Daily fantasy sports operator Underdog cut more than 20% of its workforce as the company makes a major shift into prediction markets.
Key Takeaways
- Underdog laid off 125 employees from various departments, including the majority of its fraud department.
- Underdog CEO says the changes are part of a transition to prediction markets.
- There is heavy competition in the event contracts space.
Underdog CEO and founder Jeremy Levine confirmed the change in focus to Front Office Sports on Monday, just days after 125 employees were reportedly laid off, including two-thirds of the fraud department.
“We transitioned our business this year,” Levine said in a statement to FOS. “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.”
Underdog workers in marketing, customer support, graphics, and daily and season-long draft departments were cut, and the affected employees were reportedly informed of the layoffs on Friday during an online meeting with Levine.
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Major shift
Founded in 2020, Underdog has grown to operate fantasy games in 40 U.S. states and created a traditional sportsbook in North Carolina in 2024. However, the company began a shift toward prediction markets in the second half of 2025.
Underdog partnered with prediction market platform Crypto.com in September to begin allowing DFS users to include sports contracts in their contests. Shortly before Missouri launched sports betting in December, Underdog told regulators it was pulling out of the market and not offering its sportsbook.
Underdog then closed its lone traditional sports betting platform in North Carolina on Dec. 16, while still offering its DFS product, signifying that the company was focusing on prediction markets, which are regulated federally by the Commodity Futures Trading Commission. Sports betting is regulated by state agencies.
The operator is offering sports event contracts in more than 30 U.S. states, including California, Texas, and Georgia. None of those three highly populated states has legal sports betting. PrizePicks, Underdog’s rival in the DFS space, is also in the prediction market game.
All the rage
Prediction markets platforms have exploded over the last year. Kalshi became the first major U.S. trading exchange during the 2024 Presidential Election. By the 2025 Super Bowl, Kalshi and Crypto.com were offering the first sports contracts.
By late 2025, Polymarket, a major global prediction platform, had re-launched in the U.S. Meanwhile, popular sports betting brands FanDuel, DraftKings, and Fanatics entered the prediction market space with new platforms. DraftKings announced on Monday that it is combining all of its products, including Predictions, into one app as it continues to invest heavily in contract exchange.
However, trading exchanges have come under fire for various reasons, including offering controversial war-related markets, manipulation, and sports contracts in state-regulated sports betting jurisdictions.
