Fanatics Acquires CFTC-Regulated Exchange to Expand Prediction Markets

The sports platform will gain control of its own federally regulated exchange and clearinghouse as competition intensifies across prediction markets.

Fanatics has agreed to acquire two Commodity Futures Trading Commission (CFTC)-regulated market infrastructure businesses from BGC Group. This move will allow the company to operate its own federally regulated prediction market exchange instead of relying on third-party platforms. The companies announced the agreement on July 27, although they did not disclose financial terms. According to Fanatics’ official announcement, the transaction includes Water Street Labs LLC, a CFTC-registered Designated Contract Market (DCM). It also includes CX Clearinghouse L.P., a registered Derivatives Clearing Organization (DCO).

The acquisition comes as prediction markets continue attracting interest from traditional finance firms, sportsbooks, and cryptocurrency-related companies. These groups see event-based trading as a rapidly growing segment of regulated derivatives markets.

Fanatics Gains Its Own Market Infrastructure

Once completed, the acquisition will give Fanatics ownership of both the exchange where contracts are listed and the clearinghouse responsible for settling trades. This vertically integrated structure should allow the company to launch new prediction contracts more quickly. It should also help Fanatics manage the trading infrastructure internally rather than depending on external providers. According to the company’s announcement, Fanatics and BGC also intend to collaborate on data products. These products will combine prediction market activity with traditional financial market information.

Matt King, Chief Executive Officer of Fanatics Betting & Gaming, said in the company announcement that combining BGC’s institutional infrastructure with Fanatics’ consumer platform creates an opportunity. This opportunity is to expand prediction markets for both retail and institutional participants.

Neither company disclosed when the acquisition is expected to close or whether additional regulatory approvals remain outstanding.

Prediction Market Competition Continues to Intensify

The acquisition reflects increasing competition in U.S. prediction markets.

Over the past two years, platforms including Kalshi and blockchain-based Polymarket have expanded the visibility of event contracts tied to elections, macroeconomic indicators, sports outcomes, and other real-world events. Additionally, crypto companies have also entered the sector through partnerships that broaden distribution of regulated event contracts.

Fanatics launched Fanatics Markets in late 2025 after previously acquiring Paragon Global Markets, an NFA member, as part of its broader derivatives strategy. At launch, the company partnered with Crypto.com’s regulated derivatives infrastructure. Later, it began pursuing ownership of its own exchange through the current transaction.

Industry participants increasingly view ownership of exchange infrastructure as strategically important because it enables firms to control product listings, clearing operations, technology development, and customer experience.

Regulatory Environment Remains Unsettled

The transaction also arrives during an evolving regulatory debate surrounding prediction markets.

The CFTC is currently reviewing public comments on proposed rules governing event contracts, including sports-related markets. While federal regulators have generally supported regulated prediction markets, state regulators, tribal organizations, and casino operators continue arguing that some sports event contracts resemble gambling rather than traditional derivatives.

Former CFTC officials and lawmakers have also submitted differing views regarding how broadly the agency should oversee prediction markets. This highlights continued legal uncertainty despite growing institutional participation.

For companies like Fanatics, clearer federal guidance could determine how broadly new products may be offered in coming years.

Why the Acquisition Matters

The deal extends a broader trend in which established consumer brands are investing directly in regulated market infrastructure rather than simply distributing financial products.

Owning both a designated contract market and a derivatives clearing organization gives Fanatics greater operational control over listing, clearing, and settling event contracts. It also reduces dependence on external infrastructure providers while potentially accelerating product launches.

The acquisition further illustrates the convergence between sports, financial markets, and digital asset ecosystems. In addition, blockchain-based platforms such as Polymarket helped popularize prediction markets globally, while regulated U.S. operators have increasingly adopted similar models within existing derivatives laws.

Remaining Questions

Several important details remain unanswered.

Neither Fanatics nor BGC disclosed the purchase price, expected closing date, or whether additional regulatory approvals are required before the acquisition becomes effective. The companies also have not announced what new categories of prediction contracts may be introduced after closing.

Another uncertainty concerns future federal regulation. The CFTC’s ongoing rulemaking process could ultimately reshape which event contracts qualify for trading on federally regulated exchanges and which may face restrictions.

For investors and market participants, those regulatory developments may prove as important as the acquisition itself.