Aristotle Exchange, which Underdog acquired in March and rebranded as UDX, launched Friday after self-certifying its first sports contracts, setting trading fees and establishing a market-maker program
Major fantasy sports company Underdog launched its own prediction market exchange Friday, bringing more of its rapidly growing Predictions business in-house.
Underdog CEO Jeremy Levine confirmed the launch during an interview Friday afternoon with CNBC’s Contessa Brewer. “Today, we are launching our own exchange,” Levine said, describing it as a federally regulated platform operating through the company’s designated contract market and derivatives clearing organization.
Aristotle Exchange DCM, now operating as Underdog Exchange, or UDX, filed seven baseball and basketball event contract templates with the Commodity Futures Trading Commission (CFTC) on Wednesday. The filings said UDX intended to list the first contracts for trading no later than July 17, the day Levine announced the launch.
Underdog acquired Aristotle’s federally regulated exchange and clearinghouse in March, allowing the company to list and clear contracts itself rather than relying entirely on outside venues. The acquisition reflects a growing industry trend toward owning more of the infrastructure behind prediction markets. DraftKings bought Railbird’s CFTC-approved exchange (now DKeX), while a Robinhood and Susquehanna joint venture acquired a 90% stake in the former LedgerX exchange and clearinghouse, now known as Rothera.
Owning UDX gives Underdog greater control over which markets it offers, how quickly it launches them and the revenue generated by customer trading. Underdog has relied on two third-party exchanges, Kalshi and Crypto.com’s CDNA, to power its Predictions product.
The launch follows a series of rule changes and operational preparations completed in the weeks leading up to Friday’s announcement.
Underdog says Predictions volume reached $6.49 billion
Levine said Underdog has generated the third-most notional prediction market trading volume in the regulated U.S. market since launching Predictions in September, behind Kalshi and Robinhood.
A CNBC graphic attributed to Underdog listed the company’s volume at $6.49 billion since launch, compared with $6.48 billion for Polymarket US and $1.2 billion for DraftKings Predictions. A separate graphic showed $4.4 billion in Underdog prediction market volume during 2026.
The figures represent trading through Underdog’s existing Predictions product and its third-party exchange relationships, rather than activity on the newly launched UDX.
CNBC also displayed figures showing that Underdog has more than 5 million registered customers and generates more than $500 million in annual revenue. That existing audience could give UDX an advantage over new exchanges that must build a retail customer base from scratch.
Levine said operating its own exchange will allow Underdog to substantially expand the product over the coming months ahead of the NFL season. He rejected the idea that Underdog was shifting toward a business-to-business model in which outside platforms would use UDX’s exchange and clearing infrastructure.
“It’s not a change for us at all,” Levine said. “It’s just a different regulatory framework.”
First contracts cover core sports markets
Six of the seven UDX filings cover the three standard sports markets for baseball and basketball: game winners, run or point spreads and point totals. The templates allow UDX to list contracts tied to a full game or a specified portion of a matchup, potentially including individual innings, quarters or halves.
UDX’s public exchange site says the platform was designed to support pregame, in-game and multi-event sports contracts, although the filings do not identify which leagues, games or contract variations were included in Friday’s launch.
The seventh filing, called the Entity Outcome Contract, provides a wider framework for markets involving individual athletes, teams or groups of competitors. It could support contracts based on tournament winners, playoff qualification, advancement to a particular round or statistical and performance thresholds.
The template also allows UDX to group multiple competitors within a single contract. Markets using “AND” would settle in the affirmative only if every named competitor achieved the specified outcome, while those using “OR” would require only one to do so. That could support some combination-style contracts, although the filing does not establish whether conventional parlays were included in Friday’s launch.
UDX set trading fees ahead of launch
UDX has established a fee schedule for contracts listed on its exchange. Both maker and taker orders are charged under a formula based on the number of contracts and the contract price, with fees highest when a contract trades near 50 cents.
Under the schedule, a 10-contract trade at 50 cents would carry an 18-cent fee after rounding. The same 10-contract trade at 20 cents would cost 12 cents. UDX applies the same public formula to makers and takers, although approved market makers may receive separate incentives through the exchange’s market maker program.
Operating its own exchange allows Underdog to collect exchange-level fees that would otherwise go to Kalshi or CDNA. Underdog may earn separate revenue through its role as an FCM or technology provider, but the terms of those partnerships have not been disclosed. Contracts traded on UDX would instead generate exchange fees for an Underdog-owned entity, allowing the company to keep more of the transaction revenue in-house.
Rule filings paved way for UDX launch
A major overhaul of Aristotle’s rulebook became certified July 16, one day before the listing deadline cited in the new contract filings. The exchange said the changes were intended to align its operations and policies with Underdog “ahead of Aristotle Exchange doing business following the merger.”
The revised rules establish how individual customers can open, fund and clear accounts on UDX, while creating the framework for UDX contracts to be offered through Underdog’s existing platform.
UDX had already established a market maker program that became certified July 2. Approved firms must regularly post both buy and sell prices, helping ensure there is enough liquidity for customers to enter and exit positions without waiting for another retail trader to take the opposite side. The program also refers to contingent multi-leg contracts, another indication that UDX is preparing for parlay-style products.
A separate filing submitted Wednesday would add a request-for-quote (RFQ) system for larger orders. The feature would allow a trader to request prices from participating firms when the regular order book may not offer enough liquidity. That filing remains under CFTC review, meaning the RFQ feature may not have been available for Friday’s launch and could be added later.
Sports-first strategy carries regulatory risk
Underdog launched its Predictions product in September 2025 inside the same app used for its popular fantasy contests. Predictions are currently available in 38 states and Washington, D.C., including major markets like California and Texas, where online sports betting is not legal.
The Predictions product is built primarily around sports. Customers have been able to trade contracts on game winners, spreads, totals and futures across leagues including the NFL, NBA, NHL and MLB, along with college sports, soccer and tennis. Underdog also offers a smaller selection of non-sports contracts through its Culture Markets category, covering topics such as politics, entertainment, business and the economy.
That sports focus creates a potential risk for UDX. State regulators have argued that sports event contracts amount to unlicensed sports wagering, while the CFTC maintains that federally registered exchanges fall under its exclusive jurisdiction. The dispute has produced litigation across several states and remains unresolved. State regulators in Nevada and Michigan have already secured court orders temporarily restricting Kalshi’s sports event contracts within their borders, although the underlying cases remain pending.
Underdog Predictions is already unavailable in many states that have challenged sports event contracts through litigation or regulatory action, including New Jersey, Pennsylvania, Ohio and Michigan. If courts ultimately allow states to block sports event contracts, or if Congress or the CFTC imposes broader limits on them, UDX could face further restrictions on the primary type of market it appears designed to offer.
