Fanatics has bought BGC's Water Street Labs and CX Clearinghouse, a CFTC-regulated exchange. The deal lets Fanatics list and settle its own event contracts in the prediction markets space. It's a direct move into a sector where sports-betting giants DraftKings and FanDuel have already planted flags.
What the acquisition includes
Water Street Labs is the technology behind the exchange. CX Clearinghouse holds the regulatory license from the Commodity Futures Trading Commission. Together they give Fanatics the infrastructure to create and clear contracts tied to sports outcomes, elections, and other events — without relying on a third-party settlement provider.
The company didn't disclose financial terms. BGC, the brokerage firm that owned the entities, confirmed the sale but offered no further comment.
Why Fanatics is moving into prediction markets
Fanatics already dominates licensed sports merchandise. It runs Fanatics Sportsbook in several states. Adding a self-cleared prediction exchange lets the company keep more of the margin on event-based wagers. It also gives it a platform to offer novel contract types that traditional sportsbooks might avoid.
The prediction market industry has grown quickly in the U.S. after regulatory clarity from the CFTC on certain event contracts. Companies like Kalshi and Polymarket have drawn millions of users. Fanatics wants a piece of that action — and it now has the regulated exchange to do it.
How it compares to rivals
DraftKings and FanDuel have both pushed into prediction markets. DraftKings launched its own exchange through a partnership with a CFTC-regulated platform. FanDuel has explored similar offerings. Fanatics' acquisition mirrors those strategies, but with a key difference: it now owns the clearinghouse outright, giving it more control over settlement and contract design.
That could let Fanatics move faster than competitors who rely on third-party clearing. It also means the company takes on the full regulatory burden of running a CFTC-regulated exchange.
Fanatics hasn't announced a timeline for launching its own event contracts. The company will need to integrate the Water Street Labs technology and get CFTC approval for any new products. Industry watchers expect the first contracts to appear before the next major U.S. election cycle.
One open question: how state sports betting regulators will treat these contracts. Prediction markets sometimes blur the line between gambling and financial derivatives. Fanatics will have to navigate both the CFTC and state gaming boards.
