This past month, the landscape of American sports wagering underwent a seismic shift not through the launch of a new sportsbook, but through the strategic erasure of a single word: "gambling."

Fanatics, the Michael Rubin-led juggernaut that has spent the last three years aggressively pivoting from licensed apparel to a "global sports platform," officially entered the prediction market arena with the launch of Fanatics Markets. Built in strategic partnership with Crypto.com’s Derivatives North America (CDNA), the platform represents the latest and perhaps most calculated move in Fanatics’ quest to own every vertical of the fan experience.

But before you call it a sportsbook, let me stop you right there. According to the folks in the C-suite, this isn't gambling. It’s "trading."

Fanatics’ entry into the gambling space was initially defined by brute force. Following the acquisition of PointsBet’s U.S. operations in 2023, the company rapidly scaled its Fanatics Sportsbook to cover approximately 95% of the addressable online betting market in the U.S. However, the traditional sportsbook model is a grind of state-by-state licensing, heavy taxation, and fierce competition for the same pool of gamblers traders.

Prediction markets offer a different path. Inspired by the explosive popularity of platforms like Kalshi and the crypto-native Polymarket, the latter of which saw over $3.6 billion in volume during the 2024 election cycle, Fanatics is tapping into a "supercycle" where information is the primary currency.

By launching Fanatics Markets, the company isn't just offering a place to bet on the Knicks; they are offering "event contracts." These contracts, which trade between $0.00 and $1.00 based on the crowd's perceived probability of an outcome, allow users to take positions on everything from Fed interest rate hikes and Oscar winners to whether a specific NFL team will score more than 20 points.

The most striking element of the Fanatics Markets rollout is the deliberate linguistic gymnastics used to distance the product from traditional gambling. Don’t be fooled into mistaking it for marketing fluff; it’s a core regulatory strategy.

In an interview with Sportico, Matt King, CEO of Fanatics Betting & Gaming, made the company’s stance crystal clear:

“I mean, I look at these as trades, right? If you think about the regulatory context that you sit under with the futures, I think ‘trade’ is the proper vernacular, and so that’s kind of how we refer to it... I view this as trading.”

By framing the activity as "trading" rather than "betting," Fanatics aligns itself with the Commodity Futures Trading Commission (CFTC) rather than state gaming commissions. This distinction is the holy grail of the industry. Traditional sportsbooks are overseen by states, requiring massive licensing fees and corporate gambling taxes. Prediction markets, regulated as financial derivatives, can theoretically bypass these state-level hurdles.

The strategic brilliance of the "trading" label becomes apparent when looking at the map. While traditional sports betting remains illegal in the two biggest states, California and Texas, prediction markets have found a foothold.

Fanatics Markets launched in two phases, initially hitting 10 states, including Utah and Idaho, before expanding to 24 states, including the "big three" of California, Texas, and Florida. For Fanatics, this is a massive foot in the door strategy. It allows them to acquire customers and build brand loyalty in states where their traditional sportsbook app is currently blocked by legislative gridlock.

By the time California eventually legalizes traditional sports betting, Fanatics will already have a massive database of "traders" ready to be cross-sold into the broader ecosystem.

The rise of prediction markets, often called "truth machines" by Kalshi CEO Tarek Mansour, represents a convergence of investing and entertainment. Unlike a sportsbook, where you bet against the "house" and its built-in commission or fee, prediction markets are peer-to-peer. You are buying a contract from another user who has the opposite view.

This model is increasingly attractive to a younger demographic that grew up on Robinhood and crypto exchanges. As CNBC recently reported, prediction markets could hit $1 trillion in annual trading volume by the end of the decade. Fanatics is betting that the "wisdom of the crowd" is more engaging than a static money line.

Fanatics isn't alone in this pivot. DraftKings recently acquired the exchange Railbird for $50 million, and FanDuel has partnered with CME Group to launch its own version of event contracts. However, Fanatics has an edge: the ecosystem.

With a shared wallet and a single login, a user can buy a jersey, trade a Shohei Ohtani "Yes" contract for the MVP race, and check the value of their trading card collection all within the same brand umbrella. While they are currently cautious about cross-selling "FanCash" rewards into the prediction market due to CFTC scrutiny, the long-term vision is a seamless loop of sports consumption.

The launch of Fanatics Markets is a challenge to the definition of "risk" in America. By refusing to use the "G-word" and comparing their users to stock traders, Fanatics is attempting to mainstream event-based wagering for the masses.

Whether regulators and the courts continue to accept this "trading" definition remains the multi-billion dollar question. But for now, Michael Rubin’s empire has successfully planted its flag at the intersection of sports, finance, and culture.