Lynnae Williams Journalist
Lynnae is a journalist covering the intersection of technology, culture, and gambling. She has more than five years of experience as a writer and editor, with bylines at SlashGear and MakeUseOf. On the iGaming side,...
Read Full BioFantasy sports operator Underdog announced on Monday that it has acquired Aristotle Exchange, a Commodity Futures Trading Commission (CFTC)-registered derivatives exchange and clearinghouse.
The strategic move will allow the company to launch its own federally compliant prediction market platform rather than relying on partnerships with other exchanges, as it currently does through its partnership with Crypto.com.
Through its acquisition of Aristotle, Underdog will gain control of a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO), two of the registrations necessary to operate a prediction market in the United States.
Underdog will now be able to clear sports-related event contracts directly, giving it greater control over how prediction markets are listed and settled on its platform.
“We look forward to working with the CFTC to offer an exchange that brings even more options to enjoy sports to our customers,” Underdog CEO and co-founder Jeremy Levine said in the press release announcing the deal. “Prediction markets are primarily about sports and no company knows how to engage with sports fans and create products for sports fans better than Underdog.”
While Underdog will take over Aristotle’s exchanges, the company will continue operating its existing products, including PredictIt, the political prediction market run by Aristotle.
Deal Gives Underdog Its Own Federally Compliant Exchange
With the deal signed, Underdog can now offer prediction markets natively rather than relying on third-party exchanges. Last year, the company became the first sports betting operator to list prediction markets in its app through a partnership with Crypto.com, whose CFTC-registered exchange provided the event contracts.
The acquisition of Aristotle’s exchange licenses gives Underdog the ability to operate its own prediction market exchange and clearinghouse, ending its reliance on a third-party partner under its deal with Crypto.com.
Underdog will also be able to directly list contracts tied to sports outcomes and other real-world events, a quickly growing segment of financial markets that is attracting increased attention from trading-first and sports betting companies.
Of course, the deal will put Underdog more squarely in the crosshairs of state regulators who have issued cease-and-desist orders and are pursuing lawsuits against prediction markets across several jurisdictions.
Even before acquiring Aristotle Exchange, several states had already taken action against Underdog because of its prediction market offerings through Crypto.com. For example, Arizona moved to revoke its fantasy license over the products, while other states, like Tennessee and Connecticut, issued cease-and-desist orders to its partner, Crypto.com, accusing the platforms of running unlicensed sports wagering operations disguised as event contracts.
A Fast Track Into Prediction Markets
Underdog’s deal with Aristotle Exchange is a strategy that’s becoming more common in the prediction market space: acquiring companies that already hold the regulatory licenses required to operate derivatives exchanges.
This shortcut allows them to obtain the key licenses (DCM and DCO registrations from the CFTC) needed to operate a prediction market, while avoiding what would otherwise be a difficult, time-consuming approval process.
One of the most widely reported examples came in 2025, when prediction market platform Polymarket acquired the holding company behind QCEX, a CFTC-licensed derivatives exchange and clearinghouse, for $112 million. That deal paved the way for Polymarket to re-enter the U.S. as a fully regulated trading platform.
Now that it controls DCM and DCO licenses via Aristotle, Underdog has taken the lead among other major sports betting competitors, such as DraftKings, FanDuel, and Fanatics, in securing the regulatory infrastructure needed to operate CFTC-regulated prediction markets.
