TLDR
- Underdog acquired Aristotle Exchange, gaining a CFTC-regulated exchange and clearinghouse
- The deal lets Underdog list and manage event contracts directly, without third-party partners
- Underdog previously exited sports betting, shutting down in North Carolina and pulling out of Missouri
- The company laid off over 125 employees (20%+ of staff) as part of its strategic shift
- PredictIt was not part of the acquisition and will continue operating as normal
Underdog has acquired Aristotle Exchange, a platform regulated by the Commodity Futures Trading Commission. The deal gives Underdog direct control of a licensed derivatives exchange and clearinghouse.
Before this acquisition, Underdog offered sports event contracts through a partnership with Crypto.com’s exchange. Owning its own licensed platform means the company can now list and manage contracts directly.
Underdog CEO Jeremy Levine said the company sees big potential in sports-focused prediction markets. “We’re in the early innings of what prediction markets can be, especially for sports fans,” he said.
The acquisition is part of a wider shift in direction for the company. Underdog has been moving away from traditional sports betting over the past several months.
In December 2025, Underdog shut down its sports betting platform in North Carolina. It also pulled its sportsbook application in Missouri, fully exiting the sports betting market.
The company has also been changing its daily fantasy sports business. Its Pick ’em contests, which were played against the house, have been pulled from several states and now run in just 15 markets.
In states like California and Arizona, where regulators challenged Pick ’em, Underdog now offers peer-to-peer options instead.
At the end of February, Underdog laid off around 125 employees, more than 20% of its total staff. Levine linked the cuts directly to the company’s move from a state-by-state model to a national prediction market platform.
Why Companies Are Buying Licensed Exchanges
Underdog is not alone in this strategy. DraftKings acquired Railbird Exchange in October, and Robinhood partnered with Susquehanna International Group to acquire LedgerX. Coinbase acquired The Clearing Company.
Buying an already-licensed platform avoids a regulatory approval process that could take years. None of these companies has yet launched a standalone prediction market platform of their own.
Prediction markets operate under federal commodities law, not state gambling rules. This means a single federal license can allow nationwide operations, unlike sports betting which requires state-by-state approval.
That difference has driven investment across the sector. It has also sparked legal disputes between state regulators and platforms like Kalshi over how sports event contracts should be classified.
PredictIt Not Part of the Deal
Aristotle Exchange was historically linked to PredictIt, the political prediction market platform launched in 2014. PredictIt allows users to trade contracts on political races and government outcomes.
PredictIt operates under a CFTC no-action letter as an academic research project, not as a registered derivatives exchange. It was not included in Underdog’s acquisition.
PredictIt’s PR director Toni Galeassi confirmed the platform is unaffected. “The ownership and operational structure of PredictIt remains unchanged,” she said, adding that the platform will “continue operating and conducting business as usual.”
Last year, PredictIt’s per-contract cap was raised from $850 to $3,500, and the previous 5,000-trader limit per market was removed under a revised CFTC no-action agreement.
