Underdog Acquires Aristotle Exchange to Build Prediction Market Platform
Underdog has acquired CFTC-regulated exchange and clearinghouse Aristotle Exchange, enabling the company to offer sports event contracts
Underdog is making its most significant move yet into prediction markets. The company has acquired Aristotle Exchange, a Commodity Futures Trading Commission-regulated designated contract market and derivatives clearing organization.
The deal gives Underdog the infrastructure to list and manage event contracts directly, rather than relying on third-party platforms. This is a move Underdog has been eyeing for some time, as they recently applied to the CFTC for approval of event contracts.
The acquisition is the clearest signal yet that Underdog is repositioning itself as a prediction market company rather than a traditional sports betting operator.
What the Acquisition Unlocks
Until now, Underdog has offered sports event contracts through a partnership with Crypto.com’s exchange. Owning a licensed DCM and DCO changes that arrangement entirely. The company can now control its own liquidity, pricing, and product design without depending on external infrastructure.
The move aligns Underdog more directly with Kalshi, currently the leading CFTC-regulated event contract exchange in the United States.
It also follows a similar playbook adopted by DraftKings, which acquired Railbird Exchange in October, and Robinhood, which acquired prediction market exchange LedgerX in partnership with Susquehanna International Group. Coinbase also acquired The Clearing Company during the same period.
None of those companies has yet launched a standalone prediction market platform. DraftKings has revealed plans for an integrated “Super App,” and Robinhood has announced plans to launch its Rothera platform in the near future. Underdog’s acquisition puts it in the same race.
CEO Jeremy Levine framed the company’s position as a natural fit for the sector. “We’re in the early innings of what prediction markets can be, especially for sports fans,” he said. “No company knows how to engage with sports fans and create products for sports fans better than Underdog.”
A Company in the Middle of a Major Pivot
The Aristotle acquisition does not exist in isolation. Underdog has been restructuring aggressively over the past several months. In December 2025, the company shut down its North Carolina sports betting platform and withdrew its Missouri sportsbook application, effectively exiting regulated sports betting entirely.
Its daily fantasy sports business has also been reshaped. Underdog’s against-the-house Pick ’em contests, historically its core product, have been withdrawn from multiple states and now operate in just 15 markets, primarily states without legal sports betting.
In states such as California and Arizona, where regulators have challenged the Pick ’em format, the company now offers peer-to-peer alternatives.
At the end of February, Underdog laid off approximately 125 employees, representing more than 20% of its total workforce. Levine described the cuts as a direct consequence of moving away from a state-by-state regulatory model toward a nationally accessible prediction market platform.
Why Prediction Markets Are Attracting This Level of Investment
The regulatory distinction driving this wave of acquisitions is straightforward. Prediction market platforms licensed by the CFTC operate under federal commodities law rather than state gambling regulations.
That means a single federal license can support nationwide operations, bypassing the expensive and time-consuming state-by-state licensing process that governs traditional sportsbooks.
That structural advantage has drawn significant investment across the sector. It has also generated significant legal conflict. State gaming regulators and platforms like Kalshi have clashed over whether sports event contracts should be treated as financial derivatives or gambling products. That debate remains unresolved, but companies are clearly betting on the federal framework prevailing.
Acquiring an already-licensed exchange, as Underdog has done, also shortcuts a regulatory approval process that can stretch for years. The practical value of that shortcut, as much as the strategic vision, is driving the acquisition activity.
PredictIt Remains Separate
Aristotle Exchange’s association with PredictIt, the political prediction market platform launched in 2014, raised questions about the deal’s scope. PredictIt allows users to trade contracts tied to political races and government outcomes.
It operates under a CFTC no-action framework as an academic research project affiliated with Victoria University of Wellington, governed by a non-profit entity called the Prediction Market Research Consortium with academic advisors from Princeton, Rutgers, and Wake Forest.
Last year, the CFTC and PredictIt agreed to a revised no-action letter that loosened several restrictions, including raising the per-contract cap from $850 to $3,500 and eliminating the previous 5,000-trader limit per market. Aristotle later received separate approval to operate a licensed derivatives exchange and clearinghouse, which became the entity Underdog acquired.
PredictIt itself was not part of the transaction. Public relations director Toni Galeassi confirmed the platform will continue operating under its existing structure, with no changes to ownership or operations planned at this time.
Players trust our reporting due to our commitment to unbiased and professional evaluations of the iGaming sector. We track hundreds of platforms and industry updates daily to ensure our news feed and leaderboards reflect the most recent market shifts. With nearly two decades of experience within iGaming, our team provides a wealth of expert knowledge. This long-standing expertise enables us to deliver thorough, reliable news and guidance to our readers.
Latest News
