Underdog lays off 125 staff amid strategic shift to prediction markets
Underdog, a leading DFS and sports betting operator in the United States, laid off more than 20% of its staff as part of a business restructuring and transition to the prediction markets segment. As a result of the reorganisation, 125 employees were laid off without warning. They received two to three months’ salary as severance.
The company cut two-thirds of its fraud prevention team and laid off employees from customer service, design, marketing, and the drafts division. Earlier, there were reports on social media about fewer layoffs, but after the publication in Front Office Sports (FOS), former employees reported a larger scale of cuts.
Strategic shift
Underdog CEO and founder Jeremy Levin (pictured) explained the decision as a strategic shift in an official statement to FOS: ‘We have transitioned the business from a state-by-state model to a national prediction market platform with a unified offering across the country. This requires a different operating structure.’ He described those made redundant as passionate and responsible professionals, and said he would be happy to provide references.
Employees were informed of the job cuts on Friday, 27 February 2026. Some of those affected described the process as sudden: an invitation to a meeting appeared in their calendars an hour before lunch, followed by a message on Slack asking them to join. During the conference call, a manager announced the dismissals. Access to corporate email and work chat was then disabled immediately. An hour later, an HR specialist contacted those who had been dismissed to inform them of the decision.
One of the dismissed employees, support staff member Marco Sandoval, posted a 13-minute video in which he described the shock and emotional reaction of his colleagues. He noted that he was offered eight weeks’ pay and was allowed to keep his work laptop. Other sources report 12 weeks’ severance pay.
Regulatory issues
The changes are related to Underdog’s recent move into prediction markets: in September, the company announced a partnership with Crypto.com, which allowed it to launch event contract trading in 16 states. Management believes that prediction markets are now less fragmented than traditional betting, which is regulated on a state-by-state basis.
However, the transition is not without risks. Underdog previously closed traditional operations in certain states and faced regulatory scrutiny. Last year, the company settled a dispute with New York authorities by paying $17.5 million for illegally offering certain types of competitions.
Employees affected by the layoffs say they understand the company’s business logic. However, they criticise the way the layoffs were carried out and warn of possible reputational damage. One of those laid off said that Underdog could have managed the process in a far more considerate way.
Prediction markets are showing rapid growth, attracting investors and political support. Regulatory leaders, including the Chair of the Commodity Futures Trading Commission (CFTC), have publicly stated their willingness to defend jurisdictions in disputes surrounding this industry, creating a favourable backdrop for companies betting on this segment.
Five years in the US market and unicorn status
Underdog’s fifth year in the US iGaming market was marked by rapid expansion. In 2025, the company’s market valuation reached $1.3 billion, securing its unicorn status. The startup also entered into strategic partnerships with professional sports clubs, including the Missouri-based NHL hockey team St. Louis Blues.
According to Levin, despite the instability in the industry, the company continues to demonstrate resilience and the ability to scale innovative solutions. In its fifth full year of operation, the company projected revenue of around $500 million.
Underdog also became the first sports betting operator in the US to offer prediction markets on 2 September 2025. The company launched a joint initiative with Crypto.com Derivatives North America (CDNA), which allowed users to make predictions on sporting events through the Underdog app. The app topped the free sports apps category in the App Store, beating competitors such as FanDuel and DraftKings.
As a result of these developments, at the end of last year, the operator rose from fifteenth to third place in LinkedIn’s annual list of the best US start-ups. This ranking is often seen as an indicator of future success: companies such as Uber, Airbnb, and DoorDash were included in it in the early stages of their development. Underdog became the only representative of the iGaming sector in this ranking.
This article was first published in Russian on 3 March 2026.
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