Fanatics has agreed to acquire an exchange and clearing house from fintech services firm BGC Group to enable the operator to run its own federally regulated prediction market exchange and expand its existing Fanatics Markets offering.
The privately held operator will acquire the Commodity Futures Trading Commission (CFTC)-registered designated contract market (DCM) Water Street Labs, alongside CX Clearinghouse, a CFTC-regulated derivatives clearing organisation (DCO).
In addition to the acquisitions, BGC has agreed to become a data and analytics partner to Fanatics to create “new client data products that combine prediction market sentiment with traditional financial market data”.
Launched last December, after Fanatics’ acquisition of CFTC-approved broker Paragon Global Markets, Fanatics Markets is now available in 23 US states, including California, Texas and Florida, and four US territories. Since being unveiled, it has used Crypto.com as its exchange supplier.
The move reflects a growing trend of traditional operators moving away from third party platforms to power their prediction market offerings.
Last week, Underdog revealed an in-house prediction market exchange after nearly one year of relying on Crypto.com. The launch was expedited by the Brooklyn-based DFS and prediction market’s purchase of Aristotle Exchange in March.
In June, DraftKings launched DKeX, its own prediction markets exchange built into the main DraftKings app. The move provides “more control over product content, economics, and user experience in prediction markets”, the firm said.
Fanatics said the deal with BGC Group means the company is building a “prediction markets ecosystem” to serve both retail and institutional traders.
Matt King, CEO of Fanatics Betting and Gaming, added: “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.
“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.”
John Abularrage, co-CEO of BGC, said of the deal: “This 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.”
Market leader Kalshi also expressed an intention to increase adoption among institutional investors following its $1bn Series F funding round in May.
That raise took the valuation of the company to $22bn, though the founders are reportedly looking to raise additional capital at a $40bn valuation.
In April, Fanatics Markets unveiled a new product, ‘Combos’, which mimics same game parlays.
The post Fanatics “builds prediction markets ecosystem” with exchange and clearing house acquisition first appeared on EGR Intel.
Swoop for Water Street Labs and CX Clearinghouse allows the operator to widen its existing Fanatics Markets offering currently powered by Crypto.com
The post Fanatics “builds prediction markets ecosystem” with exchange and clearing house acquisition first appeared on EGR Intel.