Underdog Launches CFTC-Regulated In-House Prediction Market Exchange With Nearly $6.5 Billion Notional Volume

Key Takeaways

• In-House Exchange Launch: Underdog now wholly owns and operates its own CFTC-licensed prediction market exchange four months after acquiring Aristotle Exchange DCM Inc. and Aristotle Exchange DCO.
• Volume Milestone: Nearly $6.5 billion in notional prediction market volume since last September ranks the company third among U.S. operators and ahead of several well-known rivals.
• Full License Stack: Underdog is the first sports company to hold the complete set of DCM, DCO and FCM registrations from the CFTC.
• Vertical Integration Move: The shift from third-party partnerships to full ownership captures more economics and keeps all activity inside the existing Underdog app.

Underdog has launched its own CFTC-regulated prediction market exchange. The move gives the company direct control over trading mechanics and economics for event contracts on sports, culture and more. Casino.org first detailed the launch and the accompanying volume figures that place Underdog as a serious force in the sector.

The announcement arrives about four months after the gaming operator announced the acquisitions of Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO. Those entities supplied the Designated Contract Market and Derivatives Clearing Organization registrations required for federally regulated prediction markets. Deadspin coverage confirmed the launch aligns with broader industry moves toward owning the full infrastructure stack.

Acquisition Timeline and License Completion

That deal supplied the regulatory foundation. The company already held Futures Commission Merchant registration. Combined, the three licenses create the first complete prediction market license stack held by a sports-focused operator.

This vertical step replaces the earlier partnership model. Last September Underdog introduced prediction markets through Crypto.com. Subsequent deals with other yes/no exchanges followed the same third-party pattern. Ownership changes the equation. The new exchange operates wholly inside the Underdog app and under direct company oversight.

From the supplier side this kind of integration alters daily operational realities. Risk can be managed closer to the source. Settlement cycles sit inside one technology stack. Those adjustments matter when volumes scale.

Nearly $6.5 Billion Notional Volume in Under a Year

Underdog has recorded nearly $6.5 billion in notional prediction market volume since launching last September. The figure ranks the company third among all U.S. operators. It also puts Underdog ahead of several established names in the space.

The numbers arrive alongside the in-house exchange announcement. They demonstrate that sports-centric event contracts already attract meaningful activity. Prediction markets remain heavily weighted toward sports outcomes. Underdog built its original business on daily fantasy sports and understands that audience.

“Now with our own exchange, we’re going to unlock so much for more sports fans. Prediction markets are largely about sports, and Underdog is the best at sports,” said CEO and co-founder Jeremy Levine in the statement. The quote appears in the company statement carried by Casino.org and Deadspin.

Liquidity signals matter on the trading floor. Consistent notional volume across thousands of contracts creates tighter spreads and more reliable price discovery. Underdog’s reported totals suggest the platform has cleared that threshold faster than many expected.

Vertical Integration Trend Gains Momentum

DraftKings previously launched its own DKeX exchange for similar reasons. Greater economic control over transactions reduces reliance on external partners and improves margin capture. Underdog now follows the same logic after starting with Crypto.com and other exchanges.

The pattern is clear. Operators who began with distribution partnerships are moving to own the marketplace layer. That shift changes competitive dynamics. Companies with full license stacks can iterate on product features without external approval cycles. They also retain more of the fee revenue that previously flowed to third-party venues.

Coverage in The Event Horizon by Dustin Gouker highlighted the volume release alongside the exchange launch. The combination reinforces that the strategy is already delivering scale. Other gaming and financial services firms are watching the same data points.

Availability Limits and Regulatory Patchwork

Underdog’s prediction market remains unavailable in 13 U.S. jurisdictions. Nevada and Washington, D.C. sit among the excluded markets. This geographic restriction caps the addressable user base even as national volume climbs.

CFTC oversight provides a federal pathway yet state rules still create friction. The limitation is not abstract. It directly constrains where customers inside the Underdog app can access the new exchange. Any operator pursuing similar vertical integration will face the same state-by-state map.

That tension represents a concrete risk. High national notional figures can mask regional gaps. Liquidity in permitted states must compensate for markets where the product cannot launch. The 13-state restriction therefore deserves close attention when evaluating long-term scalability.

Why Exchange Ownership Changes the Operator Calculus

Owning the exchange, clearinghouse and merchant registration compresses the operational chain. Previously separate vendors handled different legs of each trade. Consolidation removes handoffs and associated costs. From an operations perspective the change simplifies compliance monitoring and risk limits.

The $6.5 billion volume figure supplies the first real test of that model. Third-place ranking after less than one year of activity shows sports-focused contracts can generate serious throughput when the operator controls the full stack. It also sets a benchmark for rivals still relying on external exchanges.

Underdog’s trajectory suggests vertical integration is moving from experiment to expectation. Companies without comparable licenses may find themselves at a structural disadvantage on both cost and speed of innovation. The data on the table makes that case plainly.

The next phase will show whether the in-house model sustains volume growth while navigating the 13-state exclusion list. Operators should track how quickly Underdog converts its sports audience into repeat prediction market users inside the same app. That conversion rate may prove more telling than any single notional total.