Underdog Exits Fantasy Sports in Seven States to Prioritize Prediction Markets

US-based sports firm Underdog is undergoing a significant strategic pivot that will see the company withdraw from several major markets. The firm is set to voluntarily surrender its fantasy sports licenses in seven key US states: Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio, and Pennsylvania. The move comes as regulators in these jurisdictions determined that operating a predictions platform alongside traditional fantasy sports is legally incompatible. Underdog is choosing to prioritize its emerging prediction market operations over its legacy fantasy offerings.

Jeremy Levine, the Founder and Chief Executive Officer of Underdog, shared the news directly with the community on X. He confirmed that the firm’s Drafts product will no longer be available in these states starting September 10. While Levine expressed disagreement with the legal viewpoints taken by these states, he noted that the company was forced to choose. By surrendering the fantasy licenses, Underdog can offer what it describes as its full experience, powered by CFTC-licensed prediction products, without legal friction in those specific regions.

Numbers and facts

The decision is heavily influenced by a major corporate development: the acquisition of Underdog by the UK-based FTSE 100 fintech giant IG Group. The deal, valued at $1.1 billion, was driven by Underdog’s impressive user demographics. More than 60% of Underdog’s monthly active users are under the age of 30. In contrast, IG Group’s average customer age stands at 42. This acquisition places IG Group at the front of the convergence between product-first tech teams and daily fantasy sports franchises.

While the withdrawal affects seven states, Underdog’s draft-style fantasy contests remain active in 33 other US states and Canada (excluding Ontario). However, the shift toward predictions is undeniable. Underdog first launched these markets in September 2025 through a partnership with Crypto.com. Levine has been a vocal proponent of this space, previously stating that competitors are scared of Underdog challenging their market positions with these innovative products.

Background

The rise of prediction markets has not been without controversy. Unlike traditional sports betting, these platforms allow users to trade on the outcome of events, often functioning more like financial exchanges. The NFL has recently voiced concerns, demanding that prediction markets like Polymarket or Kalshi stop offering bets that can be easily influenced by a single player’s performance. Regulators in Europe, including the UK Gambling Commission, have also been cautious, often requiring these platforms to obtain the same licenses as traditional gambling operators.

“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. 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.” - Jeremy Levine, Founder and CEO of Underdog

Breon Corcoran, CEO of IG Group, noted at the time of the acquisition that Underdog’s “valuable license stack” was a primary draw. The company is now navigating a complex regulatory landscape where financial authorities like the FCA in the UK are reassessing the accessibility of retail investment products. For Underdog, the goal is to lead the US prediction market space, even if it means sacrificing fantasy operations in certain states.

Why it matters for German players

For players in Germany, the developments at Underdog serve as a reminder of the strict regulatory boundaries within the European market. Prediction markets as described in the US do not currently exist within the legal framework of the German Interstate Treaty on Gambling 2021 (GlüStV 2021). German residents are advised to stick to operators listed on the GGL’s official whitelist to ensure they are protected by local laws. These laws include a 1,000 Euro monthly deposit limit and a 1 Euro stake limit for virtual slots, which are monitored via the LUGAS system.

Foreign platforms offering prediction markets often lack the necessary German licenses and do not provide the same level of player protection. While the convergence of finance and gambling is an interesting global trend, the German market remains focused on clearly defined sports betting and casino gaming. Engaging with unlicensed offshore sites, even those offering innovative prediction products, carries significant legal and financial risks for German consumers.

What it means for GGL-licensed casinos

German licensed operators continue to operate in a highly controlled environment that prioritizes addiction prevention over market expansion into financial hybrids. The GGL ensures that all licensed products are transparent and resistant to manipulation. While US firms like Underdog are experimenting with CFTC-regulated products, German casinos must adhere to the strict guidelines of the GlüStV. This regulatory stability protects the integrity of the German market, even as international players push the boundaries of what constitutes a bet versus a financial trade.