Fanatics has agreed to buy Water Street Labs and CX Clearinghouse from BGC Group, giving the sports platform its own federally regulated exchange and clearinghouse for prediction markets. Financial terms were not disclosed.
The two companies announced the agreement on 27 July. Water Street Labs is a Commodity Futures Trading Commission (CFTC) registered Designated Contract Market (DCM). CX Clearinghouse is a CFTC registered Derivatives Clearing Organization (DCO). Holding both registrations lets Fanatics list event contracts and clear the resulting trades itself, without routing customers through a third-party venue.
What the two registrations do
A DCM is a federally supervised exchange operating under the Commodity Exchange Act and CFTC rules. It is the entity that lists a contract, sets the rulebook and self-certifies new products with the regulator. A DCO sits behind it, standing between buyer and seller on every trade and holding the margin. Prediction market operators need access to both, which is why control of federally registered infrastructure has become the competitive line in the US event contracts market. Kalshi runs its own DCM and clears through a registered DCO. Polymarket bought a licensed exchange and clearinghouse to enter the US on the same basis.
Until now Fanatics has been on the other side of that arrangement. Fanatics Markets went live on 3 December 2025 through a partnership with Crypto.com, with the app introducing customers to markets and pricing offered by Crypto.com | Derivatives North America, a CFTC-registered exchange and clearinghouse affiliated with Crypto.com. The platform runs in 23 states and four US territories on iOS, Android and the web.
Fanatics moves the infrastructure in house
Owning the exchange changes what Fanatics can list and how fast. Product decisions, rulebook changes and clearing all move inside the company, and the economics of each trade stop being shared with an outside venue.
“Their expertise in building and operating regulated exchanges, clearinghouses, trading technology, and institutional market infrastructure makes them an ideal partner,” said Matt King, CEO of Fanatics Betting and Gaming. “By combining that institutional foundation with Fanatics’ unmatched understanding of fans and consumer engagement, we have a unique opportunity to accelerate the growth of prediction markets and deliver a best-in-class experience for both retail and institutional participants.”
Water Street Labs filed its Form DCM application with the CFTC on 22 January 2026, according to commission filings. Designation came through in July, days before Fanatics announced the purchase. CX Clearinghouse, previously known as Cantor Clearinghouse, has held DCO registration since 2010.
BGC keeps a role through data
The acquisition comes with a commercial partnership. BGC will contribute its market data and analytics capabilities to develop client data products that combine prediction market sentiment with traditional financial market data. Fanatics said the two will connect retail-focused prediction markets with the institutional marketplace.
BGC Group is a Nasdaq-listed brokerage and financial technology company whose clients include banks, broker-dealers, investment banks, trading firms, hedge funds, governments and corporations. Access to those desks is what Fanatics gets from the partnership: retail sports contracts priced on a venue institutional traders can also see and trade.
“This represents an important strategic step for BGC to expand our data and analytics capabilities while combining our institutional expertise with Fanatics’ consumer reach,” said John Abularrage, BGC Co-CEO. “No one knows the sports fan better than Fanatics, and we believe the acquisition of BGC’s DCM and DCO will supercharge Fanatics Markets.”
The announcement did not include a closing date, a purchase price, or detail on the first data products.
State challenges are still open
Federal registration settles the question of whether Fanatics can operate an exchange. It does not settle where sports event contracts can be offered. Kalshi has agreed to withdraw sports and other prohibited event contracts from Nevada, a Washington judge granted a preliminary injunction against the company, and a federal judge has halted Minnesota’s prediction market ban. Legislators in Nevada have introduced a bill to ban sports prediction markets while Pennsylvania lawmakers have introduced a bill to regulate them.
Fanatics now takes on that exposure directly. As an intermediary it faced state scrutiny through a partner’s licence. As a DCM operator it becomes the party the CFTC supervises and the party state regulators name.
The European read
European regulators have moved in the opposite direction to Washington. Spain ordered blocks on Kalshi and Polymarket in a licensing crackdown, and Brazil banned prediction markets outright, with Anatel blocking 27 platforms. Malta has been drafting what would be the first EU framework for the products, and Gibraltar has positioned itself to take applications while larger EU markets hold back.
Fanatics has bought a derivatives licence, not a gambling licence, and the contracts it lists sit under a financial regulator. European operators have no equivalent route today. Reaching the same structure in the EU means either a MiFID pathway or a purpose-built regime of the kind Malta is drafting.
What to watch next is which contracts Fanatics lists first on its own exchange, whether institutional desks take up the BGC data products, and how many more states file against sports event contracts before the 2026 NFL season starts.
Source: Fanatics
