Fanatics has acquired Water Street Labs, a CFTC-registered designated contract market, and CX Clearinghouse, a registered derivatives clearing organization, from BGC Group. This strategic acquisition enables Fanatics to directly manage its prediction market subsidiary, Fanatics Markets, which was launched in December.
The move significantly strengthens Fanatics’ position in the rapidly expanding prediction market sector. By integrating ownership of both an exchange and a clearinghouse, Fanatics can now list and settle event contracts directly on its platform, eliminating reliance on third-party services. This approach aligns with a broader industry trend where major sports betting companies are prioritizing control over their prediction market infrastructure.
This strategy mirrors recent actions by competitors like DraftKings and FanDuel, who also entered the CFTC-regulated event contracts market around the start of the year. This regulatory framework allows them to reach sports fans in states where traditional mobile sportsbooks are restricted. DraftKings accelerated its entry by acquiring exchange operator Railbird, while FanDuel partnered with CME Group, as both companies developed proprietary infrastructure. Owning the necessary infrastructure, rather than leasing it, has become a prevalent strategy in the industry.
The prediction market sector is experiencing substantial growth and attracting significant investment. Platforms such as Polymarket and Kalshi have seen rapid expansion. Kalshi alone recorded $33 billion in trading volume in June, per data from Dune Analytics. Across multiple venues, including Polymarket and Kalshi, total prediction market trading volume reached $48 billion so far in July, according to Dune data. This surge in activity has also drawn Wall Street’s attention, with NYSE parent ICE investing $1.6 billion in Polymarket.
Looking ahead, analysts project continued expansion for the prediction market. Bernstein analysts forecast that by 2030, prediction market volumes could reach $1 trillion, with associated revenue climbing to approximately $10.8 billion. These projections suggest an increasing role for institutions, potentially broadening trading beyond sports into economic and political contracts.
In addition to the acquisition, Fanatics and BGC Group will collaborate on market-data products. These offerings are designed to merge sentiment from prediction markets with traditional financial data, aiming to connect both retail and institutional participants.
The terms of the acquisition were not disclosed.
Why This Matters
The materials describe a narrow update: Fanatics is acquiring Water Street Labs, a CFTC-registered designated contract market, and CX Clearinghouse, a registered derivatives clearing organization, from BGC Group. Terms of the acquisition were not disclosed.
Broader Context
Source materials place the factual news in this context: Fanatics is buying its way deeper into prediction markets, striking a deal to acquire a federally regulated exchange and clearinghouse from brokerage giant BGC Group as sports-betting heavyweights race to stake out ground in the fast-growing sector.
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