Underdog Fantasy Suspends Drafts in Seven States Due to Licensing Dispute
Regulatory clash forces fantasy sports platform to choose between state licenses and CFTC-regulated products.
1Immediate Suspension
Underdog Fantasy announced on September 5, 2026, that it would immediately halt new Drafts entries in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio after Wednesday's kickoff. Founder Jeremy Levine stated this decision came after regulators forced the company to choose between maintaining state fantasy licenses or continuing CFTC-regulated products. Existing contests will proceed unaffected, but no new entries will be accepted in these states.
2Regulatory Dilemma
The conflict stems from state regulators linking Underdog's ability to hold fantasy sports licenses with its Commodity Futures Trading Commission-regulated offerings. Levine explained that these states adopted a legal position the company disputes: offering CFTC-licensed products would preclude them from operating fantasy sports in those jurisdictions. This forced Underdog to make a difficult choice between two key business segments.
3Historical Significance
Drafts holds special importance for Underdog as the company's first-ever launched game and a foundational product in its early growth. Levine expressed personal attachment, calling it "a big part of what built Underdog." Despite current usage being lower than other products, the format maintains a dedicated community that the company hopes to eventually serve again through potential future solutions.
4State-by-State Patchwork
Fantasy sports regulation in the U.S. operates through individual state oversight, creating a complex compliance landscape. Massachusetts exemplifies this with specific rules governing DFS operators, including consumer protections regarding minors, college sports contests, and customer funds. The current seven-state withdrawal highlights ongoing challenges in navigating inconsistent regulatory environments across jurisdictions.
5California Precedent
Underdog previously faced regulatory pressure in California during 2025, when it transitioned its pick'em contests to a peer-to-peer format following legal challenges. This change came after California Attorney General Rob Bonta issued an enforcement-worthy opinion on daily fantasy sports. PrizePicks made similar adjustments, demonstrating how regulatory interpretations can force industry-wide operational changes.
6Strategic Trade-off
By choosing CFTC-licensed products over state fantasy licenses, Underdog preserves what Levine calls "effectively our full experience, minus Drafts." This strategic decision prioritizes regulatory compliance and long-term sustainability over maintaining all offerings in every market. The company believes this approach better positions it for future growth despite the immediate product limitations.
7Community Impact
Levine directly addressed the Drafts community through social media, acknowledging the unpopular nature of the decision. The company maintains optimism about eventually reintroducing Drafts to more customers, though Levine cautioned it's too early to commit to specific plans. This transparency reflects Underdog's commitment to maintaining trust with its user base during regulatory challenges.
8Industry Implications
Underdog's situation underscores broader challenges in the fantasy sports sector as operators balance innovation with evolving regulations. The seven-state withdrawal demonstrates how regulatory interpretations can significantly impact product offerings overnight. As the industry matures, companies must develop flexible strategies to adapt to diverse and sometimes conflicting legal landscapes across markets.