Underdog Fantasy’s layoffs came with a thud that is all too familiar to startup companies and that they hardly ever honestly describe. Short video calls end abruptly, Slack access vanishes, screens go dark, and a business that has been selling momentum for years suddenly begins discussing “transition.” According to several industry reports, the cuts, which were announced on March 3, impacted at least 125 workers, or more than 20% of the company’s workforce. The CEO and founder of Underdog, Jeremy Levine, described the layoffs as part of a move toward prediction markets, but Covers said they affected multiple departments, including a large portion of the fraud team.
Prediction markets is the term that’s doing a lot of work. Underdog has “transitioned” from a state-by-state framework to a national prediction-markets platform with more seamless offerings across the nation, Levine told Front Office Sports, as reported by Covers and other outlets. Because it is strategic, it sounds strategic. However, it also sounds like a business attempting to get away from the tussles of conventional sports betting in the US, where licenses are state-specific, costly, time-consuming, and politically complex. It seems as though Underdog decided it would prefer to go around the wall rather than continue climbing it after looking at the map and the cost of legal fees.
| Important Information | Details |
|---|---|
| Company | Underdog Fantasy |
| Founder / CEO | Jeremy Levine |
| Headquarters | Brooklyn, New York |
| Main business | Daily fantasy sports, drafts, sports gaming, prediction-market products |
| Layoffs | At least 125 employees |
| Approx. share of workforce | More than 20% |
| Timing | Reported on March 3, 2026 |
| Stated reason | Pivot from a state-by-state betting model to a national prediction-markets model |
| Related moves | North Carolina sportsbook closure in December 2025; Missouri sportsbook application withdrawn |
| Authentic reference website | Underdog official site |
That clarifies why the cuts weren’t sporadic or isolated. According to reports, approximately two-thirds of the fraud unit was laid off, and employees in customer service, marketing, graphics, draft products, and fraud operations were also impacted. Those trims aren’t decorative. They recommend that a business restructure itself around a different operating model, one that might require fewer of the skills developed for its previous enterprise. Compared to daily fantasy plus sportsbook expansion, management may find prediction markets to be more scalable, leaner, and legally more intriguing. That might be accurate. In early March, it also causes a large number of people to lose their jobs.
The move seems less abrupt than it initially seemed because of the larger context. Underdog closed its sole traditional sportsbook in North Carolina in December 2025, citing a business decision. Reports at the same time suggested that the company decided to leave Missouri rather than pursue a traditional sportsbook route there. If one believed Underdog still aspired to be a standard sports-betting operator, those choices appeared strange. If the business had already determined that federally regulated event contracts provided a more straightforward path into major states where sports betting is still prohibited or restricted, they would make far more sense.
And that is the true allure of this place. In ways that sportsbook operators have long envied, prediction markets can penetrate states like Texas and California. To illustrate how appealing this lane has grown, Barron’s reported in January that DraftKings launched its own prediction-market product in 38 states, including major states where sports betting is illegal. It’s not just Underdog who sees the opportunity. The distinction is that Underdog seems to be more agile, smaller, and more inclined to demolish portions of its previous organization in order to pursue it. As I watch this happen, it seems more like a company adopting a new religion than a typical layoff.
A harsher reading is also available. Although they are currently popular, prediction markets are not risk-free. Because they might be able to get around some of the state-level obstacles that characterize sportsbook expansion, they stand in an odd place between finance and gambling. If regulators or courts determine that these products have strayed too close to sports betting in disguise, that legal advantage may diminish. Although investors seem to think the category has room to grow, it’s still unclear if the current structure will hold up as political actors, state regulators, and established incumbents continue to put more pressure on the margins.
On the other hand, Underdog is no longer just a tenacious side project. In March 2025, Axios revealed that the Brooklyn-based business had raised $70 million in Series C funding at a $1.23 billion valuation, supported by Kevin Durant, Mark Cuban, BlackRock, and Spark Capital. Ambition is purchased by that type of cap table, but expectations are also purchased. Startups worth billions aren’t meant to stray. They are meant to grow. Therefore, if a company at that valuation reduces its workforce by more than a fifth, it typically indicates that management feels the previous course is not only flawed but also subpar. That doesn’t necessarily indicate distress. It can occasionally be an indication of discipline. It can be both at times.
The story’s central emotional contradiction is difficult to overlook. Sports culture, fantasy loyalty, community, and the excitement of participation are key components of Underdog’s brand. All of that is the reverse of layoffs. They are antiseptic, cold, and administrative. Overnight, they transform a rapidly expanding consumer brand into a workplace narrative. A flashy gaming company cutting deep while talking about long-term opportunity presents a difficult image, even if the business case is well-reasoned. Anyone who has observed startups grow older in public will be able to identify the trend. As the mood deteriorates, the language becomes more formal.
However, the action might turn out to be sensible. Giants like DraftKings and FanDuel have benefited from the outdated state-by-state sports betting model, but smaller operators have been caught in a vicious cycle of licensing fees, market-access agreements, promotions, and exorbitant customer acquisition costs. It’s possible that Underdog is just admitting that it can’t win that war on those terms. A different battlefield, possibly more affordable, more expansive, and more strategically defensible, is provided by a national prediction-markets platform. These layoffs will subsequently be characterized as painful but necessary if that wager proves successful. They will appear to be the first obvious indication that the business mistook an escape hatch for a growth engine if it fails.
For this reason, the layoffs at Underdog Fantasy are significant for more than just one business. They demonstrate the continued instability of the American sports-gaming landscape. Daily fantasy operators are reorganizing around whatever legal and commercial opening appears to be the least crowded, rather than simply improving upon outdated products. Jobs become strategic casualties in that setting, and terms like “pivot” begin to sound a bit more harsh than they once did. The future of the underdog might be better after this change. However, early March 2026 did not appear to be a time of internal reinvention. It appeared to be a business wagering that 125 employees would be worth a different regulatory architecture.
