Underdog just buried its own origin story in seven states and called it strategy. Jeremy Levine hit X on September 5 with the news that Drafts die in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio the second NFL kickoff clears the runway. Already-entered contests settle. New ones stop. The company is surrendering the fantasy licenses on purpose.
Levine did not hide the math. “Those states have taken a legal viewpoint we disagree with: if we offer our CFTC-licensed products we cannot offer fantasy sports in those states. So we had to choose.”
They chose prediction markets. Full experience, minus Drafts. If that sentence makes you want to torch the app, sit with it for a second. The choice already tells you which product actually pays the bills.
I know the replies. Drop the “stupid prediction markets.” Keep the draft rooms that built the brand. Your favorite Best Ball guy is already mid-paragraph about loyalty. Cool. Loyalty does not clear a billion-dollar acquisition.
The Term Sheet Ate the Nostalgia
IG Group agreed in late July to buy Underdog for up to $1.3 billion. Net revenue ran about $466 million for the twelve months ended June 2026. Prediction markets started in September 2025. Underdog bought Aristotle Exchange in March, stood up its own CFTC-licensed exchange in July, and suddenly the first game the company ever launched became the disposable piece.
Levine still sounded like a founder who remembered the early rooms. “It sucks. I love Drafts. It was the first game we ever launched and a big part of what built Underdog. Even though they don’t get anywhere near the usage of our other offerings, we still care deeply about them.”
That usage line is the whole argument. Drafts built the logo. Everything else built the exit. When a CEO admits the heritage product does not touch the volume of the newer stack, the funeral is already scheduled. The seven states just forced him to read it out loud.
Underdog has been running this movie. It already killed the North Carolina sportsbook to narrow the focus. Same instinct, bigger stage. Fantasy licenses are state permission slips. CFTC event contracts come with a federal preemption theory and a buyer willing to write a check with a B in it. One of those scales. One of those gets you sued by AGs who still treat a prediction market like a backroom.
Around September 8 the company filed federal suits against Massachusetts, New Mexico, Ohio, Washington, and Wisconsin seeking permanent injunctions and declaratory judgments. Connecticut got added later after cease-and-desist noise. The Commodity Exchange Act fight is now the product roadmap. Drafts were never going to win that courtroom.
State Regulators Built the Binary
The seven states created the fork. Keep fantasy or run the full CFTC stack. Underdog disagreed with the legal read and still picked the stack. “I’m really sorry,” Levine told the Drafts community in those states. Apology noted. Balance sheet unchanged.
Traditional sports media will package this as retreat. Wrong. This is a company advancing into the only lane that can absorb state pressure and still look attractive to a London-listed buyer. Pick’em stays. Prediction products stay in most of the affected markets with the usual state-level wrinkles. Drafts survive in roughly 35 other jurisdictions. The people who only ever opened the app for a slow draft were already living in the smaller room.
I’m not glazing the decision because it feels clean. It feels cold. Cold is how you get to $1.3 billion while half the map tries to reclassify your core product as illegal gambling under a different label. Levine says the company has ideas to get Drafts back to more customers and calls himself optimistic. Too early to commit. Until that fix exists, the map is simple.
Bettors Should Read the Menu, Not the Eulogy
If you live in one of those seven states and your entire Underdog identity was Best Ball Drafts, you got nerfed by regulation and usage at the same time. The remaining board is still the board that drew the acquisition. Event contracts, pick’em volume, the products that do not need a twelve-round draft clock to move money. Rage at Levine if it helps. The states that forced a binary choice did more damage to the Drafts community than any founder post ever will.
I’m planting the flag in public. Underdog made the only rational call available under the rules those seven states wrote. Heritage died where the usage chart and the deal math pointed the same direction. Fantasy got the soft landing and the sorry. Markets got the company, the lawsuits, and the path to close with IG Group.
The Drafts purists can keep the origin story. The money already left the draft room.
21+. Commentary, not betting advice. Gambling problem? Call or text 1-800-MY-RESET (in Wisconsin, 1-800-GAMBLE-5).
