Underdog has acquired both Aristotle Exchange DCM and Aristotle Exchange DCO, giving the US sports operator its own CFTC-registered infrastructure to offer event contracts directly. The move positions Underdog to compete in the fast-growing prediction markets sector without relying on third-party platforms.

CFTC Registration Changes the Game

The acquisition brings Underdog a designated contract market (DCM) and a derivatives clearing organization (DCO), both registered with the Commodity Futures Trading Commission. That regulatory framework is crucial.

It means Underdog can offer event contracts compliantly, letting customers take positions on sports outcomes and other events within a properly regulated structure.

Underdog has been in the prediction space since September 2024, when it became the first sportsbook to offer sports predictions through its app. Until now, though, it operated as an intermediary, connecting users to other platforms. Owning the exchange infrastructure changes that dynamic completely. The company can now control the entire customer experience and expand its offerings without third-party constraints.

Sports Focus Sets Underdog Apart

Jeremy Levine, Underdog’s co-founder and CEO, made it clear the company sees sports as the natural home for prediction markets. “We’re in the early innings of what prediction markets can be, especially for sports fans,” Levine said. “We’ll use this opportunity to bring the same relentless focus on innovation and experience that we’ve always brought to our customers.”

He added that prediction markets are “primarily about sports,” positioning Underdog’s expertise as a competitive advantage. That’s not just marketing talk. Sports-focused prediction markets have different dynamics than political or financial contracts. Understanding player performance, game variables, and fan engagement matters. Underdog has built its business around exactly that knowledge.

Growing Market, Strategic Timing

The prediction markets sector has seen real growth recently, with increased regulatory clarity and consumer interest. By acquiring existing CFTC-registered entities rather than applying for new registrations, Underdog accelerates its timeline considerably.

The regulatory approval process for these designations can take years.

Lazard served as financial advisor to Aristotle in the transaction, with Willkie Farr & Gallagher handling legal matters. Financial terms were not disclosed.

For Underdog, the acquisition represents a major strategic shift from intermediary to operator. The company can now design contracts, set terms, and manage risk directly. That control should allow faster innovation and tighter integration with its existing sports offerings. Whether prediction markets can scale beyond the early adopter crowd, well, the jury’s still out, but Underdog has positioned itself to find out.

What the team thinks

Philippa Ashworth says:

This is a textbook vertical integration play that gives Underdog serious regulatory moat in a crowded market. While everyone else is scrambling for exchange partnerships or white label solutions, Underdog just bought itself years of competitive advantage by owning the entire infrastructure stack. The real story here is timing, they’re making this move while prediction markets are still in regulatory flux, which means they can help shape compliance standards rather than just follow them.