Fanatics to acquire exchange and clearinghouse from BGC Group to expand Fanatics Markets

Fanatics plans to acquire a federally regulated exchange and clearinghouse from BGC Group, giving the sports platform the infrastructure to list and clear prediction markets directly through Fanatics Markets.

The agreement covers Water Street Labs, LLC, a Commodity Futures Trading Commission-registered Designated Contract Market, and CX Clearinghouse L.P., a CFTC-registered Derivatives Clearing Organization. Fanatics and BGC said that the transaction would allow Fanatics to operate its own federally regulated prediction market exchange and expand the contracts available through its platform.

Owning the exchange and clearinghouse would give Fanatics control over the markets it offers to its customer base. The company plans to combine its experience operating consumer-facing platforms with BGC’s institutional market infrastructure, liquidity, trading technology, and clearing capabilities.

“BGC are experts in the financial services industry and, like Fanatics, have built their business on a foundation of cutting-edge technology, innovation, and exceptional talent,” said Matt King, CEO of Fanatics Betting and Gaming. “Their expertise in building and operating regulated exchanges, clearinghouses, trading technology, and institutional market infrastructure makes them an ideal partner.”

“By combining that institutional foundation with Fanatics’ unmatched understanding of fans and consumer engagement, we have a unique opportunity to accelerate the growth of prediction markets and deliver a best-in-class experience for both retail and institutional participants.”

Fanatics and BGC will also work together on market data products for the prediction market sector. BGC will contribute its existing data and analytics capabilities to develop products that combine prediction market sentiment with traditional financial market data.

“This represents an important strategic step for BGC to expand our data and analytics capabilities while combining our institutional expertise with Fanatics’ consumer reach,” said John Abularrage, BGC Co-CEO.

“No one knows the sports fan better than Fanatics, and we believe the acquisition of BGC’s DCM and DCO will supercharge Fanatics Markets. Together, we intend to broaden institutional adoption of prediction markets and create innovative data products that unlock new insights for market participants.”

BGC is a global brokerage and financial technology company serving financial markets. Fanatics operates as a global sports platform.

Fanatics Markets is available through iOS, Android, and the web in 23 states and four U.S. territories. Since its debut in December last year, the platform has introduced FanCash and Fanatics ONE, allowing customers to earn rewards from trades.