American sports company Fanatics has entered into an agreement to purchase Water Street Labs and CX Clearinghouse from BGC Group, giving the company ownership of a federally regulated exchange and clearinghouse. According to reports from The Block, the deal allows Fanatics to operate its own Designated Contract Market and Derivatives Clearing Organization under CFTC oversight, enabling the company to directly list, execute and clear prediction market contracts without relying on third-party infrastructure. The acquisition was officially announced on July 27, 2026, with Water Street Labs receiving its CFTC designated contract market status on July 16, 2026, eleven days before the announcement. Financial terms of the acquisition were not disclosed, but this acquisition allows Fanatics to list and clear contracts independently, enhancing control over its offerings and market launch speed.
The acquisition positions Fanatics to compete in the rapidly expanding prediction market sector alongside established platforms Kalshi and Polymarket. As reported by The Block, prediction markets have become one of the fastest-growing areas of finance, with much of that growth fueled by CFTC-regulated exchange Kalshi and blockchain-based Polymarket. Crypto-native companies have also contributed to mainstream adoption, with Coinbase partnering with Kalshi to bring prediction markets to users in 50 states, while Robinhood has begun offering event contracts through the same exchange. Fanatics aims to leverage its large sports audience to broaden the consumer base for prediction markets, with the company's Markets platform launched in December 2025 through a partnership with Crypto.com Derivatives North America. The platform is currently available in 23 states and four U.S. territories through mobile apps and web platforms.
Fanatics is betting that its large sports audience can help bring prediction markets to an even broader consumer base. The acquisition aligns with broader industry trends, as sportsbooks operators are similarly expanding into prediction markets, with DraftKings announcing plans to launch its own platform. Fanatics said the acquisition complements recent product launches, including FanCash rewards, Fanatics ONE loyalty integration, Combos, FanViz and new risk management tools, as it continues expanding Fanatics Markets across the US. The company's Markets platform launched in December 2025 and is currently available in 23 states and four U.S. territories through mobile apps and web platforms. The acquisition reduces Fanatics' reliance on third-party infrastructure, although existing partner arrangements may continue separately.
Fanatics and BGC will collaborate to expand prediction markets for retail and institutional participants by combining Fanatics' consumer-facing platform with BGC's institutional trading expertise. Under the partnership, BGC will provide expertise in market infrastructure, liquidity, trading technology and financial market data, while Fanatics contributes its consumer platform and sports-focused customer base. The companies intend to launch a prediction markets ecosystem to connect retail traders with institutional investors, with plans to develop new analytics products that combine prediction market activity with traditional financial market intelligence. Additionally, Fanatics and BGC plan to develop new market data products that integrate prediction market activity with traditional financial data. The arrangement pairs BGC's institutional trading and analytics experience with Fanatics' retail audience, with the companies combining consumer event trading with institutional participants.
The acquired firms hold separate but complementary CFTC registrations that provide the regulatory foundation for Fanatics' prediction market operations. Water Street Labs received its CFTC designated contract market status on July 16, 2026, making it a federally supervised exchange operating under the Commodity Exchange Act and CFTC rules. CX Clearinghouse has been registered as a derivatives clearing organization since April 2010, with current CFTC orders permitting clearing of fully collateralized futures, options on futures and swaps. These registrations do not remove product-level oversight, as CFTC guidance requires designated contract markets to file new contracts and certify compliance with federal law. The acquisition moves Fanatics closer to competitors that control or closely align with regulated exchanges, with Coinbase expanding Kalshi-powered prediction markets across all 50 U.S. states and Robinhood pursuing contracts from several exchanges. However, owning a CFTC-registered exchange does not settle disputes between federal derivatives oversight and state gambling laws, with Kalshi and Polymarket currently fighting state-by-state legal battles involving cease-and-desist orders and conflicting court decisions.
