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Decrypt reported that sports merchandise giant Fanatics is buying a CFTC-registered exchange and clearinghouse from BGC Group, giving the sports merchandise giant full control of the infrastructure behind its prediction market push. The deal follows the same basic path DraftKings and FanDuel have taken as sportsbooks look to bring more of the business in-house.
What’s the Scoop?
- The Deal: Fanatics is acquiring Water Street Labs, a federally registered exchange, and CX Clearinghouse, which handles settlement, from Nasdaq-listed BGC Group. Together, the two businesses will let Fanatics list contracts and settle trades directly through Fanatics Markets, the prediction market platform it launched in December, rather than paying an outside provider to handle those functions.
- Why Sportsbooks Want In: Unlike sports betting, which is regulated state by state, prediction markets fall under the federal oversight of the CFTC. That gives operators a path into California, Texas, and other large states where mobile sportsbooks remain illegal. DraftKings entered by acquiring exchange operator Railbird, while FanDuel initially partnered with CME Group. Both have since moved toward owning more of the underlying infrastructure themselves, making vertical integration the emerging playbook.
