Fanatics Acquires Regulated Exchange to Expand Prediction Market Business

Fanatics Markets has acquired Water Street Labs and CX Clearinghouse from institutional brokerage BGC Group, giving the company ownership of a federally regulated exchange and clearinghouse as it expands deeper into the prediction market industry.

The acquisition provides Fanatics with the infrastructure needed to list, clear, and settle event contracts in-house, marking another major step in the company's efforts to diversify beyond sports merchandise, collectibles, and sportsbooks.

While financial event contracts remain the immediate focus, the deal could strengthen Fanatics' ability to expand into new categories of prediction markets as the sector continues to grow across the United States.

Acquisition Gives Fanatics Control of Trading Infrastructure

Water Street Labs operates a Commodity Futures Trading Commission (CFTC) regulated exchange, while CX Clearinghouse provides the clearing services needed to process event contracts.

By bringing both businesses under its umbrella, Fanatics Markets will no longer rely on third-party infrastructure to support its prediction market offerings.

What Fanatics Acquired

Company

Role

Water Street Labs

CFTC-regulated event contract exchange

CX Clearinghouse

Clearing and settlement infrastructure

Owning both the exchange and clearinghouse allows Fanatics to manage the full lifecycle of prediction market contracts, from listing new markets to settling trades after an event concludes.

The move follows increasing interest in regulated event contracts, particularly surrounding politics, economics, sports, and other real-world events. Companies such as Kalshi have helped bring prediction markets into the mainstream, while several major operators continue to explore the growing sector.

What It Could Mean for Sports and Esports

Although Fanatics has not announced any plans to introduce esports-related prediction markets, the acquisition gives the company significantly greater flexibility should it decide to expand its event contract offerings in the future.

Unlike traditional sportsbooks, prediction markets allow participants to trade contracts tied to specific outcomes, with prices fluctuating based on market sentiment rather than bookmaker-set odds. That model has opened the door to increasingly specialized event contracts covering a wide range of subjects.

If Fanatics eventually enters esports prediction markets, the industry's data-rich competitive environment could support contracts on individual in-game events rather than simply match winners. Markets tied to objectives such as first blood, first Baron, overtime, or map victories could become possible, though the company has not indicated that such products are currently under development.

For now, those possibilities remain speculative, and Fanatics has not publicly outlined any roadmap involving esports.

Prediction Markets Continue to Attract Major Investment

The acquisition is another sign that established gaming and sports companies see long-term potential in regulated prediction markets.

Over the past year, event-based trading has expanded rapidly as operators seek to capitalize on growing consumer interest and evolving regulatory frameworks. Companies including Kalshi have continued to broaden their market offerings, while Fanatics is investing in the underlying infrastructure needed to compete in the space.

By owning its own exchange and clearinghouse, Fanatics gains greater operational control and the ability to develop new event contracts without depending on external providers. Whether those future markets remain focused on traditional sports and finance or eventually extend into esports and other entertainment categories remains to be seen.

Stay tuned to UMG Gaming for more updates on prediction markets, trading platforms, and the latest developments shaping the future of event-based trading.