary, leading traders to win or lose big instead of tracking a basket of liquid securities with moderate returns like other ETFs.
Bringing event contracts to new accounts also makes them more difficult to eliminate. Future CFTC commissioners may oppose sports contracts or mention markets. However, they would face the pressure of eliminating hundreds of millions or billions in value from balance sheets across the financial sector.
Contracts used for entertainment have led some industry observers to urge prediction market platforms to refocus on hedging.
Returning to prediction market hedging
Ethereum co-founder Vitalik Buterin lamented the drift toward short-term speculation over better hedging products. He went on to describe a vision of prediction market indexes replacing the need for fiat currencies.
Recently I have been starting to worry about the state of prediction markets, in their current form. They have achieved a certain level of success: market volume is high enough to make meaningful bets and have a full-time job as a trader, and they often prove useful as a…
— vitalik.eth (@VitalikButerin) February 14, 2026
While prediction markets are unlikely to eliminate traditional currencies, they are playing a more public role in election tracking. CNN and CNBC have partnered with Kalshi to feature real-time probabilities in news stories, including election coverage.
As prediction markets have become more mainstream, they have faced greater concerns about insider trading. Last month, Virginia Senate candidate Mark Moran placed a $125 trade on himself on Kalshi. He later deleted the Jan. 26 X post announcing it, and Kalshi has not commented on the incident.
Meanwhile, Polymarket has had its own insiders revealed. The Shin Bet arrested several members of the Israeli military for using classified information to trade on Iran strike timing on Polymarket in 2025.
These are challenges that the CFTC will need to confront, but may not have the resources to be as responsive as they have historically been.
Empty CFTC office, slower response times
In an interview with Prediction News, Barron’s journalist Nick Devor explained why the final enforcement attorney from the CFTC’s Chicago office leaving is such a big deal.
Devor noted that the Chicago office was known for taking a leading role in complex litigation. Now, with no enforcement staff left in Chicago, Devor warned, the agency could face longer timelines to investigate and file fraud cases.
While Kalshi’s CEO has claimed that his company investigated over 200 accounts, the ongoing release of new markets on novel topics ensures concerns about insider trading will remain salient.