Underdog
- Underdog was founded in 2020 as daily fantasy specialist
- Firm was valued at US$1bn after Series C round last year
- Aristotle Exchange is fully compliant with US regulations
Underdog Fantasy is continuing its pivot to prediction markets with the acquisition of Aristotle Exchange, allowing it to offer its own event contracts.
Prediction markets see customers exchange contracts tied to the result of a particular sporting event, with their value appreciating or depreciating accordingly.
Prediction markets operate under federal commodities and derivatives regulation rather than traditional state gambling laws. This means the service can be offered in US states where betting is not legal.
The company launched a prediction markets service in December through a partnership with Crypto.com. Acquiring a federally-compliant prediction market exchange will provide Underdog with greater flexibility, agility, and capability as it seeks to expand its offering.
Aristotle Exchange DCM and Aristotle Exchange CDO are a Commodity Futures Trading Commission (CFTC) registered Designated Contract Market (DCM) and a Derivatives Clearing Organisation (DCO).
“We look forward to working with the CFTC to offer an exchange that brings even more options to enjoy sports to our customers,” said Jeremy Levine, chief executive and co-founder of Underdog. “We’re in the early innings of what prediction markets can be, especially for sports fans.
“We’ll use this opportunity to bring the same relentless focus on innovation and experience that we’ve always brought to our customers. The reality is, 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.”
Underdog was founded in 2020, initially focusing on fantasy sports before expanding into sports betting.
The company was once the fastest growing sports gaming in the US and believed that its ability to develop products and services specifically for the US market was a competitive differentiator. It raised US$70 million in a Series C funding round that valued it at US$1 billion, giving it unicorn status.
However, it closed its sole betting operation in North Carolina in late 2025 and, earlier this month laid off 125 employees – or 20 per cent of its workforce – as part of the shift towards the prediction space.
FanDuel has also launched an exchange, joining early movers Kalshi and Polymarket in the market, while Fanatics and DraftKings also have plans to follow suit.
However, the emergence of prediction market operators has triggered several legal clashes with state regulators, many of whom believe they are forms of gambling and should therefore be subject to their oversight.
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