Underdog is exiting fantasy sports in seven states due to a regulator crackdown — but is there more to the move?
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Key Takeaways
Underdog is surrendering fantasy sports licenses in seven states after choosing its CFTC-regulated prediction market business over Draft.
IG Group’s acquisition model shows prediction markets growing from 14% of Underdog’s handle in 2025 to roughly 99% in its longer-term projection.
The $1.3 billion buyer also sees a route beyond sports: 46% of Underdog customers have previously traded crypto, and 58% have traded individual stocks.
Underdog’s decision to sacrifice fantasy sports in seven US states seems to be only the beginning of a much bigger transformation.
The sports gaming company is surrendering fantasy licenses after regulators ruled that its CFTC-regulated prediction products could not operate alongside fantasy sports.
But investor documents from its prospective $1.3 billion buyer, IG Group, put the withdrawal in a dramatically different light.
IG’s acquisition presentation shows prediction markets growing from just 14% of Underdog’s handle in 2025 to 54% by the first half of 2026, before reaching around 99% under its longer-term model.
The stats suggest the economics of Underdog’s business are already moving rapidly away from the fantasy product that built the company.
And IG has an even broader ambition — to use Underdog’s sports-heavy customer base to push deeper into crypto, stocks and financial trading.
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According to Levine, the seven states had adopted a legal position under which Underdog could retain its fantasy licenses or continue offering its CFTC-licensed products, but not both.
“So we had to choose,” Levine wrote.
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. Already entered drafts will continue as normal, but in those states you won’t be able to enter new drafts. If…
Underdog chose the latter, meaning new draft entries will therefore disappear in the affected states, although contests that customers have already entered will continue.
Levine described fantasy drafts as the company’s first game and a major part of what built the business, although it now attracts substantially less usage than its other products.
Fantasy is not disappearing entirely; however, Underdog continues to offer its draft-style contests across dozens of other states.
But IG’s acquisition materials show just how quickly the balance could shift.
Prediction Markets Could Swallow 99% of Underdog’s Handle
When IG announced its agreement to acquire Underdog on July 30, it valued the transaction at up to approximately $1.3 billion.
The accompanying presentation was explicit about where it sees Underdog’s future.
In 2025, legacy products, including DFS, accounted for 86% of Underdog’s handle, with prediction markets contributing only 14%.
By June 2026, the split had almost flipped, with prediction markets representing 54%.
IG’s longer-term model takes that change much further, putting prediction markets at approximately 99% of handle, leaving legacy activity at only 1%.
Elsewhere in the presentation, IG describes daily fantasy sports as Underdog’s “heritage,” while characterizing prediction markets as its “present and future.”
It argues the latter could expand the platform beyond sports and into crypto, financial markets, politics, and culture.
From Fantasy Players to Crypto and Financial Traders?
IG’s plan does not stop at prediction markets.
Its investor materials describe Underdog as a way to accelerate the convergence of trading, investing, and entertainment.
IG said 46% of Underdog customers have previously traded crypto, while 58% have traded individual stocks.
Another 42% said they would like the ability to fund their Underdog wallets using crypto.
A separate July survey cited by IG found that among US online sports gamers, 42% trade crypto, 58% trade stocks, and 30% trade options or futures.
IG explicitly described this overlap as a “significant cross-sell opportunity” between its platforms and Underdog.
The strategy comes at a tough time for prediction markets in the regulatory space.
Polymarket and Kalshi remain the subject of disputes over whether federally regulated event contracts can be offered nationwide.
IG itself acknowledged the tension in its acquisition presentation, noting challenges involving 16 states.
For seven states, at least, Underdog has already shown which side of its business it is prepared to sacrifice.
And if IG’s 99% projection comes anywhere close to reality, Drafts may well and truly be out the door.
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Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
