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Underdog CEO Levine Sees Prediction Markets Driving Activity Surge

By jili tutorial · September 15, 2026

How Prediction Markets Are Reshaping Sports Betting: An Inside Look at Underdog’s Strategy and Growth

Prediction markets—platforms where users trade event-based contracts rather than place fixed-odds bets—are rapidly transforming the sports wagering landscape. Jeremy Levine, co-founder and CEO of Underdog, recently shared at the Bank of America Gaming & Lodging Conference that his company’s prediction market exchange is driving a surge in customer activity and handle (the total amount wagered). This article unpacks Levine’s insights, the company’s strategic pivot from daily fantasy sports (DFS) to prediction markets, the legal battles it faces, and the role of combos (parlays) in fueling growth.

The Rise of Prediction Markets: A New Frontier

Prediction markets allow participants to buy and sell shares in the outcome of future events—for example, “Will Team X win the Super Bowl?” or “Will Player Y score more than 20.5 points?” Unlike traditional sportsbooks, which offer fixed odds that the house sets, prediction markets use a continuous double auction where prices fluctuate based on supply and demand. This creates a trading dynamic that encourages frequent activity, as users can enter and exit positions at any time.

Underdog was the first sports-native company (born out of daily fantasy sports) to enter this arena. Levine noted that when Underdog could only offer a “sliver” of its product—presumably standard DFS contests—customer handle was about one-fourth of what a typical sportsbook sees. With prediction markets, however, handle has already surpassed that benchmark because the trading element keeps customers engaged. “We’re seeing the climb happen rapidly in real time,” Levine said, calling the trend “super exciting.”

Underdog’s Journey: From DFS to Prediction Market Leader

Founded as a DFS Operator (2020)

Underdog launched in 2020 as a daily fantasy sports platform. Its core product required users to select multiple players based on expected performance statistics—a format that Levine describes as essentially a player proposition parlay. This parlay DNA would later become a key advantage when the company moved into prediction markets.

Entry into Prediction Markets (2025)

In September 2025, Underdog entered the prediction market space through a partnership with Crypto.com. The collaboration allowed Underdog to offer event contracts while leveraging Crypto.com’s infrastructure. Shortly thereafter, in July of the following period (the original article did not specify a year for the July rollout), Underdog launched its own wholly-owned prediction market exchange, the Underdog Exchange (UDX) . This move gave the company full control over its event contract economics, reducing reliance on third parties.

Customer Handle Surge: Levine’s Insights

At the Bank of America conference, Levine provided concrete numbers to illustrate the impact of prediction markets. He recalled doing quick mental math: “When we could only offer a sliver of the product, our customer handle was… a fourth what sportsbook’s customer handle is. And prediction markets I think have even been higher.”

Why the jump?

Levine’s remarks suggest that Underdog is capturing a share of the market that traditional sportsbooks cannot easily replicate.

Geographic Strategy: Focusing on States Without Sports Betting

Key Markets: California, Texas, and Georgia

Levine described Underdog’s journey since 2025 as a “real journey,” noting that prediction markets disrupted sports betting. The company has deliberately focused on states where sports betting is not yet legal—specifically California, Texas, and Georgia. In these jurisdictions, Underdog can offer its event contracts without directly competing with established sportsbooks, and it often fills a gap for sports fans who want to engage with outcomes legally.

Surrendering DFS Licenses in Seven States

To streamline operations and avoid regulatory conflicts, Underdog voluntarily surrendered its DFS licenses in Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio, and Pennsylvania. Regulators in those states argued that operating a prediction market under a DFS permit was inconsistent. Levine acknowledged that the decision was tough but “very obvious” based on “dollars and cents.” By exiting those DFS markets, Underdog can focus its resources on states where prediction markets are clearly permitted or unregulated.

Lawsuits Against Five States

Underdog is currently suing Massachusetts, New Mexico, Ohio, Wisconsin, and Washington to prevent those states from applying existing gaming laws to its prediction market. The company argues that event contracts are not traditional sports wagers and should be treated differently. Levine expressed hope that with “Supreme Court clarity,” Underdog would eventually offer its full product suite in all 50 states. He added, “Now we can offer really 100% of the experience in nearly 100% of the states, and hopefully with Supreme Court clarity, we get to 100% of the states.”

The Combo Revolution: Why Parlays Drive Growth

More Than Half of UDX Activity Is Multi-Leg

Combinations, or parlays—bets that link two or more outcomes—are a major growth driver for Underdog’s prediction market. Levine revealed that more than half of all activity on the Underdog Exchange (UDX) comes from multi-leg bets. This is significant because parlays typically offer higher payouts and attract customers seeking larger wins.

Underdog’s DNA: A Parley Business from Day One

Underdog’s original DFS product required users to select multiple players across different games, effectively creating a parlay of player props. Levine explained, “We have been effectively a parlay business for the life of our business. The easy part for us is the parlay experience.”

Example:
A user might combine three contracts:

Each component is traded as a separate event contract, but the user can bundle them into a single multi-leg trade that pays out only if all three conditions are met. Underdog’s interface, honed through years of DFS, makes this process intuitive and engaging.

With the football season underway, Levine expects combos to continue propelling growth. The company was already racing up the prediction‐market leaderboard before the season kicked off, and the parlay-friendly format gives it an edge over competitors.

The Fight for Clarity

Underdog operates in a gray area between daily fantasy sports, sports betting, and financial prediction markets. The company’s lawsuits aim to establish that event contracts fall outside the scope of traditional gaming law. If successful, this could open the door for prediction market operators nationwide without needing individual sports betting licenses.

Hope for Supreme Court Action

Levine’s reference to “Supreme Court clarity” suggests that Underdog views a federal ruling as the ultimate resolution. A decision clarifying whether prediction markets constitute gambling or something else entirely would have far-reaching implications not only for Underdog but for the entire sector.

Conclusion: What’s Next for Underdog?

Underdog’s pivot to prediction markets appears to be paying off. Customer handle is climbing, combos (parlays) are dominating activity, and the company is strategically targeting states where it faces less regulatory friction. However, legal battles in five states and the surrender of DFS licenses in seven others underscore the challenges of operating in a rapidly evolving regulatory environment.

For now, Levine remains optimistic: “With Supreme Court clarity, we get to 100% of the states.” If that clarity arrives, Underdog’s prediction market could become a major player in the broader gaming ecosystem—one that blurs the line between betting, trading, and fantasy sports.