Underdog is surrendering fantasy licenses in seven states so it can keep its CFTC-licensed prediction markets. Founder Jeremy Levine told Drafts players that after Wednesday's NFL kickoff, new Drafts entries will stop in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio.
Already-entered drafts will play out and pay as usual.
Drafts community, I have some not fun news to share. Right after kickoff on Wednesday, we will be shutting down Drafts in seven states: MA, MD, MI, MS, NJ, PA and OH. Already entered drafts will continue as normal, but in those states you won't be able to enter new drafts. If…
— Jeremy Levine (@JerLevine) September 5, 2026
Levine's message was unusually personal for a regulatory notice.
Drafts — Underdog's original snake-draft / best-ball product — was the first game the company launched in 2020 and a core part of how it built a brand. Usage is now far below Pick'em and the newer prediction products, but he said the company still cares about that community and that the choice "sucks."
The states, he wrote, have taken a view Underdog disagrees with: offer CFTC-licensed event contracts, or keep a fantasy sports license—not both. Underdog picked the federal product and is giving up the state fantasy licenses. He said they have ideas for bringing Drafts back to more people but nothing they can commit to yet.
Company help pages confirm the cutoff (September 10 in most of the seven states; September 9 in Mississippi), that existing entries settle normally, and that prediction picks stay available in several of those states even after fantasy contests disappear.
In Massachusetts, DFS play is regulated by the Attorney General's office. RotoWire reached out to its office for comment.
What Is 'Drafts'
Drafts is Underdog's salary-cap-free draft format: you snake-draft a roster once (daily slates, weekly, or full-season best ball), then the platform auto-starts your highest-scoring eligible players. No waivers, no weekly lineups.
It is the product that made Underdog distinct from DraftKings/FanDuel salary-cap DFS and from the higher/lower Pick'em style that later became the company's volume engine.
The broader fight: States vs. DCMs
Underdog is one company making a concrete tradeoff in a larger, still-unsettled war. Prediction-market platforms (Kalshi, Novig, Polymarket U.S., Crypto.com/Nadex-style products, and now Underdog's own exchange after it acquired the Aristotle stack) list binary event contracts — "Will this team win?" "Will this player go over X yards?" — under CFTC Designated Contract Market rules.
Operators and the CFTC treat those as federally regulated derivatives. A growing list of states treat sports-related contracts as unlicensed sports wagering that belongs under gaming commissions, age 21 rules, geofencing, responsible-gaming mandates, and — critically — state tax rates that can run into the high teens or higher.
That is why the conflict is so sharp
Federal claim: Commodity Exchange Act exclusive jurisdiction. One national rulebook, 18+ in many cases, no state gaming tax on the handle/revenue the way sportsbooks pay.
State claim: This is sports betting. Packaging it as a swap or event contract should not strip states of police power, consumer protection, or tax base—especially in states that already legalized sportsbooks and depend on that revenue.
Courts are split. The Third Circuit has sided with Kalshi against New Jersey's attempt to treat the contracts as state-regulated wagering. Nevada's district court has been more willing to treat sports-parlay-style contracts as gaming. Other states (Massachusetts, Michigan, Maryland, Arizona, and more) have used C&Ds, license threats, injunctions, or lawsuits. Coalitions of states have filed amicus briefs. The CFTC and DOJ have also moved to assert exclusive federal authority in some of these fights.
Underdog is not a bystander. It previously distributed Crypto.com event contracts, then launched its own CFTC-licensed exchange in July 2026. Arizona had already moved against its fantasy license over the Crypto.com relationship.
Closing or unused sportsbook licenses (North Carolina, unused Ohio/Missouri paths) fit the same pattern: when the choice is a heavily taxed, tightly licensed state sportsbook versus a federal event-contract stack, the company has been choosing the federal stack. The $1.3 billion IG Group acquisition is part of the backdrop for doubling down on that product rather than the original Drafts licenses.
Why These Seven States?
These are states that both:
(a) licensed Underdog's fantasy contests
(b) have taken the hard line that a fantasy licensee cannot also run CFTC sports event contracts.
The NFL Season Kickoff Wednesday night is the practical deadline. Season-long best ball is the product that would lock users in for months. Surrendering the licenses now lets Underdog keep "effectively the full experience minus Drafts" for users in those states who will still get prediction products.
Levine is optimistic they can get Drafts back somehow—separate entity, different product design, legislative change, or a court win that collapses the incompatibility rule.
None of that is committed. Until then, the message to the Drafts community in those seven states is an apology and a completed-entry grandfather.
The larger story is not just one app dropping one format. It is operators deciding that a federal DCM license is more valuable than a patchwork of state fantasy licenses, while states decide whether they will accept a parallel, lower-tax, federally supervised sports-wagering channel they did not authorize.
That fight will keep producing exactly this kind of "we had to choose" announcement until Congress, the Supreme Court, or a durable circuit consensus settles who owns sports event contracts.
