Fanatics agreed on July 27 to acquire Water Street Labs and CX Clearinghouse from BGC Group, giving the sports platform a federally regulated exchange and clearinghouse for its prediction markets business.
Summary
- Fanatics agreed to buy two CFTC-registered entities, gaining direct control of exchange and clearing infrastructure.
- Water Street Labs received CFTC designated contract market status on July 16, 2026, records show.
- Fanatics Markets currently operates across 23 states and four U.S. territories, according to company disclosures.
Financial terms and a closing date were not disclosed. The deal has been announced but has not been described as completed.
Once ownership transfers, Fanatics intends to list event contracts through Water Street Labs and settle them through CX Clearinghouse rather than relying entirely on an outside exchange and clearing partner.
Fanatics prediction markets move in-house
Fanatics Markets launched in December 2025 through a partnership with Crypto.com Derivatives North America. Fanatics had also acquired Paragon Global Markets, a CFTC-registered introducing broker and National Futures Association member, in July 2025.
The new transaction would add the remaining core market infrastructure. Fanatics said owning the exchange and clearinghouse would let it directly list and clear contracts across a wider range of events. The service is currently available through mobile apps and the web in 23 states and four U.S. territories.
As previously reported, Fanatics initially explored entering prediction markets through Crypto.com before launching the service in December. The acquisition would reduce its reliance on third-party infrastructure, although existing partner arrangements may continue separately.
The acquired firms hold separate CFTC registrations
The CFTC designated Water Street Labs as a contract market on July 16, eleven days before the acquisition announcement. A designated contract market is a federally supervised exchange that operates under the Commodity Exchange Act and CFTC rules.
CX Clearinghouse has been registered as a derivatives clearing organisation since April 2010. Its current CFTC order permits it to clear fully collateralised futures, options on futures and swaps. The business was previously known as Cantor Clearinghouse.
Those registrations do not remove product-level oversight. CFTC guidance says designated contract markets must file new contracts and certify that they comply with federal law, or request formal approval where required.
BGC will remain a prediction market data partner
Fanatics and BGC also plan to create data products combining prediction market sentiment with BGC’s traditional financial-market information. The companies did not provide a product name, release schedule or pricing model.
BGC said the arrangement would pair its institutional trading and analytics experience with Fanatics’ retail audience. Fanatics said the combination could connect consumer event trading with institutional participants. These are company objectives rather than completed services.
BGC shares last traded at $11.79, up about 1.2% from the previous close. Fanatics is privately held, so there was no public share-price reaction for the buyer.
Competition and legal risks remain
The acquisition moves Fanatics closer to competitors that control or closely align with regulated exchanges. Coinbase expanded Kalshi-powered prediction markets across all 50 U.S. states, while Robinhood has pursued contracts from several exchanges to broaden its product range.
Owning a CFTC-registered exchange does not settle the dispute between federal derivatives oversight and state gambling laws. In related coverage, Kalshi and Polymarket are fighting a state-by-state legal battle involving cease-and-desist orders, lawsuits and conflicting court decisions.
Fanatics may face similar questions as it expands sports-linked contracts. Its exchange and clearinghouse would remain subject to CFTC supervision, while states could still challenge individual products under gambling and consumer-protection laws.
The next steps are completion of the acquisition, any necessary ownership and rule filings, and the first contracts listed through Water Street Labs. Fanatics and BGC must also develop the proposed market-data products. Neither company announced a launch deadline, and the release did not mention crypto or blockchain integration.