Underdog Acquires CFTC-Registered Aristotle Exchange DCM and DCO to Grow Prediction Markets
The intersection between sports betting and prediction markets is accelerating in the United States.
Underdog, one of the fastest-growing private sports gaming companies in the country, has announced the acquisition of Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc. The entities are registered with the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO).
In practical terms, the purchase gives Underdog the regulatory foundation needed to operate its own federally compliant prediction market exchange.
Expansion into Exchange-Based Prediction Markets
Prediction markets allow users to trade contracts tied to real-world outcomes such as match results or player performance. Underdog has already been expanding in this space through partnerships that introduced sports prediction markets across multiple US states.
Until now, Underdog has provided access to these markets as an intermediary, connecting users to third-party exchanges through its platform. The strategy aligns with the company’s broader pivot toward prediction markets, highlighted when it withdrew from the Missouri online sportsbook launch to focus on event-contract products instead.
With the acquisition of the Aristotle Exchange entities, the company now has the ability to expand those products under its own exchange infrastructure.
According to Underdog CEO and co-founder Jeremy Levine, the company sees strong potential in prediction markets, particularly within sports.
“We look forward to working with the CFTC to offer an exchange that brings even more options to enjoy sports to our customers,” Levine said. “We’re in the early innings of what prediction markets can be, especially for sports fans.”
Strategic Context for the Sports Gaming Sector
From an industry perspective, prediction markets have increasingly attracted attention as a complementary model to traditional sports betting. Underdog itself had previously explored expansion through sportsbook partnerships, including a proposed market-access deal with the Kansas City Royals in Missouri before shifting its strategic focus toward prediction markets.
Several major operators are also exploring federally regulated event-contract platforms as the market develops under financial oversight, highlighting the growing competition around prediction-based trading products.
Unlike traditional wagers, prediction markets operate as trading platforms where participants buy and sell contracts tied to event probabilities, placing them under financial regulatory frameworks such as the CFTC.
For operators, the model opens the door to new forms of engagement, particularly among users seeking trading-style engagement around sports outcomes.
Levine suggested that sports will remain central to the development of the category.
“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,” he said.
Commercial Implications
Owning both a Designated Contract Market and a Derivatives Clearing Organization also provides Underdog with greater control over its product ecosystem.
The exchange will allow customers to access sports event contracts directly while also enabling the company to expand prediction-based offerings across other topics over time.
Aristotle Exchange was advised by financial firm Lazard on the transaction, while legal counsel was provided by Willkie Farr & Gallagher LLP.
More broadly, the move illustrates how sports gaming platforms are beginning to explore new regulated structures beyond traditional betting products, as operators across the industry experiment with new engagement models beyond traditional sportsbook products.
As prediction markets continue to gain visibility in the US, the sector has already begun influencing regulatory discussions and operator strategies across the industry, and deals like this could shape how operators build the next generation of sports-focused engagement platforms.
Source: Underdog
