Fanatics just made its boldest move yet in the prediction market space. The company announced an agreement to acquire Water Street Labs, LLC and CX Clearinghouse, L.P. from BGC Group, giving it direct ownership of CFTC-registered exchange and clearinghouse infrastructure.
From licensed partner to full owner
Fanatics Markets launched in December 2025, offering event contracts across sports, finance, and politics. It currently operates in 23 US states and four territories. Until now, the platform relied on a partnership with Crypto.com | Derivatives North America (CDNA) for its underlying exchange infrastructure.
By acquiring both Water Street Labs (the exchange entity) and CX Clearinghouse (the clearing entity), Fanatics gains direct control over two critical functions: listing contracts and clearing trades. Owning both means Fanatics can set its own rules for what contracts get listed, how they’re priced, and how counterparty risk is managed.
Why BGC Group’s infrastructure matters
BGC Group is a major player in institutional financial services, known for brokerage and trading technology used by banks and hedge funds. The planned joint development of market data and analytics products with BGC is designed to merge prediction market sentiment with traditional financial indicators.
The partnership structure means BGC retains skin in the game through collaborative product development, while Fanatics gets the regulatory licenses it needs to operate independently.
The competitive landscape is heating up
Fanatics isn’t entering an empty market. Kalshi, the first CFTC-regulated prediction market exchange in the US, has been operating since 2021 and fought a high-profile legal battle with the CFTC over the right to list election contracts. Polymarket, built on crypto rails, exploded in popularity during the 2024 US presidential election cycle but operates offshore and outside US regulatory jurisdiction for most contract types.
The deal makes no mention of crypto tokens or decentralized protocols. It’s a bet that regulated, centralized infrastructure is the path to mainstream and institutional adoption of prediction markets, even as crypto-native platforms like Polymarket continue to innovate on the decentralized side.
That said, the Crypto.com connection through CDNA shows Fanatics isn’t allergic to the crypto ecosystem. It simply appears to view crypto companies as potential partners rather than foundational technology for its exchange operations.
What this means for investors and the market
The planned analytics products that combine prediction market sentiment with traditional financial data could create entirely new trading signals for institutional desks.
The risk, of course, is execution. Running an exchange is fundamentally different from selling jerseys and trading cards. Regulatory compliance, risk management, and market surveillance require specialized expertise that Fanatics will need to either acquire with the deal or hire quickly.