Fanatics acquires regulated exchange to control prediction markets
In brief
- Fanatics acquired Water Street Labs and CX Clearinghouse from BGC Group, gaining regulated exchange and clearinghouse ownership.
- Fanatics can now list and clear contracts directly, accelerating product launches and market control.
- Prediction markets are finance's fastest-growing sector, attracting Coinbase, Robinhood, and other major players.
Control and Speed
Through the acquisition, Fanatics will be able to list and clear contracts itself, giving it more control over products and faster time to market. The infrastructure play removes dependency on third-party exchanges and lets the company move at its own pace as competition intensifies in prediction markets.
Prediction markets have become one of the fastest-growing areas of finance. Major platforms are racing to capture share. CFTC-regulated exchange Kalshi operates as a traditional regulated venue, while Polymarket runs its operations on a blockchain.
Market Expansion
Fanatics' Markets platform launched in late 2024 and is available in 23 states and four U.S. territories. The regulated exchange acquisition opens the door to broader geographic expansion and deeper product offerings.
Competitors are making aggressive moves. Coinbase partnered with Kalshi to bring prediction markets to its users in 50 states, and Robinhood has begun offering event contracts through the same exchange. DraftKings announced late last year it would launch its own platform.
Data and Products
Beyond exchange ownership, Fanatics and BGC also plan to develop new market data products that combine prediction market activity with traditional financial data. This cross-pollination could unlock new revenue streams and deepen the tie between sports betting and broader financial markets.
