Fantasy sports betting firm Underdog, which once boasted hundreds of millions in venture backing and a unicorn valuation, appears to be going through a rocky stretch. In the past week, the business has cut a significant portion of its workforce, reworking parts of its product strategy, as it deals with mounting scrutiny from regulators in several states.

Former Underdog employees speak out after widespread job cuts

Current and former staffers have turned to LinkedIn to share that they were swept up in the layoffs. One member of the creative team said Underdog “made the decision to eliminate my role in a recent round of layoffs” after four years spent building systems and leading teams — “[a] lot to reflect on.” 

Others described themselves as “a casualty of the recent Underdog layoffs,” said they planned to “keep up with contacts,” or noted they had been “impacted by the layoffs at Underdog.”

Many added the hashtag #OpenToWork, thanked colleagues, and voiced confidence about what comes next. One former employee wrote about waking up “feeling free and ready for my next chapter,” while encouraging recruiters to get in touch. 

An industry report suggests the cuts go well beyond a handful of public posts. At least 125 employees, which is more than 20% of the company’s workforce, were let go as Underdog shifts away from some of its traditional offerings and leans more heavily into prediction markets. Teams in fraud operations, marketing, customer support, and product were among those affected.

Regulatory pressure reshapes company’s direction

The internal changes are unfolding as Underdog contends with legal and regulatory challenges across the country.

In California, uncertainty has hung over daily fantasy sports operators after the state’s Attorney General issued an opinion asserting that many fantasy formats, including pick ’em and drafts, amount to illegal gambling under state law. The company has already begun modifying what it offers there.

In North Carolina, Underdog exited the regulated sports betting market late last year, shutting down those operations while settling outstanding wagers and maintaining account access for customers.

Arizona regulators issued a notice of intent to revoke the company’s fantasy sports operator license, citing its involvement with prediction markets and certain partnerships. Underdog has said it plans to fight the move. In New York, the company agreed to a $17.5 million settlement and pulled certain contest types after a dispute with the state’s gaming commission.

The turbulence comes not long after a high point. Just last year, Underdog raised a $70 million Series C round led by Spark Capital, pushing its valuation past $1.2 billion as it expanded its customer base and product lineup.

Even so, the company continues to advertise new openings in product design, analytics, and operations, signaling that while some areas are shrinking, others remain part of its long-term plans.

ReadWrite has reached out to Underdog for comment.

Featured image: Underdog / Canva

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