Established-Private Profile · No Rating · Thesis Case Study / Watch

Underdog

DFS → prediction-markets operator (Best Ball / Pick’em / Underdog Predict) · Brooklyn · June 14, 2026

Founded: 2020Raised: ~$115mValuation: ~$1.2bn (Mar-25)Customers: ~4m

Why this is a profile, not a screen. Underdog is a Series C, ~$1.2bn-valuation VC-backed private with ~4m customers — well past the early-stage screen. So no fit score, no Harvey Balls, no verdict. But it is the single most thesis-relevant private in the coverage: it is executing, in real time, the DFS/OSB→prediction-markets pivot this fund’s entire disruption thesis is built around — and has gone further than any major peer.

Section 1

Overview

Underdog is a Brooklyn-based sports-gaming company founded in 2020 by a team of industry veterans, led by founder/CEO Jeremy Levine. It reached scale on differentiated daily-fantasy products — Best Ball tournaments (draft once, auto-managed lineups) and Pick’em (Higher/Lower on player stat lines, 2–5 legs, house-banked — economically close to prop betting) — building ~4 million customers and a who’s-who cap table. Over 2025–26 it has reinvented itself as a prediction-markets operator, and now owns exchange infrastructure to run them.

▮Best Ball / Pick’em (DFS): the original product-market fit; Pick’em is the higher-margin, prop-like, house-banked game that drew regulatory scrutiny in many states.
▮Underdog Predict: sports prediction markets launched Sept 2025 via a Crypto.com partnership across 16 states — the first major sports-gaming operator to offer market-driven contracts, ahead of DraftKings/FanDuel/Fanatics.
▮Sportsbook (wound down): a proprietary-tech sportsbook launched in North Carolina (Mar 2024) has since been taken offline, with the Missouri license application withdrawn — a deliberate retreat from state-licensed betting.

Section 2

The 2025–26 Prediction-Markets Pivot

The defining development — and the reason Underdog matters to this book — is a hard pivot from state-licensed DFS/sportsbook toward federally-regulated prediction markets.

When	Move
Mar 2024	Launches proprietary-tech sportsbook in North Carolina
Sep 2025	Launches Underdog Predict (prediction markets) via Crypto.com in 16 states — first major operator to do so
Late 2025	Withdraws Missouri sportsbook licence application; takes North Carolina sportsbook offline
Early 2026	Layoffs (dozens), attributed partly to the prediction-markets transition; “we transitioned our business this year” (Levine)
Mar 2026	Acquires a derivatives exchange (Aristotle Exchange) — to own the CFTC-regulated rails for prediction markets (deal value undisclosed)

In one sequence, Underdog moved from being subject to state-by-state betting/DFS regulation to operating on the federal event-contract (CFTC) rails — and then bought the exchange itself, internalising the infrastructure rather than only distributing on a partner’s. That is the prediction-market disruption thesis, executed by an operator in real time.

Section 3

Ownership & Funding

Well-capitalised by a marquee investor base. Figures from reporting/data providers; revenue is not disclosed (not fabricated here).

Item	Figure	Basis / flag
Total raised	~$115m	PitchBook / CBInsights
Series C (Mar 2025)	~$70m+ (round >$100m cited)	Led by Spark Capital
Valuation (Mar 2025)	~$1.2–1.23bn	Series C; ~3x the 2022 Series B — reporting/secondary
Series B (2022)	$35m @ ~$485m	reporting
Customers	~4m	company-cited (DFS + betting)
Employees	~60–500 (post-layoffs)	sources vary; dozens cut early 2026
Revenue	Not disclosed	— (not estimated here)

Backers: Spark Capital (lead, Series C — cited as one of the largest sports-gaming bets by a top-tier Silicon Valley VC), plus BlackRock, Mark Cuban, Kevin Durant, and Breon Corcoran (ex-CEO, Paddy Power Betfair), among 100+ investors. Note: the ~$1.2bn mark was a 2025 peak; the early-2026 layoffs followed, so the current internal mark may differ — treat the valuation as a last-round reference, not a live quote.

Section 4

Competitive Positioning & RG

Underdog now competes on two fronts — the DFS/pick’em field it came from, and the prediction-market field it is moving into.

Arena	Key players	Underdog’s position
Pick’em / DFS	PrizePicks (Allwyn 62.3%), Sleeper, DraftKings, FanDuel	strong #2 in pick’em behind PrizePicks; regulatory pressure on the format
Prediction markets	Kalshi, Polymarket, Robinhood, Crypto.com (partner)	first major sports-gaming operator in; now owns an exchange (Aristotle)
Traditional sportsbook	FanDuel, DraftKings, BetMGM	exited — NC offline, MO withdrawn

Responsible gaming: Underdog runs GuardDog, a ~$1m innovation fund backing early-stage problem-gaming-solution startups — a credible RG-forward signal as it scales high-velocity products.

Section 5

Strategic Read for the Fund (observations, not a verdict)

Observations for the coverage — not an investment rating. Underdog is not currently accessible (private; last primary round Mar 2025), but it is the most instructive private in the book.

Why it matters to the thesis

The fund’s core disruption call is that federally-regulated prediction markets bypass state licensing/tax and threaten conventional operators. Underdog is that thesis in motion: a scaled operator has voluntarily abandoned a state-licensed sportsbook to bet its business on CFTC-rails prediction markets — and bought an exchange to own the infrastructure rather than rent it. It is simultaneously evidence for the disruption (operators are defecting to PMs) and a live test of whether an operator can convert a DFS audience into a prediction-market one.

What to watch

Execution of the Aristotle Exchange integration; whether the ~4m DFS customers convert to Predict; the CFTC-vs-states regulatory fight over sports event contracts (the whole pivot rests on the federal route holding); PrizePicks/DraftKings/Kalshi/Polymarket competitive response; and the next financing — a fresh round, a strategic investment, or an eventual IPO would be the access point. The early-2026 layoffs are a flag that the transition is not frictionless.

Bottom line (no rating): the clearest operator-level case study of the prediction-market disruption this book is built around — an established private reinventing itself on the CFTC rails and buying the exchange to do it. Not accessible today, but a priority watch: track the Predict conversion, the regulatory contest, and the next round. It also sharpens the read on the listed names — if even a scaled operator is fleeing state-licensed betting for PMs, the “own the data layer, not the operators” stance and the PM-tailwind for Sportradar/Genius look better, not worse.

SOURCES & FLAGS. Profile from corroborating sources: products + Crypto.com prediction-markets launch in 16 states, Sept 2025 (Sacra, marvn); sportsbook wind-down (NC offline, MO withdrawn) + layoffs + “transitioned our business” (Sportico, Mar 2026); Aristotle Exchange / derivatives-exchange acquisition, Mar 2026, deal value UNDISCLOSED (CBInsights news, marvn); funding ~$115m total, Series C ~$70m+ led by Spark Capital at ~$1.2–1.23bn (Mar 2025), investors incl. BlackRock, Mark Cuban, Kevin Durant, Breon Corcoran (Sacra, Clay, marvn, comped, PitchBook, CBInsights); ~4m customers (company-cited); founded 2020, Brooklyn; founder/CEO Jeremy Levine. FLAGS: revenue is NOT disclosed and is not estimated here; the ~$1.2bn valuation is a Mar-2025 last-round reference that PREDATES the early-2026 layoffs, so it is not a live mark; employee count varies by source; the Aristotle deal value is undisclosed. This is an established-private profile: NO rating, NO fit score, NO verdict.
DISCLAIMER. Internal profile for informational purposes; not investment advice, an offer, or a solicitation.