Fanatics has recently made a significant move in the prediction market sector by announcing the acquisition of a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO) from BGC Group (NASDAQ: BGC). This strategic shift allows Fanatics to enhance its exchange and technology capabilities internally.
The privately owned Fanatics is set to acquire Water Street Labs and CX Clearinghouse from BGC Group, a move that positions the company for future growth by expanding its event contract offerings while managing its own federally sanctioned prediction market.
“Owning its own exchange and clearinghouse will enable Fanatics Markets to leverage its established expertise in developing consumer platforms with the ability to directly list and clear prediction markets for its highly engaged customer audience,” Fanatics stated.
Details regarding the financial aspects of the acquisition have not been disclosed. Fanatics started its journey in the prediction market industry in December last year and has since formed a partnership with Crypto.com. Currently, Fanatics Markets operates in 23 states and four U.S. territories.
Fanatics Takes Significant Steps Forward
Fanatics is not only acquiring a DCM and a DCO but is also forming a partnership with BGC to utilize its market-making expertise. This collaboration is seen as a blend of Fanatics’ deep understanding of their fan base with BGC’s analytical and data-driven strengths.
“Leveraging BGC’s strengths in institutional market frameworks, liquidity, and trading will allow Fanatics Markets to connect retail-oriented prediction markets with institutional investors for the very first time,” the press release stated.
This strategic positioning may enhance Fanatics’ appeal to institutional market participants, including professional trading firms, which are essential for the sustainable growth of prediction markets.
According to a report released last week, Macquarie analyst Chad Beynon predicts that turnover on yes/no exchanges could reach $1.5 trillion by 2030. Achieving this target will require greater involvement from the professional investment sector.
Silence on Crypto.com Partnership
While discussing the acquisitions and the new alliance with BGC, Fanatics did not provide updates regarding its ongoing relationship with Crypto.com. While it is common for consumer-focused operators to collaborate with multiple prediction market partners, Fanatics did not clarify whether Crypto.com remains part of its prediction market strategy.
As for Crypto.com, it continues to be a key player in the event contracts space, maintaining partnerships with FanDuel and reportedly in talks with Robinhood Markets (NASDAQ: HOOD) to establish a prediction market collaboration.