In a notable development within the realms of sports commerce and technology, Fanatics is reportedly engaged in preliminary discussions with Crypto.com regarding a potential collaboration focused on prediction markets. This move hints at Fanatics’ interest in entering the regulated event contracts sector.
Fanatics, recognized for its emphasis on sports retail, technology, and collectibles—including trading cards—has garnered significant investment, raising over $700 million from notable backers such as SoftBank, Silver Lake, Fidelity, and Clearlake Capital. Following these investments, the company reached a valuation of $31 billion by the end of December 2022.
Prediction markets have surged in popularity in the United States, particularly as sports betting attracts both investors and bettors alike. This area has seen rapid growth, with established players like Kalshi and Polymarket leading the charge and attracting an increasing amount of institutional interest. The entry of newcomers into this space is evident as they aim to capitalize on the momentum and establish an early presence.
It’s essential to note that the discussions between Fanatics and Crypto.com are still in the nascent stages, with potential changes in plans depending on how negotiations unfold.
The evolving regulatory landscape for event contracts in the U.S. has played a significant role in reigniting interest in prediction markets. In 2022, the Commodity Futures Trading Commission (CFTC) penalized Polymarket due to unregistered contracts, causing the platform to reconsider its U.S. presence. However, there has been a notable shift in the agency’s position in recent months, particularly under the current administration, which has clarified the operation of federally supervised prediction markets.
In a significant move, the CFTC issued a no-action letter in September, allowing Polymarket to acquire QCX. This development effectively opened doors for Polymarket to recommence operations in the U.S., indicating a more favorable regulatory atmosphere for event-driven markets. Kalshi, which has faced its own legal challenges regarding the classification of its contracts, has also achieved several courtroom victories that solidify its federal stance, further contributing to a more welcoming landscape for prediction markets.
A partnership with Crypto.com could significantly influence Fanatics’ strategy. Crypto.com has already made inroads into regulated event contracts, offering its robust infrastructure to platforms like Underdog and Hollywood.com for launching dedicated prediction markets. This collaboration could potentially expedite Fanatics’ entry into the space, utilizing compliance and exchange-grade infrastructure.
While Fanatics operates a sportsbook through its subsidiary, Fanatics Betting and Gaming, there had previously been indications from company leadership that venturing into prediction markets was not on the agenda due to regulatory uncertainties. However, the recent shift in the regulatory framework has encouraged a reevaluation of this stance. Reports from industry experts and Crypto.com research indicate that there is a broadening scope of use cases for prediction markets, which serve as data-rich, event-driven instruments that blend elements of sports, finance, and entertainment.
As the regulatory environment stabilizes, major brands are beginning to scale operations in prediction markets. Recent weeks have seen Polymarket enter into significant partnerships with entities like the UFC—integrating prediction features into their live broadcasts—and Yahoo Finance, which is showcasing Polymarket odds across its platform.
Should discussions between Fanatics and Crypto.com advance, the resulting prediction market initiative could represent a strategic shift for a prominent sports-commerce organization, aligning it with the growing intersections of regulated event contracts and U.S. sports betting.
