Underdog cuts over 125 jobs as it abandons sports betting for prediction markets

Scale of cuts larger than initially reported
From sportsbook to event contracts
A broader industry inflection point

Underdog has laid off at least 125 employees, more than 20% of its workforce, as it exits traditional sports betting to focus on a national prediction markets platform.
Two-thirds of the fraud operations team were among those cut, along with staff in customer support, graphics, marketing, and its “drafts” product.
The move follows Underdog’s September 2025 partnership with Crypto.com and its December exit from North Carolina, its only traditional sportsbook market.

Underdog has cut at least 125 employees as it pivots away from state-regulated sports betting toward a national prediction markets model. The layoffs represent just over 20% of the company’s workforce. They were communicated to staff on Friday, February 27, in an online meeting led by founder and CEO Jeremy Levine.

Scale of cuts larger than initially reported

The true scale of the reductions only emerged after initial reports suggested as few as 15 departures, based on early LinkedIn posts from affected staff. Additional sources subsequently told Front Office Sports that the total exceeded 125 employees. LinkedIn puts Underdog’s total headcount at more than 600.

The deepest cuts fell on the fraud operations department, where two-thirds of the team were let go. Roles were also eliminated across customer support, graphics and design, marketing, and the company’s “drafts” product, covering daily and season-long fantasy contests.

Several affected employees described the process as abrupt. Access to company systems was reportedly cut off as soon as the meeting ended. Affected employees are set to receive between eight and twelve weeks of severance pay.

Jeremy Levine, CEO and founder of Underdog, said:

“We transitioned our business this year. We went from a focus on a state-by-state framework to a national prediction markets platform with seamless offerings across the country. It’s simply a different operation, and the changes we made are a part of that transition,” Levine said.

“We take pride in hiring people who are passionate, good human beings, and who really care about their work, so if you’re hiring and come across an ex-Underdog person, you’d be lucky to have them and call me for a reference.”

From sportsbook to event contracts

Founded in 2020, Underdog built a substantial daily fantasy sports operation across 40 US states before securing a traditional sports betting license in North Carolina. That sportsbook closed on December 16, 2025.

The company also withdrew its pending Missouri license application less than a week before the state’s December 1, 2025 launch, having previously agreed a multi-year deal with the Kansas City Royals for that market.

The shift accelerated following Underdog’s September 2025 partnership with Crypto.com, which gave the company access to the exchange’s CFTC-regulated infrastructure.

The deal enabled users in an initial 16 states to trade sports event contracts covering the NFL, NBA, MLB, and college football. The platform has since expanded to more than 30 states, including California, Texas, and Georgia, where traditional sports betting remains prohibited.

Arizona’s Department of Gaming issued a notice of intent to revoke Underdog’s fantasy sports license over the Crypto.com partnership, a move Underdog has said it will contest. In New York, the company reached a $17.5 million settlement with the state’s gaming commission over certain contest formats.

In January, the National Futures Association approved an Underdog-affiliated entity to operate as a futures commission merchant, a further step toward full independent operation in the prediction markets space.

The restructuring of the fraud team is particularly notable. Fraud operations typically handle account abuse, chargebacks, and suspicious transactions — functions central to state-licensed sportsbooks and DFS platforms.

Prediction markets are regulated federally by the CFTC rather than by individual states, operating under a different risk and compliance framework. That shift appears to have rendered a large portion of Underdog’s existing fraud infrastructure redundant.

A broader industry inflection point

Underdog’s move reflects a wider reorientation underway across the US gaming sector. Kalshi surpassed $1 billion in monthly trading volume as prediction markets captured growing market share, rattling traditional operators. DraftKings and Flutter both saw billions wiped from their valuations as Kalshi pushed into parlay-style markets.

DraftKings announced plans to launch its DraftKings Predictions platform in the coming months after acquiring CFTC-approved exchange Railbird in October 2025. FanDuel partnered with CME Group for a similar offering. DraftKings also announced an undisclosed round of job cuts in late February, with analysts at Citizens estimating reductions of around 5% of its 5,500-strong global workforce.

The political environment has tilted in prediction markets’ favor. Donald Trump Jr. holds positions as an investor in Polymarket and an advisor to Kalshi. Truth Social is planning its own prediction market product in partnership with Crypto.com.

CFTC Chairman Mike Selig said:

“To those who seek to challenge our authority in this space, let me be clear: we will see you in court.”

State regulators, however, are pushing back. Robinhood has sued Massachusetts regulators over attempts to block its prediction market product. Michigan’s Gaming Control Board has warned licensed operators that offering sports event contracts may put their licenses at risk.

More than a dozen lawsuits are working through federal and state courts, and a resolution at the Supreme Court level remains a possibility, according to legal analysts.

For Underdog, the wager on prediction markets is now fully placed. The company ranked third on LinkedIn’s Top Startups of 2025 list and closed a $70 million Series C in March of that year, valuing it at $1.2 billion. Time will tell if their strategic bet pays off, depending on how the regulatory landscape resolves.

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