Underdog Fantasy is pulling new Drafts entries from seven U.S. states this week after founder Jeremy Levine said regulators left the company facing a choice between state fantasy licenses and products licensed by the Commodity Futures Trading Commission.
Levine said on social media September 5 that the cutoff will take effect immediately after Wednesday’s kickoff in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania and Ohio.
“Drafts community, I have some not fun news to share,” Levine wrote. “Right after kickoff on Wednesday, we will be shutting down Drafts in seven states: MA, MD, MI, MS, NJ, PA and OH.”
Already-entered contests will still go ahead. Levine said existing entries will “continue as normal,” although customers in those states cannot submit new Drafts entries after the deadline.
The change scales back one of Underdog’s earliest fantasy offerings at a time when daily fantasy sports rules continue to differ widely across the country.
CFTC licensing clash forces Underdog to pull Drafts from seven states
Levine said state regulators have taken a position Underdog disputes, linking the company’s ability to hold fantasy licenses with its CFTC-regulated offerings.
“Those states have taken a legal viewpoint we disagree with: if we offer our CFTC-licensed products we cannot offer fantasy sports in those states,” Levine wrote. “So we had to choose.”
He said Underdog’s options were to keep its fantasy licenses in those jurisdictions or give them up while continuing what he called “effectively our full experience, minus Drafts.”
Fantasy sports oversight has traditionally happened state by state, leaving operators to navigate different rules and licensing requirements. Massachusetts, for example, regulates DFS operators serving residents and sets consumer safeguards covering areas including minors, college sports contests and customer funds.
Underdog has faced regulatory pressure elsewhere, although under different circumstances. In California last year, it changed its DFS pick’em offering to a peer-to-peer format as questions continued over the legal treatment of fantasy sports. PrizePicks made a similar shift.
California Attorney General Rob Bonta had issued a legal opinion addressing daily fantasy sports and later said his office planned to enforce that interpretation against operators continuing to offer games covered by it.
“We expect our legal opinion to be followed and complied with by everyone governed by it,” Bonta said at the time.
Underdog challenged California’s position but failed in its effort to stop the opinion from being issued, then moved its California pick’em contests to the peer-to-peer format.
This seven-state withdrawal involves a different issue, with Levine specifically pointing to the clash between state fantasy licensing and Underdog’s CFTC-licensed products.
For Levine, the decision also hits a product closely tied to Underdog’s early history.
“I love Drafts,” he wrote. “It was the first game we ever launched and a big part of what built Underdog.”
Levine said Drafts now draws usage “anywhere near” the company’s other products, while stressing that the format and its community remain important.
“We have some ideas about how to get Drafts back to more customers, but it’s too early to commit to anything yet,” he added. “I’m optimistic, and we’re definitely going to try.”
Featured image: Underdog
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