Global sports platform Fanatics has agreed to acquire Water Street Labs, a CFTC-registered Designated Contract Market (DCM), and CX Clearinghouse, a registered Derivatives Clearing Organization (DCO), from BGC Group. The acquisition gives Fanatics direct ownership of the exchange and clearing infrastructure that will enable it to expand its prediction markets business. Alongside the transaction, the two firms will partner on market data, with BGC contributing analytics capabilities to build products that combine prediction market sentiment with traditional financial market information.
Since launching Fanatics Markets in December 2025, the platform’s contracts have been listed and cleared on infrastructure owned by third parties through a partnership with Crypto.com Derivatives North America. Owning a DCM and a DCO allows Fanatics to list and settle event contracts under its own registrations. Matt King, CEO of Fanatics Betting and Gaming, describes the combination as “a unique opportunity to accelerate the growth of prediction markets and deliver a best-in-class experience for both retail and institutional participants.”BGC, which is retaining its FMX Futures Exchange, is positioning itself as the institutional foundation beneath a consumer-facing platform. “This represents an important strategic step for BGC to expand our data and analytics capabilities while combining our institutional expertise with Fanatics’ consumer reach,” says John Abularrage, BGC Co-CEO.
The institutional aspect
According to the announcement, the acquisition will “connect retail-focused prediction markets with the institutional marketplace for the first time,” with BGC contributing established market data, liquidity, and analytics. However, the exact mechanics remain unspecified. Neither firm has detailed whether institutional participants will quote into and trade Fanatics-listed contracts through the acquired DCM, provide liquidity to retail order books, or interact primarily through the data partnership. Similarly, neither firm has clarified which specific categories of institutional clients they are targeting.
The institutional case for prediction markets remains unsettled. While retail trading volume is substantial and expanding, it is market depth, contract standardisation, and robust market structure that determine whether professional capital can trade on these venues at scale. A dataset blending market sentiment with conventional financial data is clearly tailored for trading desks and quantitative teams rather than sports fans. Nevertheless, the announcement leaves it unclear whether institutional trading activity will follow the data partnership into professional hands.The regulatory line
Regulatory challenges also lie ahead. Legislation introduced in Congress in recent months seeks to amend the Commodity Exchange Act to prohibit CFTC-registered entities from listing sports event contracts and casino-style games. Bills are active in both the House and the Senate; although neither has advanced to a floor vote, the administration and the CFTC have instead signalled a preference for case-by-case contract reviews.
These proposed bills carve out bona fide hedging instruments, ensuring weather and economic contracts remain under CFTC oversight while drawing a strict boundary at sports and casino-style events. While the DCM and DCO retain value beyond sports, the underlying federal permission for the core product is actively being challenged in both legislative chambers and litigated in pre-emption cases across several circuit courts.
Financial terms and a closing date for the deal have not been disclosed.
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