Fanatics has agreed to buy its own federally regulated exchange. The sports merchandise and trading card company announced on Monday, July 27, 2026, that it will acquire Water Street Labs and CX Clearinghouse from BGC Group, the Nasdaq listed brokerage. Terms were not disclosed. The purchase gives Fanatics Markets, the prediction market platform it launched on December 3, 2025, the ability to list and settle its own event contracts rather than route them through a partner that holds the licenses.
Two dates in the paperwork are worth more than the price nobody published. The Commodity Futures Trading Commission, the federal regulator of the derivatives market, designated Water Street Labs a contract market on July 16, 2026. That is 11 days before Fanatics announced it was buying the company. The clearinghouse that came with it is 16 years older, and it was built to do something the law no longer allows.
An exchange 11 days old
The deal is for two licenses that do different jobs. A designated contract market is a federally supervised exchange, the venue where a contract is listed and traded. A derivatives clearing organization is the counterparty that stands between buyer and seller and guarantees the trade settles even if one side fails. Owning both is the difference between renting a market and running one.
Until now Fanatics Markets ran on rails belonging to Crypto.com Derivatives North America, which held the registrations while Fanatics held the customers. Water Street Labs is close to a blank slate by comparison. Its filings describe a proprietary platform, the WSL Direct System, supporting fully collateralized futures and swaps on a two sided central limit order book alongside a parimutuel single sided auction. It has almost no public trading history, because it has barely had time to have one.
"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," said Matt King, who runs the company's Fanatics Betting and Gaming arm.
The clearinghouse was built to trade movies
The other half of the deal has a long memory. CX Clearinghouse was registered on April 20, 2010, under a different name: Cantor Clearinghouse. On the same day, the CFTC approved its sister company, Cantor Futures Exchange, as a contract market. Cantor Fitzgerald had bought the Hollywood Stock Exchange, a play money game where fans traded imaginary shares in films and actors, and wanted to build the real thing underneath it. Studios would be able to hedge a production the way a farmer hedges a harvest, and everyone else would be able to price a film's opening weekend.
Hollywood fought it for months. The Motion Picture Association and the Directors Guild of America argued that a public market in a film's receipts invited speculation against the movies themselves. Regulators cleared box office contracts to trade anyway in June 2010. The industry went around them to Congress instead, and won.
On July 21, 2010, the Dodd-Frank Act was signed into law. Section 721 amended the Commodity Exchange Act's definition of a commodity to carve out "motion picture box office receipts (or any index, measure, value, or data related to such receipts)." Not a single contract ever traded.
That prohibition is still live law, at 7 U.S.C. 13-1, and the list it belongs to is very short. Federal law bars futures on exactly two things: motion picture box office receipts, and onions. The onion ban dates to 1958, after a corner in the onion market left growers holding a crop worth less than the bags it shipped in. Hollywood talked its way onto a list with vegetables, and it worked.
One detail is worth getting right, because the lineage is easy to garble. The exchange from that 2010 pair went on to a different life. It was renamed CX Futures Exchange, then FMX Futures Exchange, and it trades U.S. Treasury futures for BGC today. It is not part of this transaction. The clearinghouse is the piece that stayed behind, and the clearinghouse is what Fanatics is buying.
Why everyone is buying the plumbing
Event contracts are not sports betting, and that distinction is the entire commercial point of the past 18 months. Because they are federally regulated derivatives rather than a state licensed wager, they reach customers in states where mobile sports betting was never legalized, and they answer to Washington rather than to 50 separate regulators. That is also why states have been fighting them, and why a federal judge in Minnesota blocked that state's criminal ban on July 27, the same day this deal was announced.
So the industry has been buying the rails. DraftKings acquired the exchange operator Railbird. FanDuel worked with CME Group before moving toward infrastructure of its own. Polymarket did it first and most expensively, paying $112 million in July 2025 for QCEX, a CFTC licensed exchange and clearinghouse, to build a compliant route back to American traders after years of being closed to them. Fanatics is the fourth large consumer brand to decide that renting someone else's license is a weak place to stand.
Fanatics Markets is live in 23 states and 4 territories, and the company sells to a customer list built from jerseys and trading cards rather than from finance. "No one knows the sports fan better than Fanatics," said John Abularrage, co-CEO of BGC, which will keep working with the buyer on data products that combine prediction market sentiment with traditional market data.
What it still cannot settle
Fanatics Markets already lists contracts on culture, including movies and music. The clearinghouse it is buying can settle a market on which film wins Best Picture, or on how a soundtrack charts, or on whether a studio greenlights another sequel. The one thing it still cannot legally touch, 16 years after it was registered to do precisely that, is a single dollar of what any of those films actually takes at the box office.
