Home / Play / Fanatics announces Water Street Labs acquisition to provide proprietary prediction market exchange

Fanatics announces Water Street Labs acquisition to provide proprietary prediction market exchange

Legal Writer

Publish Date: Jul 28, 2026

Fact checked by: Matt Moreno

Key Points

Fanatics Markets currently licenses exchange access from Crypto.com
Acquisition will give Fanatics an exchange that it fully controls
Announcement closely follows DraftKings migration to proprietary exchange and amid FanDuel strife with the CME Group

Fanatics has announced that it intends to acquire CX Clearinghouse and Water Street Labs from the BGC Group, which is a brokerage and tech company. With CX Clearinghouse and Water Street Labs in-house, Fanatics will have its own exchange stack that federal regulators in the United States have already approved.

The move signals that Fanatics Markets will shift to the proprietary exchange in the coming months, a measure that will help the prediction market product remain competitive. Grabbing and maintaining a share of the market in the U.S. may soon require full control of the stack.

Fanatics Markets Predictions

Fanatics announces purchase to augment Fanatics Markets

A Monday press release from Fanatics laid out the company’s agreement with the BGC Group, which had secured approval for Water Street Labs from the U.S. Commodity Futures Trading Commission (CFTC) fewer than two weeks prior to the announcement. While the BGC Group will continue to provide “its established market data and analytics capabilities,” Fanatics will fully control the stack.

That means Fanatics will be able to directly clear and list event contracts on Fanatics Markets in accordance with the market rules that the CFTC has approved, rather than being dependent on Crypto.com doing so under its current arrangement. That is the exchange that Fanatics licenses to provide event contracts on Fanatics Markets at this time.

Fanatics isn’t alone in going the route of buying a turn-key solution for CFTC-regulated exchanges. Many other companies in the prediction market space have done so already, and while it has its costs and risks, there are definite upsides to the model.

Fanatics follows acquisition trend as future of prediction markets in flux

Fanatics has taken a conservative approach with Fanatics Markets to this point, only offering the platform in four U.S. territories and 23 states. The Water Street Labs acquisition represents an escalation of the investment in Fanatics Markets as a serious sign that Fanatics intends to compete for market share.

Other companies to acquire CFTC-approved exchanges include DraftKings, Robinhood, Polymarket, and Underdog. Doing so saves the expense and time of building a proprietary stack and securing approval for it while also affording the buyer greater autonomy in event contract listings and settlement.

That also means that Fanatics bears the responsibility of potential rule violations and carries the cost of maintaining the exchange. It means that Fanatics and the others can avoid tension like that which FanDuel is currently experiencing, though.

CME Group, FanDuel potentially at odds over sports event contracts

FanDuel has gone a different direction to this point, licensing the CME Group’s exchange to power its FanDuel Predicts product. FanDuel Predicts offers CME Group exchange sports event contracts in most U.S. states where FanDuel Sportsbook is not also available.

However, CME Group CEO Terry Duffy criticized those offerings on the company’s July 2026 earnings call.

“A lot of these prediction markets on sports are gambling, and I think that that is going to find its way to the Supreme Court, and that is not something that we want to be a part of participating in right now,” Duffy stated. “As I said earlier, I think a lot of these contracts are susceptible to manipulation when they list some of these small parlays and things of that nature, and those are not markets. Those are gambling.”

Because FanDuel relies on the CME Group to provide event contracts for FanDuel Predicts, FanDuel would have little recourse if the CME Group stopped offering sports event contracts altogether as Duffy suggested. The only options for FanDuel would be to find another provider, build its own exchange, or join the litany of operators that have bought rather than rented.

As Duffy alluded to, further guidance on the future of prediction market exchanges could be forthcoming from Congress and the Supreme Court. If that does occur, Fanatics will have control of the necessary adjustments on Fanatics Markets.

There is plenty more news and updates waiting for you on the Ballislife Play page.

Play

Baltimore sues Kalshi and Polymarket over sports event contract offerings

The Baltimore City Council and Baltimore Mayor Brandon M. Scott have gone to court to try to stop Kalshi and Polymarket offering sports event contracts to people in the city. The lawsuit alleges that the two prediction market exchanges have deceived Baltimore residents by offering unlicensed sports wagering in violation ...

by Derek Helling

Aug 17, 2026