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 July 18, 2026, after acquiring two CFTC-registered entities — Aristotle Exchange DCM and Aristotle Exchange DCO — in March. Underdog was the first sports gaming company to offer prediction market access (through Kalshi and Crypto.com) in fall 2025. Going direct gives it full vertical control. The platform has $6.49 billion in cumulative notional volume, putting it third in the market behind Kalshi and Robinhood.
Underdog launched its own CFTC-licensed prediction market exchange on July 18, 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 organizations — giving it the regulatory infrastructure to list and clear its own event contracts without routing through a third-party exchange. Before the launch, Underdog had offered prediction market access through partnerships with Kalshi and Crypto.com, making it the first sports gaming operator to bring prediction market trading directly into its app when those partnerships went live in fall 2025.
The move matters competitively because Underdog's user base is built around sports. The company grew as a best-ball fantasy sports platform — a format that skews toward engaged sports fans who follow rosters, injury reports, and game dynamics rather than casual bettors. That audience maps naturally onto sports event contracts: they already have the information advantage that prediction market theory says should produce efficient prices. By owning the exchange rather than relying on Kalshi's market structure, Underdog keeps the economics of market-making and contract listing in-house and can build sports-specific market designs without negotiating with a competitor. CEO Jeremy Levine framed it directly: 'Prediction markets are largely about sports, and Underdog is the best at sports.'
The current competitive rankings show how quickly the market is consolidating into distinct tiers. Kalshi leads with $86.5 billion in cumulative notional volume since September 2025, with Robinhood second at $32.5 billion — a figure that reflects both Robinhood's large retail user base and its decision to route World Cup event contracts through its own Rothera exchange starting in June. Underdog sits third at $6.49 billion in cumulative notional, narrowly ahead of Polymarket's US regulated platform at $6.48 billion. DraftKings and FanDuel trail further behind. The rankings illustrate a structural pattern: sports-first platforms are outpacing the crypto-native prediction markets in US regulated notional volume, because the sports-event contract category is where the mass-market user interest actually is.
Underdog's exchange launch is the fifth major CFTC-licensed prediction market venue now active in the US market alongside Kalshi, Polymarket's QCEX, Robinhood's Rothera, and DraftKings. Each of these operators is betting that owning the exchange layer — rather than distributing through someone else's — is necessary to capture the margin and the data that comes with matching buyers and sellers directly. For Kalshi, which was the primary exchange infrastructure partner for most of these operators when prediction markets first scaled in 2025, the pattern represents a systematic reduction of the distribution advantage it held in the sector's early phase. The platforms that once sent Kalshi volume are now building their own exchanges, while Kalshi's own regulatory battles in ten states continue.
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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 misdemeanor, 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 of 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 scrutinizing 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 attempting to trade 'oftentimes after the fact.' The remarks highlight the CFTC's dual and somewhat conflicting role as both the platforms' federal protector and their manipulation watchdog, at a time when the agency has shed enforcement staff.