US-based sports firm Underdog is set to shut down its fantasy sports operations in seven states as it looks to be shifting towards a prioritisation of its prediction market operations.
Underdog, which entered into an agreement in late July to be acquired by UK-based FTSE 100 fintech IG Group, will voluntarily surrender its fantasy sports licences in Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio and Pennsylvania.
It comes as those states determined that running a predictions platform alongside fantasy sports is not compatible – something Underdog Founder and Chief Executive Officer, Jeremy Levine, said he disagrees with.
Levine apologised to users as he confirmed on X that the firm’s Drafts product will no longer be available from 10 September.
“Drafts community, I have some not fun news to share. Right after kickoff on Wednesday, we will be shutting down Drafts in seven states: MA, MD, MI, MS, NJ, PA and OH,” he wrote.
“Already entered drafts will continue as normal, but in those states you won’t be able to enter new drafts. If you’re a drafter in one of those states, I’m really sorry.
“This sucks, but I want to explain why. Those states have taken a legal viewpoint we disagree with: if we offer our CFTC-licensed products we cannot offer fantasy sports in those states. So we had to choose.
“We could keep our fantasy licenses in those states, or surrender the licenses and offer effectively our full experience, minus Drafts.”
Will predictions become Underdog’s core product?
Levine’s words, alongside the decision, hint towards the fact that Underdog may be beginning to shift towards making its predictions offering its core product.
The company first began offering prediction markets in September 2025 via a Crypto.com partnership as Levine described the space as “one of the most exciting developments we’ve seen in a long time”.
A vocal CEO, Levine has previously fired warning shots to competitors, claiming that “they’re scared that we will challenge their market positions”.
Underdog’s draft-style fantasy contests are still available in 33 US states, as well as in Canada (outside of Ontario), so it’s not like there is a complete switch from daily fantasy sports (DFS) to predictions.
But it does represent somewhat of a change for the firm, who look to be refusing to curtail their predictions operations in favour of DFS.
Levine’s statement continued. “It sucks. I love Drafts. It was the first game we ever launched and a big part of what built Underdog.
“Even though they don’t get anywhere near the usage of our other offerings, we still care deeply about them. And it pains me that we can’t do right by the Drafts community and offer the best experience possible to the most customers.
“We have some ideas about how to get Drafts back to more customers, but it’s too early to commit to anything yet. I’m optimistic, and we’re definitely going to try. But until then, I don’t think there’s really anything I can say other than I’m sorry.”
Levine has received some backlash from customers, who have criticised the move and claimed the fantasy element is what differentiates Underdog from competitors.
However, the predictions boom, which is still well and truly present, may have enticed Levine and Underdog more than its fantasy product did.
IG Group and a glimmer of hope in the UK
The $1.1bn IG Group deal also raised a few eyebrows, given that no prediction markets have gained a licence from the UK’s Gambling Commission.
Like many regulators in Europe, the Commission has stated that prediction market platforms must gain the same licences as traditional gambling operators, and many predictions firms are reluctant to do so as they see themselves as different from gambling.
Interestingly, Jason Trost, CEO of UK-licenced betting exchange Smarkets, sees exchanges and predictions platforms as one and the same.
Underdog’s “valuable licence stack” is alluring to IG Group, as is the opportunity to drastically reshape its average customer profile – over 60% of Underdog’s monthly active users are under 30, while IG Group has an average customer age of 42.
IG Group CEO, Breon Corcoran, said at the time the acquisition was announced: “Underdog puts us at the front of that convergence: a product-first team, a leading daily fantasy sports franchise and a full licence stack that together give us a differentiated position in US prediction markets.”
Coincidentally, the UK is currently weighing its stance on prediction markets.
It looks like the Financial Conduct Authority (FCA) will reassess whether consumers should have wider access to investment products, potentially bringing the UK’s retail binary options ban back into focus this September and opening the door for prediction markets to enter the UK.
Should an opportunity on these shores arise, the Underdog pendulum may tip further towards its prediction operations, with its DFS product looking more and more likely to become its secondary offering.
Want to find out more about Prediction Markets? The Global Prediction Market Forum is being held in Lisbon on 1 October. Visit https://sbcevents.com/global-prediction-markets-forum/ for more details.
