Underdog spent the past week making a hard trade. First, it told customers it would stop new fantasy Draft entries in seven state jurisdictions. Then it sued five governments, asking federal judges to keep state gambling statutes off its sports event contracts. The sequence landed as NFL Week 1 opened, and traders checked what still works in the app.
Founder and CEO Jeremy Levine announced the Drafts cut on X on September 5. New contests close after kickoff. Already entered lineups finish and pay out. He said several state regulators treated fantasy licenses and CFTC-licensed products as incompatible, a reading the company rejects. In a later reply, he added that event-contract access in those markets would make the business “well over 20x going forward.”. Underdog had to choose between their Drafts product and their march into prediction markets, and they chose the latter, and it wasn’t even close.
On September 8, Underdog Exchange DCM, Inc. and UDM, LLC, doing business as Underdog Predict, filed complaints in Massachusetts, New Mexico, Ohio, Wisconsin, and Washington. Each case seeks a permanent injunction and a declaration that state wagering laws cannot reach those contracts under the Supremacy Clause and the Commodity Exchange Act.
Fantasy Licenses Gave Way to Event Contracts
Drafts built the Underdog brand. Levine called it the first game Underdog launched. Usage, though, no longer matches the rest of the catalog. The company surrendered licenses rather than pull the federally registered event market product stack. The help center lists last-entry dates of September 10 in most of the group and September 9 in Mississippi, and it notes pick-style products can remain where allowed.
IG Group’s recent agreement to buy Underdog for up to $1.3 billion hangs over this choice. The July deal, about $1.1 billion upfront plus earnout, priced a customer base plus a designated contract market and clearing stack. Walking away from seven fantasy permissions looks less like a tactical retreat and more strategically like clearing space for the asset the buyer truly wanted.
Underdog’s support article walks through unfinished contests and one market’s extra wallet step. Traders will lose new Best Ball rooms in those seven states, but the Underdog app remains live.
Levine left a narrow opening, saying the company has “ideas” about bringing Drafts back. He offered no dates.
What the Lawsuits Ask Judges to Block
The Underdog legal complaints do not seek a damages windfall. They ask courts to freeze enforcement before local agencies treat Sunday scoreboard contracts as unlicensed sports bets.
Named defendants include attorneys general and gaming-commission officials. In Ohio, that means the attorney general and Casino Control Commission leadership. In Massachusetts, it means the attorney general and Gaming Commission director. Massachusetts already restricted another operator’s sports contracts (Kalshi), which helps explain the rush to file first.
The legal theory is the same one Kalshi and Robinhood have pressed: a designated contract market and futures commission merchant list event contracts under federal commodities law. States answer that a payout tied to a game result is still a wager. Circuit courts already split on that question. Underdog wants trial judges to side with the federal government while NFL volume builds.
What Traders Should Watch For Next
In the short term, Drafts wind down in seven states, and the five cases get briefing calendars. States will argue the suits are dressed-up gambling disputes. Underdog will answer with designation papers and Commodity Exchange Act citations. A preliminary injunction in even one court would change how other operators staff NFL boards.
Traders should read market rules and the help-center dates before assuming any Underdog contest still accepts entries. They should also watch the dockets or follow Underdog on social media for updates on their product and rules. Underdog is no longer a fantasy shop that added contracts. It is now, at least unofficially, a CFTC venue that used to run drafts, and it is asking five federal judges to accept that change.
References
- Jeremy Levine, X post on Drafts shutdown, September 5, 2026
- Casino.org, Underdog five-state legal offensive
- Sports Betting Dime, Underdog sues five states
- Gaming America, licenses dropped and lawsuits filed
- VegasInsider, Drafts ceasing in seven states
- InGame, Underdog surrenders fantasy licenses
- Underdog Sports help center, fantasy contest changes
- European Gaming, IG Group Underdog acquisition
- ReadWrite, Underdog federal complaints
- Mick Bransfield, prediction market litigation tracker
- Law360, Underdog sues 5 states
- iGaming Times, Drafts surrendered for event contracts
