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The US Securities and Exchange Commission (SEC) has formally opened a public comment period on a wave of proposed exchange-traded funds (ETFs) tied to prediction markets, a move that signals the regulator intends to scrutinize the nascent category carefully rather than let it enter the mainstream financial system by default.
SEC Chair Paul Atkins opened the comment period on prediction market ETFs that would allow investors bet on real-world events like elections and corporate layoffs. Over two dozen such products have been proposed by issuers, including Roundhill Investments, GraniteShares, and Bitwise Asset Management. None of them have launched.
Atkins said he appreciated the willingness of fund sponsors to delay the effectiveness of the products and confirmed he had instructed the SEC’s staff to seek public input on how the commission should respond to recent market changes, describing the goal as ensuring decisions are made in a transparent and thoughtful manner.
Bloomberg ETF analyst Eric Balchunas said the SEC is “clearly wrestling with these” products and “wants more time and input,” describing prediction market ETFs as “a whole new thing” similar to the early days of crypto ETFs. He added that regulators likely want to feel comfortable before fully opening the market to them.
SEC Chair is seeking public comments on prediction market ETFs.. the commission is clearly wrestling with these and wants more time and input. I get it. These are a whole new thing (kinda like crypto) and want to feel comfortable bf they open the barn door. pic.twitter.com/RdV0Rn8mSx
— Eric Balchunas (@EricBalchunas) May 20, 2026
Prediction market ETFs would allow investors to gain exposure to contracts tied to real-world events through traditional brokerage accounts, covering events that may include elections, Federal Reserve policy decisions, economic data releases, or corporate actions, such as layoffs. Unlike traditional ETFs, which hold stocks, bonds, commodities, or futures, prediction market ETFs would hold event-linked contracts that resolve based on whether a specific outcome occurs.
These products do not fit neatly into existing regulatory categories. That is precisely the problem. The SEC is being asked to approve instruments that are structurally closer to wagering contracts than to conventional securities but packaged inside the highly regulated, widely accessible ETF wrapper that sits in millions of retail brokerage accounts across the country.
Under current rules, most ETFs automatically take effect 75 days after filing unless the SEC steps in. Atkins confirmed he asked staff to slow things down and seek public input before letting event-based funds move ahead, arguing that a transparent comment process is better than letting novel products slide through and dealing with problems later.
The review carries a jurisdictional dimension that goes well beyond investor protection. By formally opening a comment process, the SEC is staking a direct claim over a sector the CFTC has treated as its own. The move by Atkins signals that he intends to hold the prediction market sector to traditional securities standards before any funds go live.
The CFTC has spent the past two years attempting to carve out a permissive framework for event contracts, withdrawing guidance that had previously constrained platforms like Kalshi and Polymarket. The SEC’s intervention now places the two agencies on a potential collision course over who regulates what and under which standards.
Concerns under review include insider trading and manipulation, particularly the risk of government officials or industry insiders trading on events they may have material, non-public knowledge of, alongside retail suitability questions about whether the ETF wrapper is the right vehicle for contracts that critics still characterize as gambling.
The timing is not coincidental. Prediction markets in the US have been expanding rapidly, led by platforms such as Kalshi and Polymarket. Both platforms attracted enormous trading volume during the 2024 election cycle and have since expanded into geopolitical events, economic data, sports, and corporate outcomes.
By May 2026, prediction markets tied to the 2026 FIFA World Cup had already become some of the largest event-driven crypto markets globally, with World Cup-related contracts on Polymarket already generating between $882 million and $916 million in cumulative trading volume across active markets more than a year before the tournament begins.
The industry’s visibility has made it increasingly difficult for regulators to ignore. On the same day the SEC announced its public comment period, Polymarket filed with the CFTC to list parlay-style contracts, allowing users to combine multiple event predictions into a single position. The filing stated the contracts could launch no earlier than May 21, 2026, underscoring how quickly the sector is evolving ahead of formal regulatory frameworks.
polymarket’in cftc dosyasında “combinatoric athletic outcome contracts” geçiyor; düz türkçesi spor tarafında parlay/kupon.
tek tahmin değil, birkaç sonucu aynı sepete koyuyorsun. biri yatarsa tüm kupon gidiyor.
tahmin piyasası app’i maç önü kupon ekranına yaklaşıyor. https://t.co/Yk2KLblAX9
— Farryn (@farrynft) May 21, 2026
Whether regulators ultimately create workable standards or delay approvals further may depend on how oversight is divided between the SEC and CFTC, two agencies now confronting a rapidly growing market neither was originally designed to regulate.
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