Underdog Drops Fantasy in Seven States to Keep Its Prediction Markets Running

Told by regulators in Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio and Pennsylvania that it could not offer both, Underdog has chosen its CFTC-registered event contracts over the draft games that built the company. Drafts close in those states on Wednesday evening, after the NFL season kicks off.

• Underdog founder Jeremy Levine announced on Saturday that the company is voluntarily surrendering its fantasy sports licences in seven states, covering all draft products including best ball
• Regulators in those states have determined that operating a prediction market is incompatible with holding a fantasy licence, Levine said, calling it "a legal viewpoint we disagree with"
• Drafts already entered will run to completion; no new drafts can be entered in the affected states from Wednesday evening
• Underdog launched prediction markets in September 2025 and agreed in July to be acquired by IG Group for $1.3 billion
• The American Gaming Association put Underdog's average daily contract volume at 16.0 million in late August, behind Novig and Rothera

A Company Founded on Drafts Gives Them Up in Its Biggest Markets

Underdog will stop offering fantasy sports in Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio and Pennsylvania from Wednesday evening, its founder Jeremy Levine announced in a post on X on Saturday morning, reported by inGame. The company is voluntarily surrendering its fantasy licences in those states rather than withdrawing its prediction-market products.

"Those states have taken a legal viewpoint we disagree with," Levine wrote. "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."

The shutdown covers every draft product, including best ball, and takes effect after kickoff of the NFL season on Wednesday. Customers in the affected states who have already entered drafts will see them continue as normal but will be unable to enter new ones. Levine did not hide the cost. "It sucks. I love Drafts. It was the first game we ever launched and a big part of what built Underdog," he wrote, adding that the products "don't get anywhere near the usage of our other offerings" but that the company cares about them. He said Underdog has "some ideas about how to get Drafts back to more customers" but that it was too early to commit to anything.

The States Forced a Choice the Company Had Been Avoiding

Underdog was founded in 2020 as a fantasy operator and added prediction markets in September 2025, offering contracts under the federal derivatives regime through a Commodity Futures Trading Commission-registered exchange. That put it in the position of holding state fantasy licences, which come with state oversight, while offering a product several of those same states regard as unlicensed sports betting. Regulators in the seven states resolved the tension by telling the company it could not be both.

The decision follows a week in which the state-federal dispute escalated at every level. Michigan ordered Kalshi to geofence the state, New Jersey asked the Supreme Court to decide who regulates the exchanges, and the NFL renewed its sportsbook deals while excluding prediction markets. Underdog agreed in July to be acquired by IG Group, the London-listed trading firm, for $1.3 billion, a deal that makes the exchange business, not fantasy, the asset being bought.

The Choice Reveals the Order of Priorities, and Fantasy Came Last

Seven states including Pennsylvania, Michigan, New Jersey and Ohio are, between them, a large share of the US fantasy market, and Underdog has walked away from all of it in a weekend. That only makes sense if the prediction-market revenue in those states, or the strategic value of keeping the product nationwide, is worth more than the draft business the company was built on. Levine's own line, that drafts get "nowhere near the usage" of the other products, is the confirmation. The acquisition by IG Group, a derivatives firm, is the second.

Regulators Have Found a Lever That Does Not Depend on Winning in Court

Michigan and New Jersey have spent a year in litigation trying to stop Kalshi from operating. With Underdog they achieved a result without a judge: a company with a state licence to lose can be told that the licence is conditional on not offering the disputed product. That does not touch Kalshi or Polymarket, which hold no state fantasy licences, but it draws a clear line for every operator that straddles both regimes. The dual model that Underdog and others have been running is being closed from the state side.

Wednesday's Kickoff Is the Deadline Because the Season Is the Business

The timing, after the first game rather than before it, lets existing drafts settle and keeps the company's event contracts live for the NFL opener. It is also a reminder that the contest between fantasy, sportsbooks and exchanges is fought over one product, the NFL season, and that this year the exchanges are treating it as theirs to lose.

Underdog has chosen the product it thinks will define it over the one that did. Seven states have made the company say so out loud.