Underdog has surrendered its daily fantasy sports licences in seven states and is winding down its Drafts product there, according to GamingAmerica. The company said no new drafts will be accepted in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania and Ohio once the shutdown takes effect after the first game of the 2026 NFL season. Existing contests already entered in those states will continue to play out normally.
Jeremy Levine, the company’s chief executive and founder, said in a post on X on Sept. 5 that regulators in those states told Underdog it could not simultaneously keep a fantasy sports licence and offer its CFTC-approved prediction market product. He said the company chose to drop fantasy sports rather than pull back on prediction markets.
As reported in July, Underdog had already launched its own prediction market exchange after buying Aristotle Exchange and securing CFTC licences. Levine described the fantasy pullback as painful because Drafts was the company’s first product when it launched in 2020. He said Drafts drew far less usage than Underdog’s other offerings, and that the company was exploring ways to bring it back, though it was too early to commit to any solution.
CDC Gaming reported that the company then filed lawsuits in Ohio, Massachusetts, Wisconsin, New Mexico and Washington state during the week of Sept. 8. The suits seek to block regulators or attorneys general from exercising jurisdiction over, regulating or terminating Underdog’s sports-event contracts. Underdog is asking for permanent injunctions and declaratory judgments that state gambling or wagering laws, as applied to its prediction markets, violate the Supremacy Clause. It also says the CFTC has exclusive jurisdiction over trading on designated contract markets and that it complied with federal approval procedures.
Pennsylvania’s 2016 fantasy sports report said the rise of DFS had prompted intense scrutiny over whether it amounted to illegal gambling and whether it should be regulated to provide consumer protections and problem-gambling assistance. Taken together, the fantasy exit and the lawsuits leave Underdog’s core DFS business with a much smaller footprint than at any point since its 2020 launch.
