Underdog Nears Launch of In-House Exchange After Filing First Sports Event Contracts

Major fantasy sports activities firm Underdog seems poised to start working its personal prediction market trade as quickly as this week after self-certifying the primary contracts for its newly acquired platform.

Aristotle Exchange DCM, now working as Underdog Exchange, or UDX, filed seven baseball and basketball occasion contract templates with the Commodity Futures Trading Commission (CFTC) on Wednesday. The filings say UDX intends to listing the primary contracts for buying and selling no later than July 17.

Underdog acquired Aristotle’s federally regulated exchange and clearinghouse in March, permitting the corporate to listing and clear contracts itself reasonably than relying solely on outdoors venues. The acquisition displays a rising business pattern towards proudly owning extra of the infrastructure behind prediction markets. DraftKings purchased Railbird’s CFTC-approved trade (now DKeX), whereas a Robinhood and Susquehanna three way partnership acquired a 90% stake within the former LedgerX trade and clearinghouse, now generally known as Rothera.

Owning UDX provides Underdog better management over which markets it gives, how shortly it launches them and the income generated by buyer buying and selling. Underdog presently depends on two third-party exchanges, Kalshi and Crypto.com’s CDNA, to energy its Predictions product, whereas its new trade has established its personal buying and selling charges, market maker program and buyer account framework.

As of Friday morning, Underdog has not formally introduced that UDX was reside. Its public market-data portal confirmed no occasions or trades by July 13, the newest date out there. But the primary product filings arrived after a collection of rule modifications and operational preparations, indicating that the corporate could also be near shifting no less than half of its prediction market enterprise onto its personal trade.

First contracts cowl core sports activities markets

Six of the seven UDX filings cowl the three commonplace sports activities markets for baseball and basketball: recreation winners, run or level spreads and level totals. The templates permit UDX to listing contracts tied to a full recreation or a specified portion of a matchup, probably together with particular person innings, quarters or halves.

UDX’s public exchange site says the platform was designed to help pregame, in-game and multi-event sports activities contracts, though the filings don’t determine which leagues, video games or contract variations might be out there at launch.

The seventh submitting, known as the Entity Outcome Contract, gives a wider framework for markets involving particular person athletes, groups or teams of opponents. It may help contracts based mostly on match winners, playoff qualification, development to a selected spherical or statistical and efficiency thresholds.

The template additionally permits UDX to group a number of opponents inside a single contract. Markets utilizing “AND” would settle within the affirmative provided that each named competitor achieved the required end result, whereas these utilizing “OR” would require just one to take action. That may help some combination-style contracts, though the submitting doesn’t set up that UDX will provide typical parlays at launch.

UDX units buying and selling charges forward of launch

UDX has established a payment schedule for contracts listed on its trade. Both maker and taker orders are charged underneath a system based mostly on the quantity of contracts and the contract worth, with charges highest when a contract trades close to 50 cents.

Under the schedule, a 10-contract commerce at 50 cents would carry an 18-cent payment after rounding. The identical 10-contract commerce at 20 cents would value 12 cents. UDX applies the identical public system to makers and takers, though permitted market makers might obtain separate incentives by the trade’s market maker program.

Operating its personal trade will permit Underdog to accumulate the exchange-level charges that presently go to Kalshi or CDNA. Underdog might earn separate income by its position as an FCM or expertise supplier, however the phrases of these partnerships haven’t been disclosed. Contracts traded on UDX would as an alternative generate trade charges for an Underdog-owned entity, permitting the corporate to hold extra of the transaction income in-house.

Rule filings add to launch preparations

A significant overhaul of Aristotle’s rulebook became certified July 16, at some point earlier than the itemizing deadline cited within the new contract filings. The trade stated the modifications had been supposed to align its operations and insurance policies with Underdog “forward of Aristotle Exchange doing enterprise following the merger.”  

The revised guidelines set up how particular person clients can open, fund and clear accounts on UDX, whereas creating the framework for UDX contracts to be provided by Underdog’s current platform.

UDX had already established a market maker program that turned certified July 2. Approved companies would commonly submit each purchase and promote costs, serving to guarantee there may be sufficient liquidity for purchasers to enter and exit positions with out ready for one more retail dealer to take the alternative aspect. The program additionally refers to contingent multi-leg contracts, one other indication that UDX is making ready for parlay-style merchandise. 

A separate filing submitted Wednesday would add a request-for-quote (RFQ) system for bigger orders. The characteristic would permit a dealer to request costs from collaborating companies when the common order guide might not provide sufficient liquidity. That submitting stays underneath CFTC evaluate, that means UDX may launch first by its commonplace order guide and add the larger-order characteristic later. 

Sports-first technique carries regulatory danger

Underdog launched its Predictions product in September 2025 inside the identical app used for its common fantasy contests. Predictions are presently out there in 38 states and Washington, D.C., together with main markets like California and Texas, the place on-line sports activities betting is just not authorized.

The Predictions product is constructed primarily round sports activities. Customers have been in a position to commerce contracts on recreation winners, spreads, totals and futures throughout leagues together with the NFL, NBA, NHL and MLB, together with school sports activities, soccer and tennis. Underdog additionally gives a smaller choice of non-sports contracts by its Culture Markets category, masking subjects corresponding to politics, leisure, enterprise and the financial system.

That sports activities focus creates a possible danger for UDX. State regulators have argued that sports activities occasion contracts quantity to unlicensed sports activities wagering, whereas the CFTC maintains that federally registered exchanges fall underneath its unique jurisdiction. The dispute has produced litigation throughout a number of states and stays unresolved. State regulators in Nevada and Michigan have already secured courtroom orders briefly proscribing Kalshi’s sports activities occasion contracts inside their borders, though the underlying instances stay pending.

Underdog Predictions is already unavailable in lots of states which have challenged sports activities occasion contracts by litigation or regulatory motion, together with New Jersey, Pennsylvania, Ohio and Michigan. If courts in the end permit states to dam sports activities occasion contracts, or if Congress or the CFTC imposes broader limits on them, UDX may face additional restrictions on the first kind of promote it seems designed to supply.

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