Fanatics Ditches Crypto.com Rails, Buys CFTC Exchange in $1T Prediction Market Grab
Fanatics acquires BGC's Water Street Labs and CX Clearinghouse, cutting reliance on Crypto.com as DraftKings, Robinhood and Polymarket race for CFTC-regulated rails.
Fanatics has agreed to acquire Water Street Labs and CX Clearinghouse from BGC Group, giving the sports and gaming company its own CFTC-registered exchange and clearinghouse rather than continuing to route contracts through a third party. The deal, announced Monday, means Fanatics Markets will no longer need to depend entirely on Crypto.com’s CFTC-regulated venue, which currently lists the contracts on Fanatics’ platform.
Terms of the transaction — including purchase price and expected closing date — were not disclosed by either company. Water Street Labs only received its designation as a CFTC-regulated designated contract market (DCM) on July 16, meaning BGC agreed to sell the venue just 11 days after securing the regulatory approval.
Vertical integration becomes the default playbook
Fanatics already runs the customer-facing layer of Fanatics Markets through Paragon Global Markets, its registered introducing broker, and Morton St. Trading Investments, its registered futures commission merchant. Layering Water Street’s DCM license and CX Clearinghouse’s derivatives clearing organization (DCO) status on top gives Fanatics control of the full stack — origination, listing, execution and clearing — without external gatekeepers deciding which markets get listed or how fast.
That structure mirrors moves already made by DraftKings, Robinhood, Polymarket and Underdog, all of which acquired existing CFTC-registered entities rather than building exchange infrastructure from scratch. DraftKings Predictions and FanDuel Predicts entered CFTC-regulated event contracts specifically to reach users in states where mobile sports betting remains banned, turning ownership of the underlying rails into the sector’s standard land-grab strategy.
BGC keeps a data and liquidity foothold
BGC will sell the two regulated entities outright but remain embedded through a separate partnership covering institutional participation, trading infrastructure and market data. The two companies said they intend to connect Fanatics’ retail user base with BGC’s institutional network and to build data products that combine prediction-market sentiment with traditional financial market signals.
“BGC are experts in the financial services industry and, like Fanatics, have built their business on a foundation of cutting-edge technology, innovation, and exceptional talent,” Fanatics Betting and Gaming CEO Matt King said in the announcement. “Their expertise in building and operating regulated exchanges, clearinghouses, trading technology, and institutional market infrastructure makes them an ideal partner.”
BGC Co-CEO John Abularrage added: “No one knows the sports fan better than Fanatics, and we believe the acquisition of BGC’s DCM and DCO will supercharge Fanatics Markets. Together, we intend to broaden institutional adoption of prediction markets and create innovative data products that unlock new insights.”
The $1 trillion backdrop
The acquisition lands against a backdrop of surging volume across both crypto-native and traditional prediction venues. Polymarket and Kalshi have seen sharp growth over the past year, and analysts have projected total prediction-market volume could reach $1 trillion by 2030 — a figure driving consolidation across sports betting, brokerage and on-chain operators alike.
For traders tracking the space, the key structural detail is that Fanatics is buying regulatory rails, not building volume itself: owning the DCM and DCO lets the platform decide unilaterally which contracts to list and how quickly to launch them, removing a dependency on Crypto.com that had previously gated its product roadmap. Neither company disclosed whether Fanatics Markets will continue listing Crypto.com contracts once the transaction closes.