TLDR
- Underdog’s purchase of Aristotle Exchange provides access to CFTC licensing for exchange and clearinghouse operations
- The acquisition enables direct listing and management of event-based contracts without relying on external partners
- The company has withdrawn from sports betting operations in North Carolina and Missouri
- More than 125 staff members (over 20% of workforce) were terminated during the strategic transition
- PredictIt remains separate from the acquisition and maintains independent operations
In a significant strategic move, Underdog has completed the acquisition of Aristotle Exchange, securing access to a Commodity Futures Trading Commission-regulated infrastructure. This purchase grants Underdog ownership of both a derivatives exchange and an associated clearinghouse.
Previously, Underdog’s sports event contract offerings operated through a third-party arrangement with Crypto.com’s exchange infrastructure. With this new acquisition, the company gains complete autonomy over contract listings and platform management.
According to Underdog’s CEO Jeremy Levine, sports-oriented prediction markets represent a significant growth opportunity. “We’re in the early innings of what prediction markets can be, especially for sports fans,” Levine commented.
This transaction represents one component of Underdog’s broader strategic transformation. Throughout recent months, the company has systematically withdrawn from conventional sports wagering operations.
December 2025 marked Underdog’s complete shutdown of its North Carolina sportsbook platform. The company simultaneously withdrew its pending sportsbook application in Missouri, marking its full departure from the sports betting sector.
Underdog’s daily fantasy sports operations have also undergone significant restructuring. The company’s Pick ’em product line, which operated on a house-backed model, has been discontinued in multiple jurisdictions and currently operates in only 15 markets.
In jurisdictions such as California and Arizona, where regulatory authorities questioned the Pick ’em model’s legality, Underdog has transitioned to peer-to-peer contest formats.
Late February saw Underdog eliminate approximately 125 positions, representing over 20% of the company’s total workforce. Levine attributed these workforce reductions to the operational shift from state-level licensing requirements to a federally-regulated prediction market model.
Why Companies Are Buying Licensed Exchanges
Underdog’s acquisition strategy mirrors moves by several competitors. DraftKings completed its Railbird Exchange purchase in October, while Robinhood collaborated with Susquehanna International Group to acquire LedgerX. Coinbase similarly purchased The Clearing Company.
Acquiring pre-licensed platforms circumvents potentially lengthy regulatory approval timelines that could extend for years. To date, none of these acquiring companies has launched their own independent prediction market product.
Prediction market platforms fall under federal commodities regulations rather than state-level gambling statutes. This regulatory framework enables nationwide operation through a single federal license, contrasting sharply with sports betting’s state-by-state approval requirements.
This regulatory distinction has catalyzed significant sector investment. It has simultaneously generated legal conflicts between state regulatory agencies and platforms like Kalshi regarding the proper classification of sports-related event contracts.
PredictIt Not Part of the Deal
Aristotle Exchange has maintained historical connections to PredictIt, the political prediction marketplace established in 2014. PredictIt facilitates trading on political election outcomes and governmental policy decisions.
PredictIt functions under a CFTC no-action letter framework as an academic research initiative, rather than as a fully registered derivatives exchange. The platform was explicitly excluded from Underdog’s acquisition.
Toni Galeassi, PredictIt’s PR director, verified that the acquisition does not impact the platform. “The ownership and operational structure of PredictIt remains unchanged,” Galeassi stated, emphasizing the platform will “continue operating and conducting business as usual.”
Recent regulatory updates have expanded PredictIt’s operational parameters, with per-contract limits increasing from $850 to $3,500, while the previous 5,000-participant cap per market was eliminated under an updated CFTC no-action arrangement.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
