Underdog Ends Daily Fantasy Contests in Seven States as Prediction Markets Take Priority

Underdog is pulling its daily fantasy sports offering from seven states as the company chooses to prioritize its growing prediction market business. Beginning this week, users in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Ohio and Pennsylvania will no longer be able to enter new fantasy contests on the platform, although existing contests will continue through settlement as normal.

The decision was announced by Underdog founder and CEO Jeremy Levine on September 5, just days before the start of the NFL regular season. Levine said the affected states have taken the position that Underdog cannot operate its CFTC-licensed prediction market products while simultaneously maintaining state fantasy sports licenses. Rather than remove its prediction market products from those states, Underdog opted to surrender its fantasy licenses.

A Choice Between Two Products

The decision creates a significant shift for a company that originally built its business around daily fantasy sports. Underdog launched in 2020 with fantasy contests, including its Drafts product, before expanding into prediction markets. Levine acknowledged the importance of Drafts to the company’s history while saying the product now represents a much smaller portion of activity on the platform. The company will continue offering its prediction products in the affected markets where permitted.

The cutoff also arrives at an important point in the sports calendar, with the NFL season beginning Wednesday, September 9. Mississippi will be the first state affected, with new fantasy contests ending September 9, while the remaining six states will follow on September 10. Users with existing entries will not need to take any immediate action, as those contests will continue and settle normally and withdrawable balances will remain available.

Prediction Markets Drive the Shift

Underdog’s decision reflects the increasingly important role prediction markets have taken in the company’s strategy. The operator launched its own federally regulated prediction market exchange in July after previously accessing the market through partnerships with companies including Crypto.com and Kalshi. Earlier this year, Underdog also acquired Aristotle Exchange’s designated contract market and derivatives clearing organization businesses.

The expansion comes as prediction markets face growing scrutiny from state regulators and lawmakers across the country. Several states have challenged sports-related prediction contracts, arguing that they function similarly to traditional sports wagering and should therefore fall under state gambling regulations. The legal fight has produced conflicting positions across federal courts, adding further uncertainty for operators attempting to offer prediction products nationally.

For Underdog, the regulatory environment has effectively created a choice between maintaining its traditional fantasy footprint and protecting its prediction market expansion. The company has opted to prioritize the latter, accepting a reduced presence for its original fantasy product in several states in order to maintain access to the prediction market opportunity.

Underdog Wants Drafts Back

While the fantasy shutdown is significant, Levine indicated that Underdog does not view the move as necessarily permanent. He said the company has ideas for eventually bringing Drafts back to more customers but stopped short of providing details on what that could look like or when the product could return.

That leaves Underdog’s original fantasy product in an unusual position. The company is not abandoning fantasy entirely, but it is accepting a reduced state footprint in order to maintain access to its newer prediction market products. The move also highlights the broader regulatory tension emerging between traditional state-regulated gaming products and prediction markets operating under federal commodities regulation.

As the legal battle continues, operators like Underdog are increasingly being forced to decide how much of their traditional business they are willing to sacrifice to pursue prediction markets. For Underdog, the decision to surrender seven fantasy licenses signals where the company currently sees the greater opportunity.