Fanatics is set to purchase a federally regulated exchange and clearinghouse from BGC Group, which will enable the sports platform to directly list and clear prediction markets via Fanatics Markets.
The deal involves Water Street Labs, LLC, a Designated Contract Market registered with the Commodity Futures Trading Commission (CFTC), and CX Clearinghouse L.P., a CFTC-registered Derivatives Clearing Organization. This acquisition will empower Fanatics to manage its own federally regulated prediction market exchange and broaden the range of contracts available on its platform.
By owning the exchange and clearinghouse, Fanatics will gain control over the markets it provides to its users. The company aims to merge its consumer-facing platform expertise with BGC’s established institutional market infrastructure, liquidity, trading technology, and clearing services.
“BGC are leaders in the financial services sector, and like Fanatics, they have built their operations on advanced technology, innovation, and top-tier talent,” stated Matt King, CEO of Fanatics Betting and Gaming. “Their proficiency in creating and managing regulated exchanges and clearinghouses makes them an ideal ally for us.”
“By leveraging this institutional foundation alongside Fanatics’ deep understanding of fans and consumer engagement, we have a remarkable opportunity to enhance the growth of prediction markets and provide an exceptional experience for both retail and institutional users,” he added.
In addition, Fanatics and BGC plan to collaborate on market data products tailored for the prediction market sector. BGC will share its existing data and analytics capabilities to create products that merge prediction market sentiment with conventional financial market data.
“This is a significant strategic move for BGC to enhance our data and analytics offerings while integrating our institutional expertise with Fanatics' extensive consumer reach,” remarked John Abularrage, Co-CEO of BGC.
“No one understands the sports fan better than Fanatics, and we believe that acquiring BGC’s DCM and DCO will greatly enhance Fanatics Markets. Together, we aim to increase institutional adoption of prediction markets and develop innovative data products that provide new insights for market participants.”
BGC operates as a global brokerage and financial technology firm serving financial markets, while Fanatics is a leading global sports platform.
Fanatics Markets is accessible via iOS, Android, and the web across 23 states and four U.S. territories. Since its launch in December of last year, the platform has introduced features like FanCash and Fanatics ONE, enabling users to earn rewards from their trades.