Underdog Acquires Aristotle Exchange as It Accelerates Prediction Market Strategy

Underdog has acquired Aristotle Exchange, a designated contract market (DCM) and derivatives clearing organization (DCO), allowing the company to eventually offer event contracts directly rather than relying on third-party infrastructure. The move marks the latest step in Underdog’s strategic pivot into prediction markets.

The acquisition gives Underdog control of a Commodity Futures Trading Commission (CFTC)-regulated exchange and clearinghouse, a strategy also pursued by companies such as DraftKings and Robinhood as interest in prediction markets grows.

Deal Gives Underdog Control of Prediction Market Infrastructure

Underdog CEO Jeremy Levine highlighted the company’s interest in sports-focused prediction markets and the sector’s growth potential.

“We’re in the early innings of what prediction markets can be, especially for sports fans.”

He added,

“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.”

Currently, Underdog offers sports event contracts through a partnership with Crypto.com’s exchange rather than operating its own market. Owning DCM and DCO licenses allows the company to list and manage contracts directly, giving it greater control over liquidity, pricing, and product design.

The move also aligns Underdog more closely with platforms like Kalshi, the leading CFTC-regulated event contract exchange in the U.S.

Part of Broader Strategic Shift

The acquisition arrives amid a broader strategy shift for Underdog.

In December 2025, the operator shut down its North Carolina sports betting platform. It also withdrew its application to operate a sportsbook in Missouri, effectively exiting the sports betting sector.

The company has also been reshaping its core daily fantasy sports (DFS) business. Underdog historically relied on its against-the-house Pick ’em contests but has gradually withdrawn them from several states and now offers them in 15 markets, mostly states without sports betting.

In some states where regulators have challenged Pick ‘em contests, such as California and Arizona, Underdog offers peer-to-peer options.

Additionally, at the end of last month, the company laid off approximately 125 employees, more than 20% of its staff. Levine said the layoffs were a result of the company reorienting from a state-by-state framework to a national prediction market platform.

The Latest DCM Acquisition

Underdog’s acquisition reflects growing interest in prediction markets across the broader sports and financial technology industries. Acquiring an already-licensed platform saves companies from a lengthy regulatory approval process that could stretch for years.

In October, DraftKings acquired Railbird Exchange. Then Robinhood, in partnership with Susquehanna International Group, acquired the prediction market exchange LedgerX; meanwhile, Coinbase acquired The Clearing Company.

None of those companies has yet launched its own standalone prediction market platform and still offer event contracts through partnerships. However, DraftKings recently revealed plans for an integrated all-in-one “Super App”, while Robinhood plans to launch Rothera in the near future.

The interest in the segment stems from prediction markets operating under federal commodities regulation rather than state gambling laws. That allows licensed platforms to offer event contracts nationwide, rather than following a state-by-state licensing model used in sports betting.

That regulatory distinction has fueled significant investment and experimentation across the sector. However, it has also sparked legal battles between state gaming regulators and platforms, such as Kalshi, over whether sports-event contracts should be treated as financial derivatives or gambling products.

Underdog’s acquisition suggests that companies are increasingly preparing for a future in which prediction markets compete directly with traditional sportsbooks for sports-related trading.

PredictIt to Continue Operating Under Current Structure

The acquisition also raises questions about PredictIt, the political prediction market platform historically associated with Aristotle.

Launched in 2014, the platform allows users to trade contracts tied to political races and government outcomes. PredictIt operates under a CFTC no-action framework rather than as a licensed deritivies exchange. That allows the platform to run as an academic research project affiliated with Victoria University of Wellington rather than registering as a regulated derivatives exchange.

Last year, the CFTC and PredictIt entered into a revised agreement through a new no-action letter. That loosened some restrictions, including raising the per-contract cap from $850 to $3,500 and removing the previous 5,000-trader limit per market.

Aristotle later received approval from the CFTC to operate a licensed derivatives exchange and clearinghouse through Aristotle Exchange, the platform Underdog acquired.

PredictIt’s governance also transitioned to a new non-profit entity, named the “Prediction Market Research Consortium.” Academic advisors from Princeton, Rutgers, and Wake Forest now guide the entity.

Despite Underdog’s acquisition of the exchange entities, PredictIt itself was not part of the transaction.

Toni Galeassi, PredictIt’s public relations director, told Gambling Insider that the platform will continue operating normally.

“The ownership and operational structure of PredictIt remains unchanged.”

Galeassi added that PredictIt will “continue operating and conducting business as usual.”

When asked whether the acquisition could lead to changes to the platform, Galeassi said:

“As with any platform, we’re always looking at ways to improve the user experience and the set of tools available to our traders, but there are no specific changes to announce at this time.”