Underdog Fantasy has made a notable comeback in New York’s daily fantasy sports (DFS) market, relaunching its draft-style contests just two months after withdrawing amid regulatory disputes. The operator’s return follows a $17.5 million settlement with the New York State Gaming Commission (NYSGC), which had previously deemed Underdog’s DFS offerings non-compliant with the state’s licensing requirements.

The exit and reentry:

In mid-March, Underdog abruptly pulled all its DFS contests from New York after the NYSGC ruled that the games it was providing did not align with the terms of the temporary license it inherited from Synkt Games, a company Underdog acquired in 2022. This temporary license had originally been granted to Synkt in 2016, allowing it to offer certain DFS games within the state.

The commission’s decision forced Underdog to cease operations as the product offerings were considered to deviate too far from those originally licensed. As part of a settlement agreement with the NYSGC, Underdog agreed to pay $18 million and exit the market, marking a significant regulatory setback for the company.

However, on May 15, Underdog confirmed that its draft-style DFS contests had resumed in New York at 7 p.m. ET. This relaunch falls under the operator’s temporary DFS license, allowing the draft games to be legally offered once again. Notably, Underdog has yet to reinstate its other popular products in the state, including the peer-to-peer (P2P) pick’em and against-the-house versions of its pick’em games.

To announce the relaunch, the company shared a post on X stating:
🚨 ATTENTION 🚨
Draft games are back in New York 🗽

New York has long maintained a cautious and evolving approach to DFS regulation. Since legalizing DFS in 2016, the state has only issued temporary licenses for operators, with a permanent licensing process still being developed. DFS contests in New York must meet stringent criteria distinguishing them as skill-based games rather than pure chance.

Underdog has applied for a permanent DFS license in the state, aiming to establish a more stable foothold. Meanwhile, other operators licensed in New York include major platforms like DraftKings, FanDuel, and Yahoo, along with smaller competitors such as Boom Fantasy and Splash Sports.

Company growth and market position:

Underdog Fantasy’s return to New York comes on the heels of a recent Series C funding round, led by Spark Capital, which has increased the company’s pre-money valuation to over $1.2 billion. This round, expected to exceed $100 million, includes a first close of $70 million, tripling its previous valuation from 2022.

CEO and founder Jeremy Levine described the new capital as “a real accelerator” for enhancing product offerings and expanding the company’s talent base. Founded in 2020, Underdog has rapidly grown its user base to nearly four million players across the United States, becoming the fourth most downloaded sports gaming app nationally by combining fantasy sports and sports betting verticals.

Around the time Underdog exited New York earlier this year, the company announced plans to launch its peer-to-peer Champions Pick’em product in neighboring states New Jersey and Delaware. Additionally, Underdog operates sports betting in selected markets and intends to enter Missouri’s newly launched market, scheduled for December 1.