Underdog has acquired two CFTC-registered entities — Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc. — giving the US sports company the federal infrastructure to run its own prediction market exchange.
The two acquired entities hold registrations as a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO) respectively with the Commodity Futures Trading Commission. Those credentials allow Underdog to offer sports event contracts and broader prediction market products under its own exchange rather than routing customers through third-party platforms.
From Intermediary to Operator
Underdog currently offers prediction markets access as an intermediary to existing CFTC-regulated exchanges. The acquisition changes that structure entirely. The company says it will continue expanding its prediction market offerings but will now do so under its own exchange, giving it direct control over product design, contract specifications, and customer experience.
Underdog launched prediction market access in its app in September 2024, making it the first sports gaming operator to bring that functionality to users in that format. The move into exchange ownership is the next step in a product strategy that already spans fantasy sports, prediction markets, and a media network.
“We look forward to working with the CFTC to offer an exchange that brings even more options to enjoy sports to our customers,” said Jeremy Levine, CEO and Co-Founder of Underdog. “We’re in the early innings of what prediction markets can be, especially for sports fans. We’ll use this opportunity to bring the same relentless focus on innovation and experience that we’ve always brought to our customers. The reality is, prediction markets are primarily about sports and no company knows how to engage with sports fans and create products for sports fans better than Underdog.”
Regulatory Context
The acquisition lands at a contested moment for prediction markets in the US. Exchanges like Kalshi and DraftKings have expanded aggressively into sports event contracts, with state regulators in Massachusetts filing suit against Kalshi over whether its sports contracts constitute unlicensed betting. The central dispute — whether sports prediction markets fall under CFTC jurisdiction or state gaming law — remains unresolved.
Underdog’s route through a registered DCM and DCO positions it squarely within the federal regulatory framework, a deliberate choice given the ongoing state-level pushback. Kalshi raised $300m and expanded globally on a similar federal-first argument, and DraftKings secured its own federal approvals before launching prediction markets in 38 states late last year.
The broader industry question — how far sports-linked prediction contracts can expand before state gaming regulators intervene at scale — remains open. Underdog’s acquisition suggests the company is betting on the federal framework holding, while building the infrastructure to compete directly with established exchanges rather than relying on them.
Deal Advisors
Aristotle’s financial adviser on the transaction was Lazard. Willkie Farr & Gallagher LLP served as legal counsel. No financial terms were disclosed.
Founded in 2020, Underdog describes itself as the fastest-growing private sports company in the US. In addition to prediction markets, the company operates fantasy sports games and a media network featuring former professional athletes, coaches, and analysts. The regulatory landscape for prediction markets continues to evolve globally as more operators seek federally compliant frameworks for sports contracts.
Source: Underdog
