Key Takeaways
- On September 9, Tema ETFs introduced the DICE ETF, providing retail access to prediction platforms Kalshi and Polymarket before they go public
- Private shares are held via special purpose vehicles rather than direct prediction market positions
- Recent funding rounds pegged both companies above $20 billion, with speculation that Kalshi may seek a $40 billion valuation
- Both platforms recorded monthly trading volumes exceeding $10 billion during summer months
- State-level regulatory battles could reclassify these platforms as gambling operations rather than financial instruments
Tema ETFs debuted the Tema Trading and Prediction Markets ETF on September 9, trading under the ticker DICE. This fund provides ordinary investors with indirect access to prediction platforms Kalshi and Polymarket, bypassing the traditional barriers to private company investment.
Since both platforms remain privately held, retail participation has been virtually impossible until now. The ETF employs special purpose vehicles to aggregate capital and acquire shares in these pre-IPO companies.
While Kalshi and Polymarket represent the fund’s primary targets, they constitute approximately 15% of total assets combined. The remaining holdings feature established public entities including Robinhood, Interactive Brokers, Intercontinental Exchange, and Coinbase.
Investors face a gross expense ratio of 0.75% for the fund.
The Investment Case for Prediction Markets
The prediction market sector has experienced explosive expansion. Both platforms processed over $10 billion in monthly volume during summer 2024, boosted significantly by major international sporting competitions like the World Cup.
According to Tema President Steve Munroe, prediction market volumes could balloon to $1 trillion by decade’s end—representing roughly 20-fold growth from current levels. This trajectory has attracted asset managers seeking exposure to this emerging sector.
Private market valuations for both Kalshi and Polymarket surpassed $20 billion in their most recent financing activities. Industry chatter suggests Kalshi might pursue additional funding at double that figure.
Tema indicates it secured positions in both companies at discounts ranging from 10% to 13% below their latest valuations. Should either platform launch a public offering above current pricing, early ETF investors could realize substantial gains.
Regulatory Uncertainty Looms Large
The regulatory landscape presents significant headwinds. Multiple states are contesting how Kalshi and Polymarket should be categorized, particularly regarding sports-related contracts.
Both platforms maintain they operate financial instruments subject to federal oversight by the Commodity Futures Trading Commission rather than state gambling authorities.
However, an adverse Supreme Court decision could fundamentally alter their business models. Reclassification as sportsbooks would trigger state-by-state licensing requirements and exclude them from key markets. Sports wagering remains prohibited in populous states including California, Georgia, and Texas.
Neither platform has disclosed public offering timelines. Kalshi representatives declined to discuss IPO prospects, while Polymarket did not provide comment.
DICE isn’t the only fund pursuing this strategy. The ERShares Private-Public Crossover ETF maintains a $30 million Kalshi position, while the KraneShares Public-Private AI and Technology ETF holds smaller Polymarket exposure.
Despite regulatory ambiguity, DICE represents among the most accessible vehicles for mainstream investors seeking prediction market exposure through traditional brokerage accounts.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
