Key Takeaways
- Aristotle Exchange acquisition provides Underdog with CFTC-licensed exchange and clearinghouse infrastructure
- Direct ownership eliminates need for third-party partnerships to operate event contract markets
- Company closed North Carolina sportsbook and withdrew Missouri application as part of sports betting exit
- More than 125 workers lost their jobs in restructuring representing over 20% of workforce
- PredictIt remains separate entity and was excluded from the transaction
In a strategic pivot, Underdog has completed the purchase of Aristotle Exchange, securing access to a Commodity Futures Trading Commission-regulated infrastructure. This transaction provides the company with operational control over both a derivatives exchange and an associated clearinghouse.
Previously, Underdog relied on third-party arrangements with Crypto.com’s exchange infrastructure to facilitate sports event contracts. The new acquisition eliminates this dependency, allowing Underdog to independently manage contract listings and operations.
Jeremy Levine, who leads Underdog as CEO, expressed optimism about the sports prediction market opportunity. “We’re in the early innings of what prediction markets can be, especially for sports fans,” he stated in announcing the deal.
This purchase represents a significant pivot in Underdog’s business approach. Over recent months, the company has systematically withdrawn from conventional sports wagering operations.
December 2025 marked Underdog’s departure from North Carolina, where it discontinued sportsbook services entirely. The company simultaneously withdrew its pending Missouri sportsbook application, signaling a complete exit from traditional betting markets.
Underdog has also restructured its daily fantasy sports offerings. The Pick ’em product line, which operated on a house-banked model, has been discontinued in multiple jurisdictions and currently operates in only 15 states.
States including California and Arizona, where Pick ’em faced regulatory scrutiny, now receive peer-to-peer alternatives from Underdog instead of the original product.
Late February brought workforce reductions of approximately 125 positions, exceeding 20% of Underdog’s employee base. Levine directly attributed these layoffs to the operational transition from state-licensed operations to a federally regulated prediction market approach.
The Race to Acquire Exchange Licenses
Underdog’s acquisition strategy mirrors moves by several major competitors. DraftKings completed its Railbird Exchange purchase in October, while Robinhood collaborated with Susquehanna International Group to acquire LedgerX. Coinbase separately purchased The Clearing Company.
Acquiring established licensed entities bypasses the lengthy regulatory approval timeline that new applications would face. Despite these acquisitions, none of the purchasing companies has yet launched independent prediction market products.
Prediction markets function under federal commodities regulation rather than state gambling frameworks. A single federal authorization enables nationwide service delivery, contrasting sharply with sports betting’s requirement for individual state licenses.
This regulatory distinction has fueled significant sector investment. It has simultaneously generated legal conflicts between state authorities and platforms like Kalshi regarding the proper classification of sports-related event contracts.
PredictIt Remains Independent
Aristotle Exchange has longstanding connections to PredictIt, the political prediction marketplace established in 2014. PredictIt enables participants to trade contracts tied to electoral contests and governmental outcomes.
Operating under a CFTC no-action letter as an academic initiative rather than as a registered exchange, PredictIt was explicitly excluded from Underdog’s purchase.
Toni Galeassi, serving as PredictIt’s public relations director, confirmed no impact to the platform. “The ownership and operational structure of PredictIt remains unchanged,” she clarified, emphasizing the platform will “continue operating and conducting business as usual.”
In a regulatory update last year, PredictIt’s individual contract limit increased from $850 to $3,500, while the previous 5,000-participant market cap was eliminated through a modified CFTC no-action arrangement.
