Fanatics Buys CFTC-Registered Exchange, Deepens Bet on 23-State Markets Unit

Fanatics has agreed to acquire Water Street Labs and CX Clearinghouse from BGC Group, giving the sports merchandiser direct ownership of a federally regulated, CFTC-registered exchange and clearinghouse. Financial terms of the deal were not disclosed, but the structure matters more than the price tag: it lets Fanatics list and settle its own prediction market contracts in-house, rather than routing volume through a third-party venue.

The acquisition, announced Monday, hands Fanatics full control over which event contracts it offers and how fast it can launch them. Fanatics and BGC also said they plan to build new market data products that blend prediction market activity with traditional financial data — a signal that both companies see event contracts converging with mainstream trading infrastructure, not sitting apart from it.

Why the regulatory layer is the real asset

Prediction markets have become one of the fastest-growing corners of finance over the past year, with traders wagering on outcomes ranging from elections to inflation prints to sports results. Much of that growth has been driven by CFTC-regulated exchange Kalshi and blockchain-based Polymarket, both of which now process significant volume without needing to build their own clearing infrastructure from scratch.

By buying Water Street Labs and CX Clearinghouse outright, Fanatics skips the dependency on outside partners that many newer entrants rely on. Coinbase, for instance, partnered with Kalshi to bring prediction markets to users across 50 states, while Robinhood has begun offering event contracts through the same Kalshi rail. Fanatics is instead internalizing the exchange and clearing function, positioning itself closer to how Kalshi and Polymarket already operate rather than as another distributor sitting on top of them.

A 23-state footprint looking to expand

Fanatics’ existing Markets platform launched in late 2024 and currently operates in 23 states. Owning the underlying exchange gives the company a path to widen that footprint and diversify its contract lineup beyond sports outcomes, tapping the same event-driven demand that has pulled traders toward Kalshi and Polymarket.

The move places Fanatics alongside other sports-betting-adjacent operators racing to secure a foothold in prediction markets before the category consolidates around a handful of regulated venues. With DraftKings and FanDuel also maneuvering in the space, control over exchange and clearing infrastructure — rather than reliance on a partner’s rails — is emerging as the key competitive line separating the players who set the terms of the market from those who simply plug into it.

What it means for traders

For crypto-native traders who have grown accustomed to Polymarket’s on-chain settlement and Kalshi’s CFTC oversight, Fanatics’ move adds another regulated, non-crypto-native competitor to a market that had largely been shaped by blockchain-based and CFTC-registered venues. It also underscores how quickly prediction markets are being treated as core financial infrastructure rather than a novelty product, with data licensing — not just contract volume — now part of the business case.

No pricing or valuation figures were disclosed for the transaction, leaving the market to judge the deal’s significance by its structural implications rather than its dollar size. As more consumer platforms seek direct exchange ownership rather than distribution deals, the CFTC-registered infrastructure layer itself is becoming the scarce, sought-after asset in the prediction market race.

Sources

• decrypt.co
• coindesk.com