Key facts
- Fanatics is acquiring Water Street Labs and CX Clearinghouse from BGC Group.
- The acquisition provides Fanatics with a federally regulated exchange and clearinghouse.
- Fanatics aims to expand its prediction markets business with this acquisition.
- Fanatics and BGC Group plan to collaborate on developing new market data products.
- Prediction market trading volume across platforms reached $48 billion so far in July.
- Analysts project prediction market volumes will reach $1 trillion by 2030.
American sports company Fanatics is expanding into the prediction markets sector through the acquisition of Water Street Labs and CX Clearinghouse from BGC Group. The deal, announced Monday, gives Fanatics ownership of a federally regulated exchange and clearinghouse, enabling the company to launch and settle its own prediction market contracts directly on its Fanatics Markets platform. Financial terms of the acquisition were not disclosed.
This move allows Fanatics greater control over its product offerings and the speed at which new markets can be introduced, mirroring a strategy employed by rivals DraftKings and FanDuel. These companies have also pushed into CFTC-regulated event contracts to reach sports fans in states where mobile sports betting is banned, making ownership of the underlying exchange infrastructure a key industry trend.
Prediction markets have seen significant growth, with platforms like Polymarket and Kalshi experiencing surges in activity. Kalshi alone recorded $33 billion in trading volume in June, and overall trading volume across various venues reached $48 billion in July. Analysts at Bernstein project that prediction market volumes could reach $1 trillion by 2030, with revenues climbing to approximately $10.8 billion, and anticipate broader institutional trading beyond sports into economic and political contracts.
In addition to launching its own prediction markets, Fanatics and BGC Group plan to collaborate on developing new market data products that integrate prediction market sentiment with traditional financial market data.