Fanatics has agreed to acquire Water Street Labs and CX Clearinghouse from BGC Group, positioning its Fanatics Markets business to own the regulated infrastructure used to list and settle prediction contracts. The transaction would give Fanatics control of both a Commodity Futures Trading Commission-designated exchange and a registered derivatives clearing organization, subject to the acquisition being completed. Financial terms were not disclosed.
Fanatics Markets currently operates as an intermediary offering event contracts through infrastructure supplied by Crypto.com Derivatives North America. Owning Water Street Labs and CX Clearinghouse would allow Fanatics to originate and clear markets through affiliated entities instead of relying exclusively on a third-party exchange, although the acquisition announcement does not state that its existing external relationships will immediately end.
Exchange Ownership Brings Listing and Clearing Under One Group
A designated contract market establishes the rules and marketplace through which regulated derivatives are listed and traded. A derivatives clearing organization handles the post-trade process, including collateral, settlement and the management of obligations between participants. Combining the two functions would give Fanatics greater authority over which contracts reach its platform and how resulting positions are cleared.
Water Street Labs received its CFTC designation on July 16, 2026, only 11 days before the acquisition was announced. CX Clearinghouse has been registered since 2010 and is currently permitted to clear fully collateralized futures, options on futures and swaps. The regulatory registrations are active, but they remain subject to CFTC rules and supervisory requirements regardless of who owns the entities.
Water Street Labs has outlined plans to list contracts whose payouts depend on the occurrence or outcome of defined events. Its regulatory materials describe both binary contracts, which pay one side based on whether an event occurs, and variable-payout structures linked to how closely a selected result matches the final outcome. The planned contracts would be fully collateralized, requiring participants to fund their maximum possible loss when entering a position.
That structure limits unsecured counterparty exposure but does not remove market, operational or regulatory risk. Fanatics would still need to maintain compliant exchange rules, surveillance, clearing controls and customer protections while attracting sufficient liquidity for its markets. Infrastructure ownership provides greater product control, not an exemption from federal oversight or a guarantee that newly listed contracts will attract active trading.
The acquisition would also broaden Fanatics Markets beyond its current role as a customer-facing distribution platform. Fanatics said direct ownership would allow it to list and clear prediction markets across a wider range of opportunities for its customer base. The operational shift is vertical integration: the company would control more of the path from product design and execution to collateral management and final settlement.
BGC Will Remain Involved Through Liquidity and Data
BGC is not exiting the prediction market sector entirely. The companies plan to maintain a strategic relationship through which BGC contributes institutional trading expertise, liquidity infrastructure and market data capabilities. Fanatics would acquire the regulated entities, while BGC would retain a commercial role supporting the institutional side of the ecosystem.
The partnership includes plans to develop data products combining prediction market sentiment with information from traditional financial markets. Such products could package contract pricing and participant expectations into datasets for professional traders, analysts or other institutional clients. Those analytics remain a development objective rather than a product that has already entered commercial operation.
Bringing exchange functions in-house could give Fanatics more control over market schedules, contract specifications, fee structures and the data generated by trading activity. It could also reduce the coordination required when a consumer platform depends on an unaffiliated venue to create and clear contracts. The commercial benefit will depend on whether Fanatics can convert its existing customer reach into durable liquidity on its own exchange.
Fanatics Markets launched in December 2025 and is available through mobile applications and the web in 23 states and four U.S. territories. The platform covers event-based markets spanning sports and other areas, while using Fanatics’ loyalty and risk-management features within the customer interface. The acquisition would add regulated market infrastructure beneath an already operating distribution business rather than launch Fanatics Markets from scratch.
The deal has been announced but not completed, and the official materials do not specify a closing date or identify the first contracts Fanatics would list through Water Street Labs. Until the transaction closes and the combined infrastructure begins operating, the practical effects on customers, liquidity and product availability remain prospective. The immediate development is Fanatics’ decision to move deeper into the prediction market value chain while retaining BGC as an institutional and data partner.
