Fanatics Strikes Deal to Acquire Infrastructure for Prediction Markets

Global sports platform Fanatics plans to offer its own federally regulated prediction market exchange after acquiring Water Street Labs and CX Clearinghouse from BGC Group.

Fanatics and BGC Group agreed to the acquisition, Fanatics said in a Monday (July 27) press release.

Water Street Labs is a Commodity Futures Trading Commission-registered designated contract market (DCM), while CX Clearinghouse is a CFTC-registered derivatives clearing organization (DCO), according to the release.

By acquiring the companies, Fanatics will own its own exchange and clearinghouse and will be able to directly list and clear prediction markets to its customer base, the release said.

In addition, Fanatics and BGC will partner to develop “new client data products that combine prediction market sentiment with traditional financial market data,” per the release.

Matt King, CEO of Fanatics Betting and Gaming, said in the release that BGC has expertise in the financial services industry and in building and operating regulated exchanges, clearinghouses, trading technology and institutional market infrastructure.

“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,” King said.

BGC Co-CEO John Abularrage said in the release that the partnership will enable BGC to expand data and analytics capabilities and combine its institutional expertise with Fanatics’ consumer reach.

“No one knows the sports fan better than Fanatics, and we believe the acquisition of BGC’s DCM and DCO will supercharge Fanatics Markets,” Abularrage said. “Together, we intend to broaden institutional adoption of prediction markets and create innovative data products that unlock new insights for market participants.”

Fanatics began rolling out Fanatics Markets, a prediction market platform, in December with plans to offer it in 24 states.

The launch marked Fanatics’ formal entry into the prediction market segment as well as the company’s latest diversification effort beyond merchandise and sports betting.

Fanatics Markets allows users to trade contracts on the outcomes of events ranging from sports and culture to finance and politics.

Fanatics Markets is available in 23 states and four U.S. territories, according to the Monday press release. While Fanatics planned in December to launch the platform in Wisconsin, the platform is not currently available there.