A legal filing unearthed last week suggests that Fanatics has already agreed terms to buy a prediction market exchange of its own, but the identity of this acquisition target remains a mystery.
The detail appeared in a Jan. 29 filing in a lawsuit related to Ari Borod’s move from chief business officer of Fanatics Betting and Gaming to president of sports business deployment at Polymarket.
First reported by Front Office Sports on Friday, and now settled, the lawsuit concerned whether Borod breached a noncompete by moving from the sportsbook to the prediction market.
While the existence of the lawsuit itself offered some intrigue, some of the most interesting pieces of information came in a filing from Borod where he provided insight about his role in building Fanatics’ prediction market arm.
Among those pieces of information is a claim that Fanatics has already agreed to purchase a designated contract market (DCM) — an exchange that could offer its own contracts. Currently, Fanatics’ prediction market product offers users access to contracts made by Crypto.com.
Not much is known
Little is known about the prospective deal. Borod’s filing says he was unaware of any deal to buy a DCM until the lawsuit was filed. It suggests that the possible deal was also referenced in Fanatics’ initial complaint, which was submitted under seal.
“I was genuinely unaware, prior to this lawsuit, that FMX had agreed to terms with a target exchange,” Borod’s filing said. “To date, I still do not know the principal financial and commercial terms of the deal, or the name of the target exchange.”
However, there are not many registered exchanges out there. The CFTC website lists only 25 exchanges as having “designated” status. Some of them are long-established businesses, often in traditional commodity futures, and unlikely to shift their entire business model. Others have been acquired for prediction market purposes recently.
Fanatics wouldn’t be the first company to buy a DCM. Polymarket re-entered the U.S. by buying an exchange called QCEX, while DraftKings bought Railbird and Robinhood bought MIAXdx — both planning to launch their in-house exchanges this year. The prediction market gold rush has meant that a DCM license could be worth more than $100 million.
Handful of exchanges stand out
It’s possible that the acquisition target is not yet approved as a DCM, but it would seem more likely that Fanatics would have bought a business that is already fully approved, rather than choosing to wait for an unknown period of time for approval.
In theory, Fanatics’ size — mostly due to its sports apparel empire — means it may be large enough to buy even the big names like Kalshi, Polymarket, or Crypto.com’s prediction market arm. But, mirroring its success as a relatively late sportsbook entrant, Fanatics management may feel they can make a contender without buying one of the top players. Meanwhile, the owners of the top prediction markets likely see enough of a future in the vertical that they would not want to let their prized asset go.
That leaves a handful of exchanges that gained approval recently, fitting a similar profile to the acquisitions of Railbird, QCEX, or MIAXdx.
Some applied for DCM status with an ambitious goal to create a new type of commodity market, but if the right offer comes along, they may be willing to take the cash.
History suggests that there’s plenty of room for surprises in the prediction market space, but here are some of the more likely candidates.
Quanta Exchange
Quanta Exchange looks like the most obvious acquisition candidate for any buyer looking to launch a DCM for prediction markets.
The business received DCM approval in July, at the same time as Railbird and just before QCEX.
Though Quanta initially applied for DCM status under the name The Environmental Exchange, intending to offer carbon offset futures, it rebranded to a less product-specific name two months before it received approval — on the day that the combination of March Madness and Robinhood integration caused Kalshi’s volume to soar to new highs.
Nine months on from receiving DCM approval, Quanta does not appear to have actually launched its exchange, seemingly a sign that it may recognize the most effective use of its DCM registration is as an asset for sale. The exchange’s website merely shows a homepage and a contact form, and CFTC records show it has not certified a single contract.
Even if it’s not the business referenced in the Fanatics court filings, it seems likely that many companies looking at launching a prediction market exchange are at least kicking the tires on Quanta.
Xchange Alpha
Xchange Alpha is the newest addition to the CFTC’s list of approved DCMs, gaining approval in January, only 203 days after applying — much faster than the multi-year wait faced by many other DCMs.
That means the entire application process took place after the rise of prediction markets last year, so the new product class might have been on management’s minds when the application was submitted. And having only just been approved, there isn’t too much of an existing operation that would be wasted if the business pivoted to event contracts.
However, in a LinkedIn post soon after the business gained approval, Bella Rozenberg, a senior counsel for Xchange Alpha, wrote that the business planned to “list traditionally structured futures contracts,” suggesting that prediction markets are not the plan. But it’s always possible that a good enough offer could cause the exchange to rethink things.
Electron Exchange
Electron Exchange also received approval in the summer of 2025, as prediction market interest from major sportsbooks heated up. The business was set up to offer derivatives on electricity generation, hence the name.
Electron Exchange launched its first power derivatives last month, a move that likely suggests it is not on the cusp of being acquired, though things can always change quickly.
It also raised $30 million at an unknown valuation in 2025, much less than what top prediction markets have raised, but enough to suggest that investors see real value in its power marketplace concept. That might make it a more difficult acquisition target than some other recently approved DCMs.
IMX Health
IMX gained CFTC approval a little over two years ago, and offers futures related to the healthcare industry.
Since launching, it has offered only one product: a futures contract on the Morningstar US Healthcare Index. That may suggest the exchange’s DCM license could be more valuable in the hands of another business. On the other hand, it has managed to stick around for some time now operating within its niche.
ForecastEx
Unlike the companies mentioned above, ForecastEx is already an operational prediction market. In fact, it was active as early as 2024, and already has both a sports offering, a link to a major distribution channel in Robinhood, and its own clearinghouse.
ForecastEx quietly started offering sports contracts last year, but remains a long way behind the market leaders in volume.
The exchange is owned by the gigantic Interactive Brokers, which is easily large enough to wait things out rather than look for short-term returns. But ForecastEx has been offering event contracts for 18 months and has gained little traction, so Interactive Brokers could decide it’s best left to someone else.
Its abbreviation on the CFTC website is already FEX — the same abbreviation Fanatics initially used for its prediction markets business before the CFTC noted the name could imply it owned an exchange rather than a brokerage. That’s unlikely to be an actual difference maker in a potential nine-figure acquisition, but it would be a nice touch.
Gemini Prediction Market
The Winklevoss twins’ Gemini is the newest CFTC-registered prediction market.
Parent company Gemini Space Station — mostly known for its cryptocurrency exchange and credit card — has struggled since its IPO in September, as cryptocurrency prices tumbled, and already announced plans to shut down many of its international operations following big losses in 2025.
Selling the prediction market and narrowing its focus further could provide more certainty to investors. But event contracts offer a compelling upside story for the business, especially when crypto isn’t performing, and the Winklevoss twins appear bullish on the product class.
Because Gemini is public, if the company had come to a binding agreement to sell a core part of its business, it would likely have to disclose that to the market. But if the agreement is still at an earlier stage, it may not have to announce it just yet.
