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Fanatics has agreed to acquire Water Street Labs LLC and CX Clearinghouse LP from BGC in a move to establish its own federally regulated prediction market exchange, bypassing the intermediaries it currently uses to operate Fanatics Markets.
Acquiring the infrastructure
The deal targets two key regulatory entities: Water Street Labs operates as a designated contract market, while CX Clearinghouse is a derivatives clearing organisation. Both are registered with the US Commodity Futures Trading Commission. The combined assets provide the end-to-end infrastructure required to list contracts and process settlements without relying on third-party intermediaries.
Fanatics will use the purchases to offer its own federally regulated prediction market exchange and expand its prediction market offerings on Fanatics Markets. The transaction is expected to close at a later date, though the company has not provided a specific timeline.
Fanatics Markets launched in December 2025 using Crypto.com infrastructure to allow US users to trade contracts on sports outcomes. The platform has previously operated as an intermediary, relying on internal subsidiaries Paragon Global Markets and Morton St Trading Investments. With this acquisition, Fanatics aims to move directly onto the exchange layer of the financial system, enabling better productivity through more efficient operations.
BGC’s role and market expansion
Beyond the sale, the brokerage group will maintain a partnership with Fanatics. Through this arrangement, BGC will provide market data and analytics capabilities. This collaboration will enable the development of new client data products that combine prediction market sentiment with traditional financial market data.
BGC co-CEO John Abularrage noted that the sale of the DCM and DCO, alongside the provision of data, aims to broaden institutional adoption of prediction markets and create products that offer new insights for market participants.
BGC operates the Fenics marketplace and FMX futures exchange, offering more than 200 products ranging from fixed income securities to credit derivatives. The firm serves banks, trading firms, hedge funds, governments, and real estate developers. The move to sell its clearing units comes as the firm focuses on its core market data and analytics offerings.
For the average sports bettor, the shift from a third-party clearing model to a self-regulated exchange model could eventually mean lower fees and faster settlement times.
The infrastructure build-out suggests Fanatics is positioning itself not just as a retailer of sports merchandise, but as a major player in the financial derivatives space.
The acquisition is being financed through the company’s existing funding rounds. Fanatics last raised approximately $700 million at a valuation of $31 billion in December 2022, with backing from Clearlake Capital Group, LionTree, Silver Lake, and SoftBank.
