Underdog Axes Fantasy After Regulatory Clash — Was a 99% Prediction Shift Already Coming?

Underdog is surrendering fantasy sports licenses in seven states after choosing its CFTC-regulated prediction market business over Draft.

IG Group's acquisition model shows prediction markets growing from 14% of Underdog's handle in 2025 to roughly 99% in its longer-term projection.

The $1.3 billion buyer also sees a route beyond sports: 46% of Underdog customers have previously traded crypto, and 58% have traded individual stocks.

Underdog's decision to sacrifice fantasy sports in seven US states seems to be only the beginning of a much bigger transformation.

The sports gaming company is surrendering fantasy licenses after regulators ruled that its CFTC-regulated prediction products could not operate alongside fantasy sports.

But investor documents from its prospective $1.3 billion buyer, IG Group, put the withdrawal in a dramatically different light.

IG's acquisition presentation shows prediction markets growing from just 14% of Underdog's handle in 2025 to 54% by the first half of 2026, before reaching around 99% under its longer-term model.

The stats suggest the economics of Underdog's business are already moving rapidly away from the fantasy product that built the company.

And IG has an even broader ambition — to use Underdog's sports-heavy customer base to push deeper into crypto, stocks and financial trading.

Underdog Chooses Prediction Markets Over the Product That Built It

Underdog founder and CEO Jeremy Levine said the company faced a straightforward choice.

According to Levine, the seven states had adopted a legal position under which Underdog could retain its fantasy licenses or continue offering its CFTC-licensed products, but not both.

Underdog chose the latter, meaning new draft entries will therefore disappear in the affected states, although contests that customers have already entered will continue.

Levine described fantasy drafts as the company's first game and a major part of what built the business, although it now attracts substantially less usage than its other products.

Fantasy is not disappearing entirely; however, Underdog continues to offer its draft-style contests across dozens of other states.

But IG's acquisition materials show just how quickly the balance could shift.

Prediction Markets Could Swallow 99% of Underdog's Handle

When IG announced its agreement to acquire Underdog on July 30, it valued the transaction at up to approximately $1.3 billion.

The accompanying presentation was explicit about where it sees Underdog's future.