Sports betting company Underdog has announced a major layoff, with 125 employees released from the company payroll, amounting to more than 20% of its total workforce.
Initial reports on Monday had suggested around 30 people were let go, but staff from the company revealed the number was much higher than initially announced. The move comes as Underdog shifts its focus onto prediction markets.
Underdog trades sports betting for exploding event contracts space
It represents a seminal moment for the company, which as recently as March 2025 announced a funding round worth $1.2 billion. At the time, CEO Jeremy Levine said the company would be looking to add talent to expand as quickly as possible.
However, his recent statement to the company outlined the reasons for the layoffs. He 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. 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.”
Employees were notified of the layoffs on Friday, Feb. 27. Alongside deep reductions to its fraud operations team, Underdog also cut roles in customer support, graphics, marketing and its “drafts” division, which runs daily and season-long draft-based contests.
Company shifts focus to prediction markets
Founded in 2020, Underdog expanded rapidly, launching fantasy contests in 40 states and opening a traditional sportsbook in North Carolina in 2024. But by the second half of 2025, the company had begun pivoting away from state-regulated sports betting and toward federally regulated prediction markets.
In September, Underdog partnered with Crypto.com to integrate sports event contracts into its daily fantasy offerings. Weeks before Missouri’s sports betting launch in December, the company informed regulators it would not enter the market with a sportsbook.
Underdog shut down its North Carolina sportsbook on Dec. 16, continuing to operate its DFS products while signaling a broader shift to prediction markets overseen by the Commodity Futures Trading Commission (CFTC) rather than state gaming agencies.
The company now offers sports event contracts in more than 30 states, including California, Texas and Georgia, large markets without legalized sports betting. Rival PrizePicks has also moved into the prediction market space as competition intensifies.
Underdog hopes for easier ride under CFTC-regulated prediction space
Underdog has faced multiple legal challenges in state courts as regulators and private plaintiffs scrutinize its fantasy and sports-related offerings.
In California, the company sued the state’s attorney general in Sacramento Superior Court in an effort to block the release of a legal opinion on daily fantasy sports. A judge denied the request, allowing the opinion process to move forward.
Underdog has also been named in proposed class action lawsuits in California alleging its fantasy contests amount to illegal gambling under state law. Plaintiffs are seeking damages and a halt to certain operations.
In New York, a separate class action filed in state court alleges the company offered unlawful sports betting products while marketing them as daily fantasy sports. Underdog has maintained that its contests comply with applicable laws.
Whether the shift ultimately pays off remains to be seen. Prediction markets operate under a different regulatory framework, but they are drawing increased scrutiny from state officials and industry critics who argue they resemble traditional sports betting.
For Underdog, the layoffs underscore the scale of its strategic reset, from a fast-growing, state-by-state sportsbook to a nationally focused event contracts platform. The company is now betting that a streamlined workforce and federal oversight will provide a clearer, more sustainable path forward.
