UDX changes the plumbing behind Underdog's prediction markets, not the pick'em contests you already know. The real shift is strategic: Underdog now owns the exchange, clearing, and customer-funds licenses, which gives it more control over what markets it can list. Pick'em players don't need to do anything — but it's worth understanding the difference between a pick'em entry and an event contract before you try both.
What Underdog Actually Launched
Underdog has been offering prediction markets since September 2025, but until now it didn't run the exchange underneath them. Those trades went through outside partners — Crypto.com and Kalshi — according to coverage from Covers and Sportsbook Review.
That changed this month. Here's the timeline as reported by industry outlets:
- March 2026: Underdog acquired Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO, Inc., picking up a CFTC-designated contract market and a derivatives clearing organization.
- July 15: the exchange self-certified its first sports event contracts with the CFTC — seven contract templates covering baseball and basketball, built around game-winner, winning-margin, and total-score outcomes.
- July 18: Underdog publicly launched UDX, its in-house exchange, integrated into the Underdog app.
Underdog also holds a futures commission merchant (FCM) registration, the license that lets a firm accept customer funds and execute trades. With all three — DCM, DCO, and FCM — Underdog is being described as the first U.S. sports gaming company to hold the full federal license stack for a prediction market business. That's the company's framing as reported by outlets including Prediction Authority and World Casino Directory, and it's a meaningful one: Underdog now lists the contracts, clears them, and holds the customer accounts.
Why Underdog Built Its Own Exchange
CEO Jeremy Levine put it bluntly in launch coverage: "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."
Strip away the marketing and there are three practical reasons a company does this:
- Control over the menu. When you route trades through a partner's exchange, you can only offer what that partner lists. Owning the DCM means Underdog decides which contracts to self-certify and when.
- Control over the product. The first UDX filings, as described by World Casino Directory, include the ability to bundle outcomes using AND/OR logic. That's the building block for combo-style products, and it's the kind of design choice you only get to make on your own exchange.
- Economics. Every trade routed through someone else's exchange and clearinghouse means sharing the economics with that partner. Bringing it in-house changes that math.
Levine also made clear this is a runway to football season. "Now that we're launching on our exchange, what's going to come over in the next few months as we head into NFL season, it's going to be a huge leap and a lot more we can offer to our customers," he told Covers. In other words: the July launch is baseball and basketball, and the plan is to build out from there.
Scale-wise, Underdog isn't starting from zero. World Casino Directory reported the company has processed nearly $6.5 billion in notional prediction market volume since September 2025, and Levine told Covers that Underdog ranks third in notional trading volume over that span, behind only Kalshi and Robinhood.
What Changes for Pick'em Players
Short answer: nothing you have to act on. None of the launch coverage describes changes to how Underdog's fantasy pick'em contests work. UDX is the exchange behind Underdog's prediction markets — a separate product that sits in the same app.
Underdog still runs daily fantasy contests alongside its CFTC-regulated prediction markets. Your pick'em entries, your best ball drafts, and your contest history aren't moving to an exchange.
What you may notice is more on the prediction-market side of the app over time. If Levine's "next few months" comment plays out, expect the market menu to widen as football approaches. That's a reason to understand how the two products differ before you start mixing them.
Pick'em Entry vs Event Contract: Know the Difference
They live in the same app and both involve sports outcomes, but they're built differently, and the strategy is different.
| Feature | Fantasy Pick'em | Event Contract (UDX) |
|---|---|---|
| What you pick | Higher/lower on player stat projections | Yes/no on a defined outcome (e.g., game winner) |
| How it pays | Fixed payout multiplier for the entry | Contract settles at $1 if the outcome happens |
| Price | Set by entry size and payout table | Set by the market; moves as people trade |
| Multi-leg | Built in — you need several picks | Optional — single outcomes or bundles |
| Regulated as | Fantasy contest (state-by-state) | Federally regulated event contract |
A few points that matter for strategy:
- Price is information. On an event contract, the market price tells you roughly what other traders think the probability is. Your edge has to come from disagreeing with that price for a good reason — not from liking a team.
- Pick'em rewards correlation; contracts reward precision. In a multi-pick entry, you can build correlated legs that rise or fall together. On a single contract, you either have an edge on that one outcome or you don't.
- You can be right and still overpay. Buying a contract at a high price for a likely outcome leaves very little upside. The same is true of pick'em when the payout multiplier doesn't compensate for the risk of extra legs.
The World Casino Directory write-up describes UDX contracts as having a $1 notional value, trading between $0.001 and $0.999. So a contract's price is effectively its implied probability. That framing alone makes event contracts easier to evaluate than many pick'em payout tables, but it also means you're trading against other people who are doing the same math.
How This Compares to PrizePicks
PrizePicks took a different route into the same space. In November 2025 it launched prediction markets with Kalshi, using its own FCM subsidiary, Performance Predictions II, to give customers access to Kalshi-listed contracts inside the PrizePicks app — "Team Picks" on team outcomes, plus "Culture Picks" on non-sports events.
That's the key structural difference:
- Underdog now owns the exchange, the clearinghouse, and the FCM.
- PrizePicks holds an FCM and lists contracts from Kalshi's exchange.
Neither model is automatically better for you as a player. Owning the exchange gives Underdog more freedom to design its own contracts. Partnering with Kalshi gives PrizePicks access to an established exchange's library without building one. What matters to you is which app offers the markets you want, at prices you like, in your state.
For a deeper look at how the two pick'em products stack up on payouts and features, see our Underdog vs PrizePicks comparison and the pick'em payout breakdown.
Which Should You Use?
For pick'em, the choice comes down to payouts, contest formats, and which projections you think are softer. For prediction markets, it comes down to which contracts each app lists and at what prices. Because the two companies source contracts differently — Underdog from its own exchange, PrizePicks from Kalshi — the menus won't always match. If a market you want isn't available on one app, it may be on the other.
Underdog's own-exchange model may also mean its contract lineup changes faster, since it can self-certify new contracts directly. That cuts both ways: more markets, but also newer markets with less trading history.
The Regulatory Backdrop
Underdog is building its own exchange in the middle of an unsettled legal fight. The core question is whether CFTC-regulated sports event contracts can be offered nationwide, or whether states can treat them as gambling under state law.
- At a mid-July industry conference covered by Covers, state attorneys general said they expect the U.S. Supreme Court to weigh in, possibly in 2027. More than 40 AGs signed a comment letter to the CFTC opposing prediction markets.
- Kalshi has won favorable rulings in the Third Circuit, while other appeals are pending, according to the same Covers report.
- Minnesota passed SF 3432, a law making it a felony to operate a prediction market platform. Kalshi, Polymarket, and the federal government are challenging it in federal court in Minneapolis, Courthouse News reported on July 2. The law is set to take effect in August.
None of that is aimed at Underdog's pick'em contests, which are regulated as fantasy contests state by state. But it's a reminder that the prediction-market side of these apps sits on newer legal ground than DFS. Availability can differ by state and can change. Underdog's markets are available in eligible states only — check your state in the app before you deposit or trade.
What Pick'em Players Should Do Now
- Nothing, if you only play pick'em. Your contests and account work the way they did last week.
- Learn the contract basics before you trade. Price equals implied probability. A contract that settles at $1 and costs most of a dollar has limited upside.
- Keep separate bankrolls. Treat prediction markets as their own product with their own budget. Our 1% bankroll rule works for both.
- Watch the NFL buildout. Levine has signaled more is coming before football. New markets often mean softer pricing early — and also more ways to overtrade.
- Compare apps. Underdog and PrizePicks are both building pick'em-plus-markets apps. Having both gives you more market selection and more promotions.
The Bottom Line
UDX is a big structural move for Underdog. It now owns the exchange, the clearinghouse, and the customer-funds license behind its prediction markets, instead of renting them from Crypto.com and Kalshi. For pick'em players, nothing about your contests changes today. What changes is the ceiling: Underdog can now design and list its own contracts, and it has said more is coming before NFL season.
If you play pick'em, keep playing pick'em. If you're curious about event contracts, start small, learn how the pricing works, and keep that bankroll separate. And if you're choosing between Underdog and PrizePicks, there's no rule against having both.