Underdog made quite a bold move in the prediction market sector when the company announced that it was acquiring Aristotle Exchange.
The deal took place more than six months after Underdog had introduced sports prediction markets for the first time, meaning that the daily fantasy sports company had a chance to run its own regulated exchange on its own. Aristotle is a Designated Contract Market and a Derivatives Clearing Organization, which are both CFTC registered entities.
Therefore, with this purchase, Underdog will be able to operate directly under federal regulators without relying on third party arrangements. Aristotle, which is famous for operating PredictIt, has been primarily dealing with American political markets, most notably during the last six months of the year. While Underdogs sports betting products are centered around sports, PredictIt completely excludes sports but political betting expertise in that field is something else that Underdog is looking to capitalize on for its growth.
More Autonomy for Underdog
Since last summer, Underdog has been able to trade contract events on its app through a partnership with Crypto.com. Entering the market was possible this way, but the company still depended on third parties for contract supply. Receiving the nod from the National Futures Association to operate as a Futures Commission Merchant has happened to Underdog early this year, which means the company can now access more CFTC-authorized exchanges.
The launch of Aristotle, together with the licensing of its Designated Contract Market, represents that Underdog is now capable of operating its prediction markets independently. This also means that the company will be registered as a Derivatives Clearing Organization, which is essentially the last step for event contracts being directly held. Having both elevates Underdog to the level of a company like Crypto. com, Kalshi, or Polymarket who are building fully self-contained prediction markets on their platforms rather than relying on external partnerships.
Setting Itself Apart from Competitors
Underdog’s acquisition of Aristotle is a completely different type of move than those made by other competitors who have used partnerships as their way to enter the prediction market space. FanDuel partnered with CME Group, Fanatics with Crypto.com, and PrizePicks reached a deal with Kalshi and Polymarket.
DraftKings acquired Railbird last fall after CFTC green light but hasn’t fully merged the platform yet and is providing DraftKings Predictions through CME and Crypto.com contracts. In contrast, Underdog wants to be a fully stand-alone native exchange, where users have direct access to sports event contracts and wholesale markets.
Jeremy Levine, Chief Executive Officer and Co‑Founder, emphasized the opportunity ahead:
We’re in the early innings of what prediction markets can be, especially for sports fans. We’ll use this opportunity to bring the same relentless focus on innovation and experience that we’ve always brought to our customers.
Levine added that sports remain central to the company’s vision:
The reality is, prediction markets are primarily about sports. No company knows how to engage with sports fans and create products for sports fans better than Underdog.
