Underdog Fantasy Bows Out of New York with $17.5 Million Fine
Underdog Fantasy is pulling the plug on its daily fantasy sports (DFS) contests in New York, agreeing to a hefty $17.5 million fine from the New York State Gaming Commission (NYSGC). The exit stems from a regulatory showdown over a temporary license, marking a costly detour for the fast-growing DFS operator.
A License Misstep
The saga kicked off with a temporary DFS license Underdog picked up when it bought Synkt Games, either in 2020 or late 2022. That license, originally issued in 2015, locked operators into offering only the games available back then, no updates allowed. The NYSGC flagged Underdog for stepping beyond those limits, claiming its contests had evolved too far from the original playbook.
Underdog pushed back, disagreeing with the commission’s strict reading of the rules, but ultimately chose peace over war. The settlement: a $17.5 million penalty based on its New York earnings and a full retreat from the state’s DFS scene.
Underdog’s general counsel, Nicholas Green, suggested the issue hinges on a peculiarity of New York’s temporary licensing system, not the specific games they offered. He also took a swipe at the state’s DFS market, calling it a regulatory gray zone that’s stifled innovation for nearly a decade, leaving players stuck with a handful of old-school options.
A Murky DFS Landscape
This isn’t New York’s first DFS crackdown. In February 2024, PrizePicks shelled out $15 million to exit after operating without a license.
Then, in June 2024, new rules banned prop-style DFS contests, upping the pressure on operators. Underdog’s case, though, centers on licensing compliance, not contest formats.
The NYSGC’s stance is clear: temporary license holders are stuck in a time capsule, nothing post-2015 flies. The fine and exit aim to draw a line under the confusion, with the commission noting Underdog’s cooperative attitude throughout.
Exit Strategy and a Pivot
Underdog isn’t packing it in for good. The company has applied for a permanent DFS license in New York, now under review. The settlement doesn’t bar that bid, offering a lifeline to re-enter the market with a clean slate. If approved, Underdog could unleash its full lineup, free from the outdated constraints that tripped it up this time.
New York’s DFS arena is a prize worth fighting for, millions of sports fans and a legal framework since 2016 make it a cash cow. Underdog’s exit hands a temporary win to giants like DraftKings and FanDuel, who dominate the state’s slimmed-down offerings.
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