SEC Halts New Betting Funds That Let You Gamble on Elections and Economy

The US Securities and Exchange Commission (SEC - the government agency that oversees stock markets) has stopped 24 new investment funds that would have let people bet on real-world events like elections and economic disasters.

These weren't normal investment funds. Instead of buying stocks or bonds, these "prediction market ETFs" (exchange-traded funds - investment products you can buy like stocks) would have worked like placing bets on whether specific events happen or not.

The proposed funds included: • Betting on who wins the 2028 US election • Wagering on whether tech companies will fire workers • Gambling on whether a recession (economic downturn) will happen

Companies like Bitwise, Roundhill, and GraniteShares wanted to launch these funds this week. They filed paperwork in February and thought they'd get automatic approval after 75 days under new fast-track rules.

Why is this risky? Unlike normal investments that go up or down gradually, these funds work like all-or-nothing bets. The companies warned investors could lose "substantially all" their money if they guess wrong - imagine betting your savings on a coin flip.

The SEC wants more time to study these products before letting regular investors buy them. Meanwhile, prediction markets (online betting platforms) like Polymarket and Kalshi have already handled $85 billion in bets this year alone.

This is an AI-generated summary. Read the original article at: https://www.theblock.co/post/399881/sec-pumps-brakes-prediction-market-etfs-set-debut-this-week-reuters?utm_source=rss&utm_medium=rss