Underdog buys Aristotle Exchange to launch own prediction market

From intermediary to exchange operator
Underdog's aggressive pivot
A crowded race for DCM/DCO status

Underdog has purchased Aristotle Exchange’s DCM and DCO registrations, enabling it to operate a federally compliant prediction market exchange.
The acquisition allows Underdog to move beyond its intermediary role with Crypto.com and list sports event contracts under its own infrastructure.
Underdog currently offers prediction markets in 31 states and has pivoted away from traditional sports betting.

Underdog has acquired Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc., gaining a Commodity Futures Trading Commission (CFTC)-registered Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO).

The deal gives the fast-growing sports company the federal registrations needed to operate its own prediction market exchange.

The company has been offering prediction markets since September 2025 through a technology partnership with Crypto.com Derivatives North America (CDNA).

That arrangement positioned Underdog as an intermediary, hosting CDNA’s sports event contracts within its app. With the Aristotle acquisition, Underdog can now list, facilitate and clear contracts on its own exchange.

From intermediary to exchange operator

Jeremy Levine, CEO and co-founder of Underdog, said:

“We look forward to working with the CFTC to offer an exchange that brings even more options to enjoy sports to our customers. We’re in the early innings of what prediction markets can be, especially for sports fans.”

The acquired entities were founded by John Aristotle Phillips, whose company also services the long-running political prediction market PredictIt.

Aristotle received its DCM and DCO approvals from the CFTC in September 2025. The applications had been pending since late 2021, according to Bloomberg.

Lazard served as Aristotle’s financial advisor, with Willkie Farr & Gallagher LLP acting as legal counsel. Financial terms of the transaction were not disclosed.

Underdog said it will continue to expand its prediction offerings under its own exchange. The company will also maintain its existing relationship with Crypto.com as it transitions to operating its own infrastructure.

Underdog’s aggressive pivot

The acquisition represents the latest step in Underdog’s strategic shift away from traditional sports betting. The company announced the closure of its North Carolina sportsbook in December 2025, ceasing operations on 16 December.

Underdog had already withdrawn its Missouri sportsbook licence application in late November 2025, days before the state’s betting market launched on 1 December.

In both states, Underdog promptly launched its prediction markets product instead. The company now offers event contracts in 31 states across the U.S., far exceeding the geographic reach of its previous sportsbook operations.

Underdog also secured National Futures Association (NFA) approval as a Futures Commission Merchant (FCM) and swap firm in January 2026, strengthening its regulatory standing with the CFTC.

Founded in 2020, the company reached a $1.2 billion valuation following a funding round in March 2025 led by Spark Capital.

The transition has not been entirely smooth. Arizona’s Department of Gaming initiated revocation proceedings against Underdog’s daily fantasy sports licence in December 2025, over the company’s prediction market activities. An appeal remains possible.

Separately, Underdog laid off over 125 employees last week, with the company’s shift toward prediction markets cited as a likely factor in the restructuring.

A crowded race for DCM/DCO status

Underdog joins a growing list of gaming and fintech operators pursuing vertically integrated prediction market infrastructure.

DraftKings acquired Railbird Exchange in October 2025 for its DCM registration, launching the standalone DraftKings Predictions app in December through a partnership with CME Group.

Robinhood and Susquehanna International Group completed the acquisition of MIAXdx in January 2026, gaining both a DCM and DCO. That exchange, renamed Rothera, is expected to begin operations in Q2 2026.

Polymarket similarly acquired QCX for its U.S. exchange and clearinghouse registrations.

The moves come against a backdrop of intense regulatory debate. Several state gaming regulators, including those in Michigan and Arizona, have pushed back against sports event contracts, arguing they constitute sports betting under a different label.

For Underdog, owning a DCM and DCO provides greater control over contract listings, pricing and clearing. It also reduces the company’s dependence on third-party exchange partners.

The key question is if the CFTC’s current permissive stance toward sports prediction markets will survive as both state regulators and the broader gambling industry continue to challenge the regulatory framework underpinning this fast-growing sector.

Keep reading