Fanatics has moved beyond just offering sports merchandise and betting by acquiring Water Street Labs, a federally regulated derivatives exchange, along with CX Clearinghouse from BGC Group. This deal hands Fanatics direct control over the listing and clearing of event-based prediction contracts, a key step to compete with platforms like Kalshi and Polymarket.

From Licensing to Full Operation

Previously, Fanatics relied on partnerships and third-party platforms to run its prediction markets. It launched Fanatics Markets in December 2025 and acquired Paragon Global Markets earlier that year to start carving out a space in event contracts. The collaboration with Crypto.com Derivatives North America in late 2025 added a crypto-focused edge. But by owning a Designated Contract Market and a Derivatives Clearing Organization, Fanatics no longer needs to lease regulatory licenses it can now build and operate the entire ecosystem in-house.

Fanatics is also planning to work with BGC Group on new market data products, signaling a longer-term collaboration beyond the acquisition. The move positions the company to expand contract categories into cryptocurrencies, stocks, and climate events under a unified federal regulatory framework.

Prediction markets are becoming a hotspot where crypto and traditional finance intersect. Polymarket’s surge during the 2024 US election showed huge demand for crypto-native prediction platforms, while regulated players like Kalshi navigate compliance challenges. Fanatics’ acquisition means it can offer similar products nationwide without juggling state-by-state rules, tapping into its massive base of over 100 million registered users.

The deal shows a broader trend, with other companies like Underdog and DraftKings also seeking regulated infrastructure for prediction markets. Fanatics’ partnership with Crypto.com Derivatives North America adds a significant crypto-native dimension to its offerings, leveraging CDNA’s existing regulated derivatives operations.

This material is for informational purposes and not financial advice.