Fanatics has agreed to acquire Water Street Labs, a CFTC-registered designated contract market, and CX Clearinghouse, a registered derivatives clearing organisation, from Nasdaq-listed BGC Group, giving the sports platform full control of exchange and clearing infrastructure for its Fanatics Markets prediction markets subsidiary.
Financial terms were not disclosed. The transaction, announced on 27 July, remains subject to regulatory approvals and CFTC ownership and rule filings before Fanatics can begin listing and clearing contracts directly through the acquired entities.
Fanatics Markets launched in December 2025 and currently operates across 23 U.S. states and four territories, including California, Texas, and Florida – large-population markets where mobile sportsbooks remain unlicensed. Owning the exchange and clearinghouse eliminates the company’s dependence on third-party infrastructure and allows it to list contracts across an expanding range of sports outcomes, from game winners to player milestones and tournament champions.
Institutional Bridge
The deal extends beyond infrastructure. Fanatics and BGC will partner on market-data products designed to combine prediction-market sentiment with traditional financial market data, targeting both retail users and institutional participants. BGC’s existing capabilities in liquidity provision, trading technology, and analytics underpin that data partnership.
Matt King, CEO of Fanatics Betting and Gaming, said BGC’s expertise in building and operating regulated exchanges, clearinghouses, and institutional market infrastructure made the firm an ideal partner. King added that combining that institutional foundation with Fanatics’ consumer engagement platform creates an opportunity to accelerate prediction-market growth and deliver a best-in-class experience for retail and institutional participants alike.
John Abularrage, BGC Co-CEO, described the deal as an important strategic step to expand BGC’s data and analytics capabilities while pairing its institutional expertise with Fanatics’ consumer reach, with the stated intent of broadening institutional adoption of prediction markets and developing innovative data products for market participants.
Competitive and Regulatory Context
The acquisition reflects an industry-wide move toward vertical integration in the prediction markets space. Rival operators have pursued similar infrastructure control strategies, as covered in recent M&A activity across the sector, while new entrants continue to navigate the CFTC approval pathway, as illustrated by Novig’s recent CFTC designation.
The regulatory environment remains contested. Platforms including Kalshi have clashed with state gambling regulators who argue sports-event contracts constitute illegal betting rather than bona fide derivatives – a tension that Fanatics’ federally regulated structure is designed to navigate but does not eliminate. Jurisdictional licensing frameworks for prediction market operators continue to evolve across multiple markets.
The immediate milestones are CFTC approval of the ownership transfer, deal close, and the first contracts listed under Water Street Labs’ DCM registration with Fanatics as owner. The joint data product rollout targeting hedge funds and asset managers is also expected to follow once the acquisition completes.
Source: Reuters
Petra Vanhoof has spent the better part of a decade following the shifting tides of gambling regulation across Europe and beyond. She came up through the compliance side of the industry before pivoting to writing, which gives her a grounded, no-nonsense perspective on the rules, loopholes, and political maneuvering that shape how operators actually do business. She is particularly drawn to the gap between what regulators say and what the market ends up doing in response.