Fanatics is set to acquire Water Street Labs and CX Clearinghouse from BGC Group, giving it direct control over a federally regulated exchange and clearinghouse for prediction markets in the U.S.
Fanatics is moving to establish itself as a major player in the U.S. prediction markets sector by acquiring two regulated financial market entities from BGC Group. The deal, announced on July 27, will see Fanatics take ownership of Water Street Labs, a Commodity Futures Trading Commission (CFTC)-registered designated contract market, and CX Clearinghouse, a CFTC-registered derivatives clearing organization. Financial terms of the transaction were not disclosed. This acquisition gives Fanatics direct access to federally regulated infrastructure for listing and clearing event-based contracts, a step that could reshape how prediction markets operate for U.S. users.
Prediction markets allow participants to trade contracts based on the outcomes of real-world events, including sports results, elections, and economic data releases. The sector has seen rapid growth in the past year, driven by platforms like Kalshi, which is also CFTC-regulated, and Polymarket, which operates on blockchain rails. Until now, Fanatics relied on third-party infrastructure to offer prediction market products. By bringing Water Street Labs and CX Clearinghouse in-house, Fanatics eliminates that dependency and gains the ability to determine which contracts to list and how quickly new products reach users.
Strategic Expansion
Fanatics Markets, the company's prediction markets platform, launched in December 2024 and is currently available in 23 states and four U.S. territories across iOS, Android, and web platforms. The platform features FanCash loyalty rewards, a Combos tool for multi-event trading, and FanViz risk management features. According to company statements, the acquisition will also see Fanatics and BGC collaborate on new data products that combine prediction market data with traditional financial analytics, leveraging BGC's expertise in regulated exchange operations and analytics.
BGC Group, for its part, will focus on expanding its data business and connecting its institutional market analytics to Fanatics' consumer-facing audience. The companies say this partnership aims to create tools that bridge the gap between prediction markets and traditional financial data, potentially offering new insights for both retail and institutional users.
Competitive Landscape
The U.S. prediction markets space has become increasingly competitive. Kalshi, which operates under CFTC oversight, has partnered with Coinbase to offer event contracts to users in all 50 states. Robinhood has also begun offering event contracts through Kalshi. Meanwhile, DraftKings announced plans in late 2025 to build its own prediction markets platform, signaling that sports betting companies see opportunity in this adjacent market. Fanatics is positioning its sports-focused user base as a way to reach consumers who may not have engaged with prediction markets through traditional financial channels.
For U.S. users, the regulatory status of prediction markets remains a key consideration. CFTC registration allows platforms like Water Street Labs and Kalshi to operate legally in the U.S., but the scope of permissible contracts and state-level restrictions can still limit access. Fanatics' move to acquire its own regulated exchange and clearinghouse could give it more flexibility in product design and rollout, but it will still need to navigate the evolving regulatory landscape for event-based derivatives.
Market Data and User Impact
According to CFTC records, Kalshi and Water Street Labs are among the few entities authorized to operate federally regulated event contract markets in the U.S. As of June 2026, Kalshi reported daily trading volumes exceeding $10 million on major event contracts, while Polymarket, which is not CFTC-registered, has seen significant growth in blockchain-based prediction trading. Fanatics has not disclosed user numbers or trading volumes for its prediction markets platform, but the company claims its sports audience gives it a unique entry point into the sector.
For users, the acquisition could mean faster access to new event contracts, more integrated risk management tools, and potentially lower fees as Fanatics controls more of the trading and clearing process. However, the practical availability of specific contracts will depend on ongoing regulatory approvals and state-level restrictions. Users should remain aware that prediction markets, while regulated at the federal level, may still face limitations based on contract type and jurisdiction.
Prediction markets operate at the intersection of financial regulation, consumer protection, and speculative trading. In the U.S., the CFTC oversees event contract markets to ensure compliance with federal derivatives law, but state-level rules and federal policy debates continue to shape what types of contracts can be offered. For users, this means that access to certain prediction markets may change as regulatory interpretations evolve. Companies entering the space must balance innovation with compliance, and users should understand the risks, fees, and legal status of any contract before participating.
