Underdog, the US-based sports firm, is voluntarily surrendering its fantasy sports licences in seven American states as it pivots toward prediction market operations.
The states affected by the shutdown are Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio, and Pennsylvania, covering some of the most significant fantasy sports markets in the country.
Underdog entered into an agreement in late July to be acquired by UK-based FTSE 100 fintech firm IG Group in a deal valued at $1.1bn.
The decision to exit these seven states follows regulatory determinations that operating a predictions platform alongside fantasy sports is not considered compatible by those states’ authorities.
Underdog Founder and Chief Executive Officer Jeremy Levine made clear on X that he personally disagrees with those regulatory determinations, though the company is complying nonetheless.
Levine confirmed that the firm’s Drafts product will be unavailable from 10 September, taking to social media to address users directly with the announcement.
“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,” Levine wrote.
Underdog confirmed that already-entered drafts in those states will continue to run as normal, but users in affected markets will not be able to enter any new drafts going forward.
Levine has faced notable backlash from customers who argue the fantasy element is precisely what distinguishes Underdog from its competitors in an increasingly crowded market.
The ongoing boom in prediction markets appears to have played a significant role in Underdog’s strategic thinking, potentially outweighing the value the company placed on its fantasy product.
The $1.1bn IG Group acquisition has itself drawn attention, given that no prediction market platforms have yet secured a licence from the UK’s Gambling Commission.
The Gambling Commission has stated that prediction market platforms must obtain the same licences as traditional gambling operators, a position that many predictions firms resist as they consider themselves a distinctly different category of product.
