Fanatics prediction markets push includes BGC exchange deal

Fanatics prediction markets plans are getting a regulatory backbone: the sports platform said Monday it agreed to buy a federally regulated exchange and clearinghouse from BGC Group. For retail investors watching the category, the deal shows how sports-betting companies are moving toward owning the infrastructure behind event-contract trading, rather than depending on outside platforms.

Fanatics said it will acquire Water Street Labs, a designated contract market registered with the Commodity Futures Trading Commission, and CX Clearinghouse, a registered derivatives clearing organization, from Nasdaq-listed brokerage BGC Group. The companies did not disclose financial terms.

A designated contract market is an exchange approved to list certain derivatives, while a clearinghouse handles settlement and helps manage counterparty risk after trades are made. In plain English, Fanatics is buying both the venue where event contracts can trade and the system that helps complete those trades.

What is Fanatics buying from BGC?

Fanatics is acquiring Water Street Labs and CX Clearinghouse, according to the company’s Monday announcement. That gives Fanatics Markets, the prediction-markets unit it launched in December, the ability to list and settle event contracts directly.

Event contracts are financial contracts tied to whether a future event happens. Prediction-market prices can act like crowd-implied odds because users buy and sell positions based on their views of an outcome.

The BGC transaction also includes a partnership between Fanatics and BGC on market-data products. According to the companies, those products will combine prediction-market sentiment with traditional financial data for retail and institutional users.

Why sports-betting firms want regulated event contracts

The move puts Fanatics in the same strategic lane as DraftKings and FanDuel, which have also entered CFTC-regulated event contracts. Decrypt reported that both companies moved into the sector around the turn of the year as a way to reach sports fans in states including California and Texas, where mobile sports betting is not allowed.

DraftKings moved faster by buying exchange operator Railbird, according to Decrypt. FanDuel partnered with CME Group before building more of its own infrastructure, Decrypt reported.

The appeal is straightforward: a federal derivatives framework can give companies a different route to offer event-based products. Owning the exchange and clearing functions can also give a company more control over product design, data and economics.

How big are prediction markets getting?

Prediction markets have drawn more attention as Polymarket and Kalshi have grown. Dune Analytics data cited by Decrypt showed Kalshi handled $33 billion in trading volume in June.

Across prediction-market venues including Polymarket, Kalshi, Limitless and Myriad, trading volume reached $48 billion so far in July, according to Dune Analytics data cited by Decrypt. Decrypt noted that Myriad is owned by Dastan, its parent company.

Traditional finance has also moved into the space. ICE, the parent company of the New York Stock Exchange, invested $1.6 billion in Polymarket, according to Decrypt.

Bernstein analysts projected that prediction-market volume could reach $1 trillion by 2030, with revenue rising to about $10.8 billion, Decrypt reported. The analysts also expect institutions to expand use of these markets beyond sports into areas such as economic and political contracts.

For Fanatics, the BGC deal is a step toward building its own regulated trading stack. For investors, it is another sign that prediction markets are becoming a competitive arena for sports platforms, crypto-native venues and established financial-market players.

This story draws on original reporting from Decrypt.