Underdog Launches Its Own CFTC-Licensed Prediction Market Exchange — Ending Its Reliance on Kalshi
Underdog, the sports prediction and fantasy operator, launched its own federally licensed prediction market exchange on 18 July 2026, after acquiring two CFTC-registered entities in March. Underdog was the first sports gaming company to offer prediction market access (through Kalshi and Crypto.com) in autumn 2025. Going direct gives it full vertical control. The platform has $6.49 billion in cumulative notional volume — third in the market behind Kalshi and Robinhood.
Underdog launched its own CFTC-licensed prediction market exchange on 18 July 2026, completing a transition from distributor to venue operator. The company acquired Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc. in March 2026 — both CFTC-registered designated contract markets and derivatives clearing organisations — giving it the regulatory infrastructure to list and clear its own event contracts without routing through Kalshi. Before the launch, Underdog offered prediction market access via partnerships with Kalshi and Crypto.com, becoming the first sports gaming operator to bring prediction markets into its app when those partnerships launched in autumn 2025.
The move matters competitively because Underdog's user base is built around sport. The company grew as a best-ball fantasy sports platform whose audience already follows rosters, injury news, and game dynamics — the information that prediction market theory says should produce efficient prices. By owning the exchange rather than relying on Kalshi, Underdog keeps the economics of market-making in-house and can design sports-specific market structures without negotiating with a competitor. CEO Jeremy Levine was direct: 'Prediction markets are largely about sports, and Underdog is the best at sports.'
For UK readers, the competitive rankings offer useful context. Kalshi leads at $86.5 billion in cumulative notional volume since September 2025. Robinhood sits second at $32.5 billion, reflecting its large retail user base and the June launch of Rothera for World Cup contracts. Underdog is third at $6.49 billion, narrowly ahead of Polymarket's US regulated platform at $6.48 billion. DraftKings and FanDuel trail further. None of these platforms is currently accessible to UK customers — neither Kalshi, Polymarket, Robinhood, nor Underdog holds a Gambling Commission or FCA licence. The US market is scaling rapidly, and the UK regulatory gap is widening.
Underdog is the fifth major CFTC-licensed prediction market venue now active alongside Kalshi, Polymarket's QCEX, Robinhood's Rothera, and DraftKings. Each is betting that owning the exchange layer — rather than distributing through someone else's marketplace — is necessary to capture the margin and market data that come with matching buyers and sellers directly. For Kalshi, which was the primary exchange infrastructure for most of these operators in 2025, the pattern represents a systematic erosion of the distribution advantage it held in the sector's early phase. The platforms that once sent Kalshi volume are building their own exchanges, while Kalshi's regulatory battles in ten states continue.
Operators mentioned in this article
Recent updates
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Robinhood Agrees to Exit Michigan Sports Contracts by October 9 — Court-Approved Deal Described as Blueprint
Robinhood Derivatives agreed on September 4, under a court-approved stipulation, to stop new Michigan sports event contracts by September 9 and close positions by October 9. Michigan will not enforce gambling laws against Robinhood while it complies. The deal preserves Robinhood's CEA preemption argument and keeps Sixth Circuit appeals on track. Legal Sports Report called it a potential blueprint for similar interim accommodations between platforms and states.
Kalshi Seeks Ninth Circuit En Banc Rehearing While Robinhood Files Separate SCOTUS Petition
Kalshi petitioned the full Ninth Circuit (11 judges) for en banc rehearing of the August 28 3-0 ruling for Nevada on September 9. On the same day, Robinhood filed a separate SCOTUS certiorari petition from the same ruling, going directly to the Supreme Court. New Jersey already has a SCOTUS petition filed from the Third Circuit's April ruling. Two cert petitions now sit before SCOTUS on the prediction market question.