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
Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanour, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinising oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.