There are many comments and views on the rise of prediction markets. One you will never hear is that they aren’t growing like gangbusters. Their growth is evident in both trading volumes and the number of new competitors entering the sector or diversifying into it to compete with Polymarket and Kalshi.
Underdog, a leading Daily Fantasy Sports app, launched its own proprietary exchange for event contracts on July 18, 2026. This step lets Underdog manage trading activity directly through its existing app, which has a reported 2 million active users. Traders now handle these event market opportunities without switching to separate tools from their Pick ’em sports betting app.
Having secured the full license stack through a recent acquisition, Underdog operates as a registered Futures Commission Merchant, Designated Contract Market, and Derivatives Clearing Organization. The structure supports internal trade routing and clearing as required by the CFTC.
Underdog generated nearly $6.5 billion in notional volume before this launch through an earlier prediction-market partnership with Crypto.com. That total ranks the company third among operators in the U.S. regulated predictions market. The independent exchange arrives at a moment of clear demand from traders focused on sports and cultural events. Earlier this year, Underdog laid off a large number of its Daily Fantasy side staff, seeing prediction markets as perhaps its larger future.
Acquisition Delivers Complete License Stack for Internal Control
Four months before the July launch, Underdog acquired Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO. These purchases supplied the designations for operating a market and handling clearing. In addition, the prior Futures Commission Merchant registration was completed, satisfying the required approvals. All of this is part of their plan to use their Crypto.com event market offerings to their user base as a temporary status until they can fully handle their own markets internally.
With all elements in place, Underdog runs its exchange without outside partnerships needed for core functions. This setup improves operational control, supports compliance at every stage, and, of course, reduces revenue splits with any third parties. Traders on Underdog should experience smoother processes with a single integrated system.
The company prepared carefully to meet regulatory standards before activation on the launch date. These are not simple (or inexpensive) legal processes. Once cleared, the exchange became available to users immediately. Building on this foundation, Underdog can now adjust its product features based on direct user feedback.
CEO Jeremy Levine Points to Expanded Possibilities for Sports Fans
CEO and co-founder Jeremy Levine described the launch as a way to unlock greater value for sports fans. That’s public-relations speak for “they will have even more betting options.” He noted that sports-centered markets closely align with the company’s pre-existing core strengths and brand reputation. With the new exchange active, Underdog plans to deliver more tailored options for those who follow athletic events.
Levine’s comments highlighted a commitment to product innovation that builds on the app’s established features. Internal operations should allow far quicker responses to user preferences. The full license stack gives the team flexibility to refine offerings over time. As with other companies entering the regulated prediction market space with their own licensed exchanges, Levine sees direct management as key to sustained progress.
Underdog first introduced event contracts last September through a partnership with Crypto.com. That step generated initial activity and introduced the concept of prediction market event contracts to existing users. Steady growth followed as traders explored the available options. The partnership phase generated nearly $6.5 billion in notional volume since that launch, establishing a clear track record of experience. This achievement demonstrated demand and positioned the company for the next phase of development: its own proprietary exchange.
Lessons from the earlier collaboration shaped the decision to pursue full internal control. Acquiring the necessary Aristotle entities enabled this shift while preserving user familiarity with the Underdog product, name, and goodwill. Traders who participated during the Crypto.com partnership phase will automatically continue their activity under the updated structure.
The Underdog exchange operates where local rules permit Underdog markets. It remains unavailable in 13 jurisdictions that apply different restrictions. These areas include Nevada and Washington, D.C., reflecting varied regulatory requirements.
Vertical Integration Places Underdog Alongside Sector Developments
Underdog is following a strategy of greater self-reliance seen in other sports gaming companies. DraftKings recently launched its own prediction market exchange, DKeX, to manage similar internal processes and operate its DraftKings Prediction services. This management pattern helps firms capture more value while strengthening oversight of trading activity.
The Underdog launch is only the latest in a wave of serious entrants to the prediction market space. The obvious newcomers will be the sports betting and daily fantasy sports companies. But other crypto-based and financial-market companies will continue to enter as well. The trajectory of prediction markets, anticipated by some to reach $1 trillion in annualized volume by 2030, is a beacon of shining financial opportunity.
References
- FishDuck article: Underdog Launches Its Own CFTC-Regulated Prediction Market Exchange, published July 18, 2026, by Tyler Rhodes
- Commodity Futures Trading Commission official resources on regulated exchanges
- DraftKings information on its DKeX exchange development
The PolyPunter staff works tirelessly to bring you the latest and most insightful news, information, and tips on the fast-growing economic, financial, and social phenomenon that is prediction markets.
