The prediction-market land grab just escalated again.
Underdog, the fast-growing fantasy and sports gaming platform, announced it has acquired Aristotle Exchange, a federally regulated derivatives marketplace that will allow the company to launch its own U.S. prediction market exchange.
In simple terms:
Underdog just bought the infrastructure to run its own event-contracts market instead of relying on someone else’s platform (Crypto .com).
And in the rapidly evolving world of prediction markets, that’s like going from renting a sportsbook counter to owning the entire casino floor.
Why This Acquisition Matters
The deal includes two key regulated entities:
- Aristotle Exchange DCM – a Designated Contract Market
- Aristotle Exchange DCO – a Derivatives Clearing Organization
Both are registered with the Commodity Futures Trading Commission (CFTC), which regulates derivatives and event-contract markets in the U.S.
That regulatory framework allows Underdog to list and settle event contracts tied to real-world outcomes, including sports, on Underdog Predict.
Up until now, Underdog’s prediction markets essentially acted as a gateway, connecting users to external exchanges.
With this acquisition? They can now run the entire exchange themselves.
Plot Twist: This Is the Same Infrastructure Behind PredictIt
Here’s the part that got industry Twitter buzzing.
Aristotle is tied to the same ecosystem that powers PredictIt, one of the longest-running political prediction markets in the U.S.
That means Underdog didn’t just buy some random tech stack. They bought serious regulatory plumbing that has already been used for event-contract markets.
This is core infrastructure for a national prediction-market exchange.
The Prediction Market Arms Race
If you’ve been watching the industry the last year, you’ve probably noticed something weird happening.
Everyone suddenly wants to build prediction markets.
Examples:
- Kalshi launching regulated event contracts
- Polymarket exploding in popularity globally
- Crypto.com is experimenting with sports event contracts and partnering with Rolr.
- Betr partnering with Polymarket
- And now Underdog buying its own exchange
Meanwhile traditional sportsbooks are dealing with:
- Higher state taxes
- Promotional wars
- Increasing regulatory friction
Prediction markets operate under commodities regulation instead of state gaming laws, which creates a completely different playing field.
And operators are noticing.
Underdog’s Big Bet on Sports Contracts
Underdog CEO Jeremy Levine made it pretty clear where the company sees this going:
“Prediction markets are primarily about sports.”
That’s an interesting statement because most current U.S. prediction markets focus on things like:
- Politics
- Economics
- World events
Underdog wants to bring the model directly into the sports ecosystem.
Think contracts like:
- Will the Lakers win tonight?
- Will Patrick Mahomes throw 3+ TDs?
- Will a team make the playoffs?
Basically sports betting… but structured as tradable probability contracts.
Which starts to look suspiciously like Wall Street for sports outcomes.
The Real Question: Sportsbooks or Prediction Markets?
The biggest industry debate right now isn’t who has the best odds.
It’s whether prediction markets eventually eat part of the sportsbook industry.
Sportsbooks are built around:
- Fixed odds
- House margin
- State licenses
Prediction markets operate more like exchanges:
- Users trade contracts
- Prices reflect probability
- Liquidity drives pricing
If that model scales, the future might look less like a sportsbook app and more like a Bloomberg terminal for sports predictions.
Bottom Line
Underdog buying Aristotle Exchange is one of the most important moves yet in the prediction-market race.
Instead of being just another operator plugging into someone else’s marketplace, Underdog now has the regulatory infrastructure to run its own federally compliant exchange.
And if prediction markets really do become the next frontier in sports wagering?
Underdog just positioned itself right in the middle of it.
Which means the next time someone tells you they have a “lock” tonight…they might soon be able to trade that take like a stock.
