Fanatics has acquired Water Street Labs, a federally regulated futures exchange, and CX Clearinghouse, a derivatives clearing organization, both from BGC Partners, according to the company's announcement. The sports betting operator plans to use both entities to launch and settle its own prediction markets platform.
Both facilities operate under Commodity Futures Trading Commission oversight. Water Street Labs holds the license to operate as a Designated Contract Market, the regulatory status required to list and trade derivatives contracts. CX Clearinghouse is registered as a Derivatives Clearing Organization, the CFTC classification that allows it to settle trades and manage counterparty risk. The acquisition places core market infrastructure squarely under Fanatics' control rather than relying on third-party operators.
Fanatics, a wagering and digital sports merchandise company valued at roughly 27 billion dollars in its most recent funding round, has been expanding into prediction markets alongside its established sports betting business. The company operates Fanatics Sportsbook across multiple U.S. states and Canada. BGC Partners, a financial technology and brokerage services firm, has run both the exchange and clearinghouse since their inception but divested them as part of a broader portfolio refocus.
Prediction markets in the United States operate within narrow regulatory parameters. Only CFTC-licensed Designated Contract Markets may offer binary prediction contracts on non-sports events, and only a handful hold that approval. Kalshi and Polymarket's operator have both pursued these licenses. The acquisition gives Fanatics the infrastructure to launch offerings without waiting for CFTC approval of individual contracts, though regulatory authority over specific offerings will remain with the agency.
The deal represents a significant infrastructure play in a market where most prediction market operators have relied on offshore platforms or foreign licensing structures to avoid U.S. regulatory friction. Fanatics' ownership of both the listing venue and the clearing entity removes intermediaries between the company and its customers and settlements.
Fanatics now holds one of only a handful of CFTC-regulated derivatives exchanges operating in the United States, a status that most startups and established betting firms have foregone. The company's move into owned infrastructure parallels decisions by large commodity brokerages and exchanges to consolidate listing and clearing functions under single operators. If Fanatics launches its prediction markets platform within the next 12 months, the timeline will measure whether the company can operationalize these licenses faster than the multi-year approval cycles other platforms have faced.
