Fanatics Acquires CFTC-Registered Exchange Infrastructure From BGC Group
The deal gives Fanatics direct control over listing and clearing prediction market contracts under federal oversight.
Fanatics announced July 27, 2026, that it has entered into an agreement to acquire Water Street Labs, LLC and CX Clearinghouse, L.P. from BGC Group, Inc. The transaction gives the sports merchandise and betting company a federally regulated exchange and clearinghouse, enabling it to list and settle its own prediction market contracts without third-party infrastructure.
Water Street Labs operates as a CFTC-registered Designated Contract Market (DCM), receiving its designation on July 16, 2026. CX Clearinghouse functions as a CFTC-registered Derivatives Clearing Organization (DCO). Together, they provide the full regulatory stack needed to offer event contracts under federal oversight.
Vertical Integration Strategy
Fanatics Markets, which launched in December 2025, previously operated through an introduced broker arrangement with Crypto.com | Derivatives North America. The platform is currently available in 23 U.S. states plus four U.S. territories. By bringing exchange and clearing capabilities in-house, Fanatics reduces reliance on external providers and gains direct control over the contract lifecycle.
The acquisition positions Fanatics to compete more directly with established prediction market platforms like Polymarket and Kalshi, as well as sports-betting operators such as DraftKings and FanDuel that have shown interest in expanding into event contracts.
Partnership Component
Alongside the acquisition, Fanatics and BGC announced a long-term partnership to develop data products that combine prediction market activity with traditional financial market intelligence. Financial terms of the transaction were not publicly disclosed.
In a press release, Fanatics stated its Markets division will "connect retail-focused prediction markets with the institutional marketplace for the first time." The company characterizes this as forward-looking messaging rather than a verified accomplishment.
Regulatory Context
The prediction market sector has experienced growing popularity alongside increased regulatory scrutiny. By acquiring an existing CFTC-registered infrastructure stack, Fanatics bypasses the need to apply for its own regulatory designations from scratch. The deal reflects a broader trend of sports-betting entities seeking to diversify beyond traditional wagering into event-based derivatives.
Fanatics Markets will now control both contract listing and post-trade clearing/settlement processes in the U.S., a capability that previously required coordination between multiple regulated entities.