TLDR
- Underdog’s purchase of Aristotle Exchange provides access to a CFTC-licensed exchange and clearinghouse infrastructure
- This acquisition enables independent listing and administration of event contracts without relying on external partners
- The company has completely withdrawn from sports betting operations, including closures in North Carolina and Missouri
- More than 125 workers (exceeding 20% of the workforce) were terminated during this strategic transition
- The acquisition does not include PredictIt, which maintains separate operations unchanged
In a significant strategic move, Underdog has completed the acquisition of Aristotle Exchange, a Commodity Futures Trading Commission-regulated entity. This transaction provides Underdog with full ownership of a federally licensed derivatives exchange and accompanying clearinghouse operations.
Previously, the company delivered sports event contracts to customers via a collaborative arrangement with Crypto.com’s exchange infrastructure. With this acquisition, Underdog now possesses the regulatory framework to independently list and administer contracts.
Jeremy Levine, serving as Underdog’s CEO, expressed enthusiasm about the opportunity in sports-oriented prediction markets. “We’re in the early innings of what prediction markets can be, especially for sports fans,” he said.
This purchase represents a component of Underdog’s broader strategic realignment. The organization has been systematically withdrawing from conventional sports betting activities throughout recent months.
December 2025 marked Underdog’s complete shutdown of its North Carolina sports betting operations. The company simultaneously withdrew its Missouri sportsbook application, effectively terminating all sports betting market participation.
Modifications have also affected the company’s daily fantasy sports segment. The Pick ’em contest format, which featured house-backed gameplay, has been discontinued across multiple jurisdictions and currently operates in only 15 markets.
In jurisdictions such as California and Arizona, where regulatory authorities questioned the Pick ’em model, Underdog transitioned to peer-to-peer alternative offerings.
Late February witnessed Underdog eliminating approximately 125 positions, representing over 20% of its entire workforce. Levine attributed these reductions specifically to the organization’s transition from state-level operations to a federally regulated prediction market framework.
Why Companies Are Buying Licensed Exchanges
Underdog’s acquisition strategy follows industry patterns. DraftKings completed the Railbird Exchange purchase in October, while Robinhood collaborated with Susquehanna International Group for the LedgerX acquisition. Coinbase similarly acquired The Clearing Company.
Purchasing existing licensed platforms circumvents regulatory approval procedures that potentially span multiple years. To date, none of these organizations has introduced an independent prediction market platform.
Prediction markets function under federal commodities regulations rather than state-level gambling frameworks. This structure permits nationwide operations through a single federal authorization, contrasting sharply with sports betting’s requirement for individual state approvals.
This regulatory distinction has catalyzed widespread industry investment. It has simultaneously generated legal conflicts between state regulatory bodies and platforms like Kalshi regarding appropriate classification of sports event contracts.
PredictIt Not Part of the Deal
Aristotle Exchange maintained historical connections with PredictIt, the political prediction market platform established in 2014. PredictIt enables participants to trade contracts based on political elections and governmental decisions.
PredictIt functions under a CFTC no-action letter as an educational research initiative, distinct from registered derivatives exchange status. The platform was excluded from Underdog’s acquisition terms.
Toni Galeassi, PredictIt’s PR director, verified the platform remains unaffected. “The ownership and operational structure of PredictIt remains unchanged,” she said, adding that the platform will “continue operating and conducting business as usual.”
Recent modifications to PredictIt include an increase in the per-contract limit from $850 to $3,500, while the former 5,000-trader market restriction was eliminated through an updated CFTC no-action agreement.
