Underdog prediction market operations moved in house on Saturday July 18, when the New York company switched on its own federally licensed exchange. Until then it offered contracts through outside venues, Crypto.com first and later Kalshi. Now it owns the plumbing, the order books and the settlement terms.

How the Underdog Prediction Market Stack Came Together

The groundwork was laid in March, with the purchase of Aristotle Exchange DCM and Aristotle Exchange DCO, a CFTC-registered Designated Contract Market and Derivatives Clearing Organization. Underdog was already a registered Futures Commission Merchant, which gives it all three designations and makes it the first sports company holding the complete licence stack rather than renting access to someone else’s.

Chief executive and co-founder Jeremy Levine announced it live on CNBC, framing the shift as the natural end point of a journey from fantasy sports through regulated betting to prediction markets. He also said only Kalshi and Robinhood have generated more notional volume since September 2025, which puts the Underdog prediction market business third in a category it entered barely ten months ago.

What Owning the Underdog Prediction Market Exchange Changes

Economics shift more than product. Routing volume through Kalshi or Crypto.com left trading and clearing revenue with those venues. Bringing the DCM and DCO inside captures that margin, and the company can list or adjust contracts on its own timeline instead of a partner’s product calendar. In a category where offerings turn over with the sports calendar, sometimes daily, that speed matters.

Every Underdog prediction market trade also becomes proprietary data. Levine expects a substantial jump once the NFL season begins, and there is evidence behind the optimism, since prediction operators collectively took roughly 27 percent of total sports betting market share during the World Cup on H2 Gambling Capital estimates.

The Underdog Prediction Market Bet Is Bigger Than It Looks

Here is the fact the announcement understates. Underdog exited regulated sportsbook operations altogether, closing the online sportsbook it had launched in North Carolina, to concentrate wholly on prediction markets.

That reframes everything. This is not a company adding a federally regulated product beside a state-licensed one. It abandoned the state-licensed business and staked the company on federal preemption holding. Rising state betting taxes gave operators reason to look at prediction markets generally, and DraftKings and FanDuel have moved in the same direction, but neither walked away from its sportsbook to do it. DraftKings had in fact launched its own DKeX exchange first, so vertical integration is the direction of travel rather than an Underdog innovation.

The Fight the Underdog Prediction Market Now Owns

Sports-flavoured event contracts sit inside an unresolved argument over whether CFTC oversight preempts state gambling law, and Kalshi has faced suits or challenges from regulators in multiple states on exactly that question. Owning a DCM grants no exemption. It simply makes Underdog the direct target rather than a customer standing behind another firm’s licence.

Underdog appointed Nick Lundgren as chief legal officer as the expansion proceeded, which reads as preparation rather than coincidence. The Underdog prediction market exchange, branded UDX, is accessible across 37 states. Watch whether state regulators pursuing Kalshi extend that pressure to a newly self-owned venue, and watch how fast the contract set widens now that no partner sign-off is required, particularly into the culture and non-sports categories the company has signalled. Given the sportsbook exit, an adverse ruling would not dent one product line. It would remove the whole business.

Fintechbits covers prediction markets, event contracts and financial regulation. Nothing here constitutes financial or investment advice. All analysis represents the editorial views of Fintechbits.