Fanatics just bought itself a derivatives exchange. The sports merchandise and betting giant agreed to acquire Water Street Labs, a Designated Contract Market, and CX Clearinghouse, a Derivatives Clearing Organization, from BGC Group. The deal gives Fanatics the regulated infrastructure it needs to run its own prediction market exchange rather than relying on third-party platforms.

Financial terms weren’t disclosed. But the strategic value here is hard to overstate: Fanatics is going from intermediary to operator, gaining direct control over the listing and clearing of event-based contracts.

From jerseys to derivatives

Fanatics launched Fanatics Markets in December 2025, and it acquired Paragon Global Markets in July 2025 to start building its prediction market footprint. It also partnered with Crypto.com Derivatives North America (CDNA) in late 2025 to accelerate its push into event contracts covering sports, finance, and political events.

This latest acquisition means Fanatics doesn’t need to rent someone else’s regulatory license anymore. It can list contracts, clear trades, and build the entire experience in-house.

Fanatics also plans to collaborate with BGC Group on developing joint market data products.

Why crypto investors should care

Prediction markets have become one of the most interesting intersections of crypto and traditional finance. Polymarket, the crypto-native prediction platform built on Polygon, exploded in popularity during the 2024 US presidential election cycle. Kalshi, its regulated competitor, has been fighting legal battles to offer similar contracts under CFTC oversight.

The company has said it plans to expand into additional contract categories in phases, including cryptocurrencies, stocks, and climate-related events. If Fanatics lists cryptocurrency event contracts on a CFTC-regulated exchange, it creates a new venue for crypto-adjacent trading that exists entirely within the traditional regulatory framework.

Fanatics’ partnership with Crypto.com Derivatives North America adds another crypto-native dimension to the story. CDNA already operates within the regulated derivatives space.

The prediction market land grab

Fanatics isn’t the only company making moves here. Underdog and DraftKings have both pursued similar regulated infrastructure goals in recent months.

A CFTC-regulated derivatives exchange operates under a single federal framework, which means Fanatics can offer prediction contracts nationwide without navigating 50 different regulatory regimes.

Fanatics claims over 100 million registered users across its various platforms. The company’s phased expansion plan starts with sports and moves into crypto, stocks, and climate.