Fanatics could soon be in a position to offer and host its own federally regulated prediction markets to customers throughout the United States. On Monday, Fanatics and BGC Group announced a deal that will see the two entities form a data analytics partnership revolving around infrastructure associated with the trading of event contracts.
Although Fanatics Markets is currently available in 23 US jurisdictions and four territories, that platform incorporates markets from Crypto.com, which means that Fanatics must rely on a third-party exchange to operate. The acquisition of Water Street Labs will give Fanatics an opportunity to offer in-house, federally regulated event contracts that are similar to CFTC-authorized products that are already offered by platforms such as Kalshi, ForecastEx, Underdog, and soon Novig.
Fanatics Markets and BGC Group released a joint statement on Monday that explains how both entities will proceed as a result of the agreement.
“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 Fanatics Betting and Gaming CEO Matt King.
“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.”
BGC Group Co-CEO John Abularrage added that the deal “represents an important strategic step for BGC to expand our data and analytics capabilities while combining our institutional expertise with Fanatics’ consumer reach. 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.”
The agreement between BGC Group and Fanatics Markets has nothing to do with state-regulated sportsbooks that Fanatics operates separately in multiple states. Instead, the acquisition of its own clearinghouse and CFTC-regulated exchange gives Fanatics more independence in how it structures and prices markets that it hosts.
Once the acquisition is complete, Fanatics Markets may expand its own prediction market exchange well beyond the 23 states that it currently serves. However, it may still hold off on nationwide coverage while the ongoing legal battles between states, tribes, and sports event contracts reach a definitive conclusion or settlement.
The partnership announcement by BGC Group and Fanatics comes less than 48 hours after the Wall Street Journal reported that Robinhood and Crypto.com are in talks to potentially partner on prediction markets. Prediction market exchanges in the United States operate under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
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