Corporate Misconduct Accountability Project
Underdog Sports, LLC d/b/a Underdog Fantasy · Class Action Lawsuit
Underdog Fantasy Accused of Running Illegal Sports Betting Ring
Class action lawsuit alleges Underdog Sports, LLC disguised unlicensed sports betting as fantasy games, deceiving tens of thousands of consumers who lost money wagering on rigged odds while the company sidestepped taxes and regulations.
CRITICAL SEVERITY
TL;DR
Underdog Fantasy allegedly operated an illegal sports betting platform disguised as fantasy sports. Users placed bets directly against the house on athlete performance statistics, not against other users as in legitimate fantasy contests. Multiple state regulators ordered the company to stop offering illegal bets. The company allegedly avoided licensing requirements, taxes, and consumer protections while targeting younger users and misleading them about the true nature of their wagers.
If you lost money on Underdog’s Pick’em games, you may be entitled to compensation.
51%
Tax rate Underdog allegedly avoided by operating without a license in New York
18
Average age of users on Underdog’s Pick’em platform
$25+
Minimum amount plaintiffs lost within three months to qualify for claims
$100
Maximum deposit match bonus used to lure new users
The Allegations: A Breakdown
Core Allegations
What they did · 8 points
| 01 | Underdog Sports operated an unlicensed sports betting platform while falsely marketing it as fantasy sports. Users bet directly against the house on whether individual athletes would exceed specific performance benchmarks set by Underdog, not against other users as required in legal fantasy contests. | high |
| 02 | The company never obtained required sports betting licenses in any state where it operated. Licensed operators in New York pay a 51 percent tax rate and must implement strict consumer protections. Underdog bypassed all these requirements. | high |
| 03 | Multiple state gaming commissions, including Florida, Massachusetts, Arkansas, Maryland, West Virginia, and Wyoming, ordered Underdog to cease operations or determined its games constituted illegal sports wagering. | high |
| 04 | The company used deposit match bonuses up to $100 to lure consumers onto the platform while actively concealing that they were gambling. Plaintiffs claim they were never shown terms of service during mobile app signup. | high |
| 05 | Underdog branded its platform as Underdog Fantasy and labeled its betting products as fantasy games to deceive consumers about the true nature of their wagers. The company set sophisticated betting lines designed to profit off consumers, similar to traditional sportsbooks. | high |
| 06 | Pick’em games operated like traditional parlays where consumers selected overs or unders for players in specific categories, betting against the house. In standard Pick’em contests, all selections needed to be correct to win, creating extremely poor odds. | medium |
| 07 | The platform targeted younger users, with an average player age of 18 according to Underdog’s own terms. This exposed vulnerable populations to addictive gambling behavior without proper warnings or safeguards. | high |
| 08 | New York adopted Rule 5602.1(a)(4) in October 2023 explicitly outlawing proposition betting contests like Underdog’s Pick’em games. The company stopped offering Pick’em Champions in New York but continued its standard Pick’em product. | medium |
Regulatory Failures
How oversight broke down · 6 points
| 01 | New York authorized mobile sports wagering in 2021 and licensed nine operators through a competitive bidding process. Underdog was not among the licensed operators but continued to offer betting products in the state. | high |
| 02 | Licensed operators must register with the New York Gaming Commission and submit to taxes and regulatory oversight. Underdog operated without registration, avoiding the Commission’s monitoring of gambling addiction, underage participation, and problem gambling trends. | high |
| 03 | The Florida State Gaming Commission ordered Underdog to cease offering illegal bets under the guise of fantasy sports. Similar actions came from Massachusetts and Arkansas gaming authorities who concluded the games were illegal sports wagering. | medium |
| 04 | Regulatory action came only after significant consumer harm had already occurred. State crackdowns did not provide direct financial compensation to consumers who had already lost money on the platform. | medium |
| 05 | The company exploited the legal distinction between interactive fantasy sports and sports betting, operating in perceived gray areas while regulations struggled to keep pace with new online gaming products. | medium |
| 06 | Licensed operators face requirements to prohibit minors from participating, implement self-exclusion programs for problem gamblers, and prevent misleading advertising. Underdog allegedly sidestepped all these consumer protections. | high |
Profit Over People
The business model · 6 points
| 01 | Underdog operated as the house, setting sophisticated betting lines designed to ensure its own profitability. The company took vigorish, a fee charged for accepting wagers, paying out less for winning bets than it collected from losing bets. | high |
| 02 | The company enriched itself by saving costs it should have spent on regulatory compliance and taxes. Licensed operators contribute to public funds for problem gambling services, but Underdog paid nothing while profiting from consumer losses. | high |
| 03 | Underdog offered deposit match bonuses and limited time promotions to entice users to join and fund accounts. These tactics lured consumers with free money while assuring them they were not actually gambling. | medium |
| 04 | The company misrepresented consumers’ odds of winning through false and misleading representations on the app. Users believed they had significantly better chances of payouts for correct picks than they actually did. | high |
| 05 | By labeling illegal betting as fantasy sports, Underdog tapped into a broader market including people hesitant to engage in explicit sports betting. This deliberate deception maximized user participation and revenue regardless of legal obligations. | high |
| 06 | The vig and sophistication of house betting lines made it very difficult for consumers to make long-term profits. The system was designed to transfer wealth from individual users to the company based on deceptive practices. | medium |
Economic Fallout
Who paid the price · 6 points
| 01 | Tens of thousands of consumers across the United States lost money wagering on Pick’em style betting through Underdog’s platforms. Plaintiff Brian Ballentine alone placed over 150 entries believing the games were legitimate and regulated. | high |
| 02 | States lost significant tax revenue from Underdog’s unlicensed operations. New York taxes licensed mobile sports wagering at 51 percent, with funds supporting problem gambling services and public programs. | high |
| 03 | Licensed competitors faced an uneven playing field. They paid heavy taxes and compliance costs while Underdog allegedly operated the same business model without these financial obligations. | medium |
| 04 | Consumers lost money based on betting lines with extremely poor odds of winning. The house kept a percentage of all wagers through vigorish, making long-term consumer profits nearly impossible. | medium |
| 05 | The company collected entry fees and kept portions for itself while users believed they were competing in skill-based fantasy contests. Underdog’s own scoring criteria determined prizes, and users did not know payouts in advance. | medium |
| 06 | Plaintiffs seek recovery of all losses, disgorgement of unjust profits, treble damages where appropriate, and attorney’s fees. The economic harm extends beyond individual losses to systemic costs of unregulated gambling. | medium |
Public Health and Safety
Addiction by design · 6 points
| 01 | Research demonstrates grave problems arising from sports betting participation, including addiction and suicidal ideation. Gambling stimulates the brain’s reward system and can lead to addiction, causing participants to risk valuable assets hoping for greater returns. | high |
| 02 | Pick’em games are especially popular with younger sports betting community members. The average age to play Pick’em games on Underdog’s platform is 18, exposing vulnerable young adults to addictive behavior without proper warnings. | high |
| 03 | Illegal gambling is addictive and dangerous, especially when consumers do not even know they are gambling. Underdog allegedly duped users into engaging in highly addictive behavior while telling them they were playing fantasy games. | high |
| 04 | Licensed operations must implement measures to prohibit minors and support compulsive gamblers through self-exclusion programs. Underdog sidestepped these crucial public health protections by operating without a license. | high |
| 05 | The lawsuit compares Underdog’s practices to providing alcohol to minors and labeling it juice. The company allegedly enabled addictive gambling behavior while ensuring users they were not engaged in gambling at all. | high |
| 06 | Licensed platforms collect data on problem gambling trends, provide counselor training, identify vulnerable populations, and offer resources. Underdog’s unlicensed operation meant none of these safeguards existed for its users. | medium |
The PR Machine
Selling the fantasy · 6 points
| 01 | The company deliberately branded its platform as Underdog Fantasy with the web URL underdogfantasy.com. The home screen graphic prominently displayed UNDERDOG FANTASY to create the impression of a fantasy sports platform. | medium |
| 02 | Underdog described its Pick’em product as Underdog Fantasy Pick’em in marketing materials. These branding choices were not accidental but part of a calculated effort to dupe consumers into thinking they were not gambling. | high |
| 03 | During mobile app signup, consumers were not alerted to terms and conditions or privacy policies. Plaintiffs claim they were never shown or asked to accept any version of Underdog’s Terms of Service. | high |
| 04 | At no point in the signup process did Underdog inform consumers that they would be betting against Underdog itself as the house. Users believed they were competing against other consumers in fantasy sports. | high |
| 05 | Marketing materials emphasized deposit match bonuses up to $100, with multiple signup screens promoting the offer. The company lured users with promises of matched funds without disclosing the illegal nature of the betting. | medium |
| 06 | Underdog falsely represented the probability of winning, the lawfulness of its business, and whether users were engaged in addictive gambling behavior. These material misrepresentations were likely to deceive reasonable consumers. | high |
Wealth Disparity
Who profits, who loses · 6 points
| 01 | Underdog unjustly enriched itself at the expense of tens of thousands of consumers. The company amassed profits by misleading users and circumventing regulations designed to protect the public and ensure fair play. | high |
| 02 | Wealth transferred from individual consumers to the company based on allegedly deceptive practices. Users lost money wagering on games they believed were legitimate fantasy contests with fair odds. | high |
| 03 | The company created betting lines with extremely poor odds of winning while misrepresenting consumers’ chances. It collected money from users who did not realize the implications of their bets or that they were gambling at all. | high |
| 04 | By avoiding sports betting licenses, Underdog skipped taxes that contribute to public services. This skewed the economic equation in the company’s favor while depriving states of revenue for problem gambling programs. | medium |
| 05 | The lawsuit seeks to recover losses and disgorge Underdog’s unlawful or inequitable proceeds. Plaintiffs argue the company’s profits were ill-gotten gains derived from illegal operations and consumer deception. | medium |
| 06 | Corporate interests diverged sharply from consumer interests. The company prioritized profit maximization over legal compliance, ethical conduct, and user well-being. | medium |
Corporate Accountability Failures
Getting away with it · 6 points
| 01 | Underdog operated for years without adhering to stringent licensing, taxation, and consumer protection mandates governing legitimate sports betting. The company attracted and retained users while allegedly violating multiple state laws. | high |
| 02 | State regulatory responses came too late for many consumers who had already lost money. Crackdowns by authorities do not make plaintiffs or class members whole or provide direct financial compensation for past harm. | high |
| 03 | The company exploited legal gray areas where regulations had not yet caught up to new forms of online gaming. This allowed Underdog to profit from ambiguities in law until explicitly challenged. | medium |
| 04 | Underdog operated its business primarily through its New York headquarters, processed payments in New York, and designated New York as governing law in its terms. Yet it never obtained required New York licensing. | high |
| 05 | The lawsuit asserts that corporations cannot operate with impunity when their actions deceive consumers, violate state laws, and undermine regulated industries. Legal action serves as public demand for corporate responsibility. | medium |
| 06 | Plaintiffs seek declarations of violations, injunctions to stop challenged conduct, recovery of losses, disgorgement of profits, treble damages, and attorney’s fees. The case aims to deter similar corporate misconduct industry-wide. | medium |
The Bottom Line
What this means · 4 points
| 01 | The lawsuit alleges Underdog Fantasy prioritized profit over legal compliance and consumer welfare, operating an illegal sports betting ring disguised as fantasy games. Tens of thousands of people lost money believing they were participating in fair, regulated contests. | high |
| 02 | Beyond individual financial losses, society paid the cost of an unregulated gambling environment particularly attractive to younger vulnerable individuals. No safeguards existed that are mandated for licensed operations. | high |
| 03 | The case highlights systemic vulnerabilities in how emerging online gaming is regulated. Corporate entities can exploit gray areas, and the allure of profits can lead companies down paths of alleged misrepresentation and legal non-compliance. | medium |
| 04 | Multiple state regulatory actions lend credence to the core legal theory that Underdog’s offerings were sports wagering, not fantasy sports. The detailed complaint cites specific statute violations and provides a coherent theory of harm. | medium |
Timeline of Events
2015
New York Attorney General Eric Schneiderman moved to ban all forms of fantasy sports operations in New York
2016
New York Governor Andrew Cuomo signed law regulating daily fantasy sports industry
2021
New York authorized mobile sports wagering and began licensing process
December 2021
New York Gaming Commission awarded 10-year licenses to nine mobile sports wagering operators at 51% tax rate; Underdog not included
Prior to February 2024
Florida State Gaming Commission ordered Underdog to cease offering illegal bets
Prior to February 2024
Massachusetts and Arkansas gaming commissions concluded Underdog’s games were illegal sports wagering
Prior to February 2024
Maryland, West Virginia, and Wyoming regulators told Underdog to stop operating without sports betting licenses
October 2023
New York Gaming Commission adopted Rule 5602.1(a)(4) explicitly outlawing proposition betting contests like Underdog’s Pick’em
Post October 2023
Underdog stopped offering Pick’em Champions in New York but continued standard Pick’em product
February 26, 2025
Class action complaint filed in US District Court, Eastern District of New York (Case 1:25-cv-01106)
Direct Quotes from the Legal Record
QUOTE 1
Illegal operation masquerading as fantasy sports
allegations
“Defendant owns and operates an online and app-based platform that it falsely markets as an interactive fantasy sports game. In actuality, Defendant owns and operates an unlicensed sports betting platform.”
💡 This establishes the core deception claim that Underdog misrepresented an illegal betting operation as legal fantasy sports
QUOTE 2
Not competing against other users
allegations
“Defendant provided and provides a platform wherein consumers can participate in Pick’em games. In Pick’em games, consumers place bets (or ‘wagers’) on how athletes will perform on various metrics in professional sports games. The house lists a series of metrics available to be bet on such as points scored, rebounds, assists, or total yards. Then consumers ‘pick’ the ‘over’ or ‘under’ for the respective categories.”
💡 This shows Pick’em games are bets against the house on athlete statistics, not fantasy team competitions against other users
QUOTE 3
State regulators confirmed illegal betting
regulatory
“The Florida State Gaming Commission ordered Defendant to cease and desist offering ‘illegal bets’ under the guise of fantasy sports. Massachusetts, Arkansas, and other state gaming commissions have similarly concluded Defendant’s fantasy games are illegal ‘sports wagering.'”
💡 Multiple independent state authorities determined Underdog’s games were illegal sports betting, not fantasy sports
QUOTE 4
Operating entirely without license
regulatory
“Sports betting is illegal without a license, and Defendant at no point during the proposed Class period has had a sports betting license. Even if Defendant were operating interactive fantasy sports contests, Defendant would still need a license, and does not have one.”
💡 Underdog never obtained required licensing for either sports betting or fantasy sports operations
QUOTE 5
Deliberately misleading consumers
profit
“Defendant dupes consumers into thinking they are not gambling, while simultaneously luring them to gamble with matching and limited time bonus offers.”
💡 The company actively deceived users about the nature of their activity while incentivizing more gambling
QUOTE 6
Never showed terms of service
pr_machine
“Upon information and belief, he was never shown, nor did he ever accept, any version of Underdog’s Terms of Service. Through the Underdog Fantasy app, he placed over 150 entries in Pick’em games. Mr. Ballentine was not informed by Underdog of the nature of its games – that it operates an unlicensed sports book.”
💡 Users never received or agreed to terms and were never told they were gambling on an unlicensed platform
QUOTE 7
Targeting vulnerable young users
health
“Pick’em games are especially popular with younger members of the sports betting community. The average age to play Pick’em games on Underdog’s platform is 18.”
💡 The platform attracted vulnerable young adults just reaching legal age, exposing them to gambling addiction risks
QUOTE 8
Addiction risks when users don’t know they’re gambling
health
“Illegal gambling is addictive and dangerous, especially when consumers do not even know they are gambling.”
💡 Concealing the gambling nature of the activity made it even more dangerous for users susceptible to addiction
QUOTE 9
Like giving alcohol to minors and calling it juice
health
“This is akin to providing alcohol to minors and labeling it juice.”
💡 The lawsuit uses this analogy to emphasize how Underdog gave people a dangerous substance while lying about what it was
QUOTE 10
Games designed to ensure house profits
profit
“The house tends to be highly sophisticated, and aims to set accurate odds that give it the best chance of making money. The house also takes Vigorish (‘the Vig’), which is a fee charged for accepting a wager. In other words, sports books pay out less for a winning bet than they take for a losing bet.”
💡 Underdog operated as a traditional sportsbook house with sophisticated odds designed to profit from consumer losses
QUOTE 11
Avoided massive tax obligations
economic
“In December 2021, the Commission awarded licenses for ten years to nine mobile sports wagering operators at a tax rate of 51 percent. Defendant is not included among the nine operators.”
💡 While licensed operators paid 51% taxes, Underdog paid nothing by operating illegally
QUOTE 12
Betting on athlete stats masquerading as fantasy
allegations
“Accordingly, the product is ‘betting on athlete stats masquerading as fantasy sports.'”
💡 This quote succinctly captures how Underdog disguised sports betting as something else
QUOTE 13
States lost revenue for problem gambling services
economic
“The taxes from these licenses fund the Council on Problem Gambling, which monitors gambling addiction on the platforms, operates seven problem gambling resource centers across the state, and hosts events, workshops, and conferences to raise awareness regarding the risks and signs associated with problem gambling.”
💡 Underdog’s tax avoidance meant lost funding for programs helping people with gambling addiction
QUOTE 14
New York rule explicitly banned these games
regulatory
“That regulation states that ‘[c]ontests shall not be based on proposition betting or contests that have the effect of mimicking proposition betting. Contests in which a contestant must choose, directly or indirectly, whether an individual athlete or a single team will surpass an identified statistical achievement, such as points scored, are prohibited.'”
💡 New York regulators wrote a rule specifically outlawing exactly what Underdog’s Pick’em games do
QUOTE 15
Class action necessary because crackdowns don’t compensate victims
accountability
“Plaintiffs welcome the crackdown, but it does not make them, or members of the putative class whole. They seek the value of the money they paid into Defendant’s illegal gambling platforms.”
💡 State enforcement actions didn’t provide financial recovery for consumers who already lost money
Frequently Asked Questions
What exactly did Underdog Fantasy do wrong?
Underdog allegedly operated an illegal sports betting platform while marketing it as fantasy sports. Users bet directly against the company on whether individual athletes would exceed specific performance statistics. This is sports betting, not the peer-to-peer fantasy team competitions that are legal. The company never obtained required sports betting licenses in any state.
How is this different from legal fantasy sports?
In legal fantasy sports, you build a team of athletes and compete against teams built by other users based on overall roster performance. In Underdog’s Pick’em games, you bet against the house on whether specific athletes will go over or under performance benchmarks set by Underdog. You’re not competing against other users; you’re betting against the company itself.
Did anyone besides the plaintiffs think this was illegal?
Yes. Gaming regulators in Florida, Massachusetts, Arkansas, Maryland, West Virginia, and Wyoming all ordered Underdog to stop operations or determined its games were illegal sports wagering. New York adopted a rule in October 2023 explicitly outlawing the type of proposition betting Underdog offered.
Why didn’t Underdog just get a sports betting license?
The lawsuit doesn’t say why Underdog didn’t get licensed, but it does explain what the company avoided. Licensed operators in New York pay a 51% tax rate, must implement strict consumer protections, prevent underage gambling, support problem gamblers, and submit to extensive regulatory oversight. By operating without a license, Underdog avoided all these costs and requirements.
Who was harmed by this?
Tens of thousands of consumers across the United States lost money wagering on Underdog’s platform believing they were playing legal, regulated fantasy sports with fair odds. Young adults were particularly affected, with the average user age being 18. States also lost significant tax revenue that should have funded problem gambling services.
Did users know they were gambling?
According to the lawsuit, no. Underdog marketed its platform as Underdog Fantasy and branded its betting products as fantasy games. Plaintiffs claim they were never shown terms of service during signup and were never informed they were betting against the house or that the platform was unlicensed. The company allegedly made them think they had much better odds than they actually did.
How did Underdog profit from this?
Underdog operated as the house, setting betting lines designed to ensure its own profitability. The company took vigorish, a fee for accepting wagers, meaning it paid out less on winning bets than it collected from losing bets. It also saved all the money licensed operators spend on taxes and regulatory compliance.
What about gambling addiction concerns?
The lawsuit highlights serious public health risks. Research shows sports betting can lead to addiction and suicidal ideation. Licensed platforms must monitor for problem gambling, offer self-exclusion programs, and provide resources for addicts. Underdog had none of these safeguards while targeting young users and concealing that they were gambling at all.
What is the lawsuit asking for?
Plaintiffs want the court to declare Underdog’s conduct illegal, order the company to stop these practices, award damages to everyone who lost money including possible triple damages, force Underdog to give back all profits from this illegal operation, and award attorney’s fees and costs.
What can I do if I lost money on Underdog Pick’em games?
If you lost money wagering on Underdog’s Pick’em games, you may be part of the class action. Contact the attorneys listed in the lawsuit: Lieff Cabraser Heimann & Bernstein, LLP at their New York office. You can also monitor the case progress through the court system using case number 1:25-cv-01106 in the Eastern District of New York.
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