Fanatics is ramping up its prediction market business. The company has agreed to acquire Water Street Labs, a designated contract market registered with the U.S. Commodity Futures Trading Commission (CFTC), and CX Clearinghouse, a registered derivatives clearing house, from BGC Group.
Following the transaction, Fanatics can directly list and settle event contracts on its Fanatics Markets platform, eliminating reliance on third-party channels. The transaction price has not yet been disclosed.
Direct control of trading and clearing channels
Launched last December, Fanatics Markets is the core platform for Fanatics' prediction market strategy. With the acquisition of exchanges and clearinghouses, Fanatics will simultaneously control both contract listing and settlement capabilities, a common direction for recent industry expansion.
For prediction market platforms, having underlying trading and clearing facilities means that the platform can control product launches, settlement processes, and data distribution, resulting in greater operational flexibility.
DraftKings and FanDuel are also following up.
The report mentions that DraftKings and FanDuel also entered the CFTC-regulated event contracts market around this year. One reason is that the federal regulatory framework can help platforms reach users in more regions, including states like California and Texas, which still prohibit mobile sports betting.
Among them, DraftKings accelerated its market entry by acquiring exchange operator Railbird; FanDuel first partnered with CME Group before advancing its own infrastructure development. Industry practice is shifting from leasing external channels to directly owning the trading platform.
Predicting continued expansion of market trading volume
Prediction markets have seen significant growth over the past year. Trading activity on crypto-native platform Polymarket and prediction market platform Kalshi has continued to rise.
- According to data from Dune Analytics, Kalshi's trading volume reached $33 billion in June.
- Including Polymarket, Kalshi, Limitless, and Myriad, total trading volume so far in July is $48 billion.
Wall Street firms are also accelerating their investment. The report mentions that ICE, the parent company of the New York Stock Exchange, has invested $1.6 billion in Polymarket. Bernstein analysts predict that by 2030, the market's trading volume could reach $1 trillion, with revenue of approximately $10.8 billion.
Additional information:Fanatics and BGC will also collaborate on market data products, combining market sentiment forecasting with traditional financial data to provide services to retail and institutional participants.
