Underdog Cuts Jobs While Pivoting to Prediction Markets

Underdog has cut two-thirds of its fraud operations team as part of a larger round of layoffs that comes as the company’s focus shifts from traditional sports betting and paid fantasy draft contests to prediction markets.

At least 15 total people were laid off, according to posts from now-former employees on social media. Underdog has more than 600 total employees, according to LinkedIn. Affected employees were informed during the workday on Friday, Feb. 27, that their jobs had been cut. In addition to substantial layoffs in the fraud operations department, Underdog cut jobs across areas like customer support, graphics, and “drafts”—a product offering daily and season-long draft-based games.

One person who was impacted by the layoffs tells Front Office Sports that while they do not know the full scope, “I do know it is significant.”

The person says that a meeting was put on their calendar roughly an hour before lunchtime, and a message was sent in Slack—the company’s internal communication platform—apologizing for the short notice and saying that those who had received the invite should attend. The call informing them they had been laid off was short, and by the time the meeting was over, access to company property, including email and Slack, “had been cut.” An hour later, a human resources manager called to confirm the person had joined the meeting and to ask if there were any questions.

“It was definitely a surreal feeling,” the person tells FOS.

A Strategic Shift

The reason cited for the layoffs was a “strategic shift,” the person says. “This shift is clearly away from drafts and shifting the focus to prediction markets.”

Underdog announced in September that it was entering prediction markets through a deal with Crypto.com, which would allow users in 16 initial states to trade on event contracts across the NFL, NBA, MLB, college football, and more. 

Underdog had previously seemed primed to grow its traditional sports betting business, but the company has changed gears after the explosive growth of prediction markets since early last year. For instance, although it used to offer traditional sports betting in North Carolina, it shut down that operation in December, not long after dropping plans to obtain a license to offer sports betting in Missouri.

Meanwhile, in March, Underdog reached a deal with the New York State Gaming Commission under which it paid $17.5 million to settle claims it was unlawfully offering “certain types” of contests in the state.

For the moment, the regulatory environment for prediction markets seems less burdensome than traditional sports betting, which is regulated on a state-by-state basis. The president’s son, Donald Trump Jr., is an investor in Polymarket and an advisor to Kalshi, and Trump’s social media platform, Truth Social, plans to launch its own prediction-market platform in partnership with Crypto.com—the same company Underdog has teamed with.

The Trump administration has signaled support for the prediction-market industry, despite it facing a growing pile of legal threats from state regulators. Last month, Mike Selig, the recently approved chairman of the Commodity Futures Trading Commission—the regulator that oversees prediction markets—made clear he will fight for the industry.

“To those who seek to challenge our authority in this space, let me be clear: we will see you in court,” he said.

“That was a gut punch.”

Another person who was laid off, customer support associate Marco Sandoval, posted a more than 13-minute video on YouTube explaining his experience. Sandoval, who worked remotely from Uvalde, Texas, is married with four kids. “This isn’t the best news,” he said in the video.

According to Sandoval, there was an announcement on Slack telling people to join a meeting, but no details were disclosed. “‘Big announcement,’ those are the words they used,” Sandoval said. He thought there may be a new partnership or some other company-related news.

Instead, after a few minutes of waiting, Underdog founder and CEO Jeremy Levine popped up on the screen, looking “distraught,” Sandoval said. Levine apologized and said that whoever received this message had been laid off. “Wow, I did not see that coming,” Sandoval said. “That was a gut punch.”

Sandoval, who was with Underdog for a little less than two years, said he will receive eight weeks’ pay and is allowed to keep his company-issued laptop. Despite his disappointment in being laid off, he understands this wasn’t personal. “It is what it is, it’s business,” Sandoval said in his video. 

The person who spoke to FOS worked at Underdog longer than Sandoval. They say they will also get to keep their company laptop and receive 12 weeks’ severance pay.

The person says they understand what Underdog did “from a business sense.” But, “there is no doubt they could have conducted themselves and this shift in a better way, and they do underestimate the negative hit they will take as a result,” they added.

A representative for Underdog didn’t respond to a request for comment.