Underdog builds exchange-based risk desk

This move turns prediction markets into Underdog’s wholesale risk desk, not just a competing consumer app. When users pile into one side of a player prop or a big event, Underdog can offset part of that exposure by buying or selling the opposite outcome on an exchange like Kalshi instead of keeping all the risk on its own balance sheet. That matters most on volatile, headline driven events where pricing can move fast and customer demand gets one sided.

• Underdog’s core money maker is Pick'em, a high frequency product with many small outcomes each day. That creates lots of spots where customer action can skew hard to one side, so outside hedging works like insurance for the biggest positions while the core fantasy app keeps acquiring and retaining users.
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• Kalshi and Polymarket are becoming liquidity venues that other apps plug into, not just destinations for retail bettors. The strategic shift is similar to how sportsbooks buy risk from market makers, except here the hedge sits on federally regulated event contract exchanges with deep sports flow and fast price discovery.
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• The hedge can lower earnings volatility, but it also ties Underdog more tightly to the prediction market regulatory fight. By late 2025, states were already scrutinizing operator relationships with Crypto.com and Kalshi, showing that risk transfer may improve trading operations while increasing licensing pressure.
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The next step is a tighter loop between consumer fantasy products and exchange based risk management. As prediction market liquidity deepens in sports, operators like Underdog can price more aggressively, hold less risk in house, and gradually look more like trading driven sportsbooks with fantasy as the customer funnel.