Fanatics buys regulated exchange to expand prediction markets business

The deal gives Fanatics control of its own prediction market infrastructure as event-based trading gains traction across sports, finance and crypto.

Fanatics will acquire BGC's federally regulated exchange and clearinghouse to launch and settle its own prediction markets.

The deal positions Fanatics to compete in the fast-growing prediction market sector alongside Kalshi, Polymarket and other emerging platforms.

Fanatics and BGC also plan to develop new market data products that combine prediction market activity with traditional financial market data.

American sports company Fanatics is making a major push into prediction markets, a segment of finance that has surged in popularity over the past year as traders bet on outcomes ranging from elections to inflation and sports.

On Monday, the sports merchandiser said it had agreed to acquire Water Street Labs and CX Clearinghouse from BGC Group, giving Fanatics ownership of a federally regulated exchange and clearinghouse that will allow it to launch and settle its own prediction market contracts. Financial terms were not disclosed.

The acquisition will allow Fanatics to list and clear contracts itself, giving the company greater control over the products it offers and the speed at which it can bring new markets online. That matters in a market where regulated infrastructure can shape how quickly new event contracts are introduced and distributed. Fanatics and BGC also said they plan to develop new market data products that combine prediction market activity with traditional financial market data.

Prediction markets have become one of the fastest-growing areas of finance, driven in large part by CFTC-regulated exchange Kalshi and Polymarket, which runs its operations on a blockchain.

Crypto-native companies have also helped push the category into the mainstream. Coinbase (COIN) partnered with Kalshi to bring prediction markets to users in all 50 states, while Robinhood (HOOD) has begun offering event contracts through the same exchange.

Against that backdrop, Fanatics is betting that its large sports audience can help bring prediction markets to a broader consumer base. The company's Markets platform launched in late 2024 and is available in 23 states and four U.S. territories, giving it an existing distribution channel as it adds more control over the underlying exchange and clearing functions.

Sportsbook operators are also expanding into prediction markets, with DraftKings announcing late last year that it would launch its own platform.