Key Takeaways
- On Sept. 9, Tema ETFs debuted the DICE ETF, providing retail investors with indirect access to prediction platforms Kalshi and Polymarket
- The ETF invests in private company shares via special purpose vehicles rather than direct prediction market positions
- Recent funding rounds valued both Kalshi and Polymarket at more than $20 billion each, with speculation that Kalshi may seek a $40 billion valuation
- Each platform recorded over $10 billion in monthly trading activity during the summer months
- Regulatory uncertainty persists as multiple states attempt to categorize these platforms as gambling operations
On Sept. 9, Tema ETFs introduced the Tema Trading and Prediction Markets ETF to the market. Trading under the ticker symbol DICE, this fund offers ordinary investors an opportunity to gain exposure to prediction market platforms Kalshi and Polymarket through indirect investment channels.
Since Kalshi and Polymarket remain privately held, traditional retail investors haven’t had access to their shares. The DICE ETF addresses this barrier through special purpose vehicles (SPVs), which consolidate capital from multiple investors to acquire stakes in pre-public companies.
While Kalshi and Polymarket represent the fund’s primary holdings, they collectively constitute approximately 15% of total assets. The remaining portfolio includes established public companies such as Robinhood, Interactive Brokers, Intercontinental Exchange, and Coinbase.
Investors pay a gross expense ratio of 0.75% for the fund.
The Appeal for Investors
The prediction market sector has experienced explosive expansion. Both platforms recorded monthly trading volumes exceeding $10 billion during summer months, fueled in part by major international sporting competitions including the World Cup.
According to Tema President Steve Munroe, prediction market trading activity could expand nearly twentyfold, potentially reaching $1 trillion by the decade’s end. Such aggressive growth projections have captured the interest of fund providers seeking to create investment vehicles around this emerging sector.
Recent financing activities valued both Kalshi and Polymarket above $20 billion. Industry reports indicate Kalshi might pursue additional funding at a $40 billion price tag.
Tema reports acquiring positions in Polymarket and Kalshi at valuations roughly 10% to 13% below their most recent funding rounds. Should either platform debut publicly at prices exceeding current valuations, ETF shareholders with pre-IPO positions could realize significant gains.
Regulatory Uncertainty Looms
The path forward isn’t without obstacles. Multiple state governments are contesting how Kalshi and Polymarket should be legally classified. The central debate centers on whether sports-related contracts offered by these platforms constitute financial products or gambling activities.
Both organizations maintain they fall under federal oversight via the Commodity Futures Trading Commission. Their position frames these contracts as financial instruments rather than wagers.
However, an unfavorable ruling from the U.S. Supreme Court could reclassify them as sportsbooks. This outcome would subject both platforms to state-by-state regulatory frameworks and severely restrict their operational footprint. Sports wagering remains prohibited in populous states including California, Georgia, and Texas.
Neither Kalshi nor Polymarket has publicly disclosed IPO intentions. When contacted, Kalshi refused to comment on potential public offering plans. Polymarket failed to respond to inquiries.
Additional ETFs maintain pre-IPO positions in Kalshi. The ERShares Private-Public Crossover ETF holds approximately $30 million in Kalshi shares, while the KraneShares Public-Private AI and Technology ETF maintains a smaller Polymarket position.
At present, DICE represents among the most accessible routes for public market participants seeking exposure to the prediction markets sector, despite ongoing regulatory ambiguity surrounding the industry’s future.
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