Underdog Fantasy Is Running an Illegal Sports Book
What It Actually Feels Like to Lose Money You Didn’t Know You Were Gambling
Imagine downloading an app called “Underdog Fantasy.” The name alone tells you this is fantasy sports. The icon says fantasy. The home screen says fantasy. You sign up. The app asks you to deposit money. It says it will match whatever you put in, up to $100. That sounds like a loyalty bonus from a game, not a sportsbook. You never see any terms of service. No pop-up. No checkbox. Nobody tells you that the company on the other side of your screen is the house, that the benchmarks it sets for player performance are the equivalent of betting lines at a casino, and that the same structural forces that drain most people at Vegas sportsbooks are built directly into this cheerful-looking mobile app.
Brian Ballentine placed over 150 entries into Pick’em games. He believed, based on what the app showed him, that his odds of winning were meaningfully better than they were. He was wrong, and the complaint says Underdog made sure he would be wrong by never telling him the truth. JeanClaude Lominy used the same app. He believed he was on a regulated betting platform. He was not. Lauren Wolf, playing from Texas, also believed her payout odds were significantly better than Underdog’s hidden house lines actually permitted. Isaac Roth, from California, believed the same. All four were never shown the Terms of Service. Not once during the sign-up process.
What makes this particular form of harm so precise is the disguise. A person who walks into a casino knows they are in a casino. The aesthetic, the sound design, the legal signage, the flashing lights, none of it pretends to be something else. Underdog’s entire product is built on the opposite premise. It calls itself fantasy. It recruits users by offering “free” money. It deploys the visual language of sports apps and gaming platforms. And then it runs what the lawsuit describes as a proposition betting operation, where the house sets the line, collects losing bets, and keeps the vigorish.
The lawsuit notes that gambling triggers the brain’s reward system in ways that produce addiction, and that people are especially vulnerable when they do not realize they are gambling. The 18-year-old picking up the Underdog Fantasy app for the first time is not calculating vigorish. They are picking whether LeBron James goes over or under 25 points. It feels like a knowledge test. It is built to feel like a knowledge test. The fact that the house set that 25-point line specifically to maximize its own profit margin is not something Underdog chose to mention anywhere in the sign-up flow.
No addiction resource. No self-exclusion option. No state-mandated problem gambling hotline. No registration with the New York Gaming Commission. No 51% tax funding the Council on Problem Gambling. Just a deposit match, a colorful interface, and a house that the user did not know existed.
What the Court Filing Actually Says, Word for Word
The following quotes are taken directly from the complaint filed in the U.S. District Court for the Eastern District of New York on February 26, 2025 (Case No. 1:25-cv-01106). No paraphrasing. This is what the plaintiffs and their attorneys put on the record.
“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. By operating unlicensed sports betting, Defendant has violated gambling laws, engaged in illegal deceptive activity, and unjustly enriched itself at the expense of tens of thousands of consumers.”
- The complaint directly frames this as a deliberate misrepresentation, not an ambiguous regulatory gray area. The word “falsely” is doing real legal work here, establishing intent for the deceptive practices claim under New York General Business Law § 349.
- “Tens of thousands of consumers” signals the scale of the class. Federal jurisdiction under the Class Action Fairness Act requires the amount in controversy to exceed $5,000,000. The complaint separately confirms that threshold is met.
“Defendant provides a platform for consumers to place bets on how particular real-world athletes will perform against performance metrics set by Defendant. This is not interactive, because consumers are not playing against other consumers, but against the house (Defendant), which sets sophisticated betting lines in order to profit off of the consumers. It is not fantasy, either, because consumers are betting on the performance of particular athletes, rather than the performance of a group of athletes assembled on an imaginary team. It is sports betting, plain and simple.”
- This paragraph is the core legal theory. New York law exempts interactive fantasy sports from the gambling prohibition specifically because the outcome depends on competitors’ relative skill. Pick’em fails that test on both required prongs: it is not consumer-versus-consumer, and it bets on individual athletes rather than assembled rosters.
- “Sophisticated betting lines” is a significant phrase. It means Underdog is not passively hosting a game; it is actively setting odds engineered to generate profit, exactly what licensed sportsbooks do and what the law requires a license for.
“Licenses allow the state to maintain gaming integrity, regulate who wagers money (including restricting minors and compulsive gamblers), and prevent unfair or misleading advertising. Without regulation, illegal sports books are able to mislead the public, including duping consumers into thinking they are not engaging in the highly addictive behavior of gambling when they are, creating betting lines with extremely poor odds of winning, misrepresenting consumers’ chances of winning, and ultimately collecting money from consumers who do not realize the implications of their bets.”
- This paragraph catalogs the specific harms that licensing prevents, and in doing so implicitly maps each harm onto what the complaint alleges Underdog actually did: mislead users about the nature of the activity, set lines that disadvantaged consumers, misrepresent odds, and collect money from people who did not understand what they were agreeing to.
- The reference to minors is legally precise. New York’s licensed wagering framework mandates age verification and tracks underage participation incidents. Underdog’s sign-up flow, per the plaintiffs’ testimony, never displayed Terms of Service at all.
“Under the guise of offering interactive fantasy games, Defendant lures consumers to gamble with special offers. As detailed below, Defendant enables addictive gambling behavior by underage adults, problem gamblers, and others by enticing them to gamble with ‘free’ money while ensuring them that they are not actually gambling. This is akin to providing alcohol to minors and labeling it juice.”
- The alcohol-labeled-as-juice analogy is not rhetorical decoration. It is establishing the framework for the deceptive practices count: the harm is not just the underlying product, it is the deliberate misrepresentation of the product’s nature to a population that includes people who would not consent to the actual product.
- “Underage adults” is legally significant. The platform’s own Terms of Use, cited in the complaint at ¶ 50, state the average Pick’em user age is 18. Eighteen is the minimum legal age to participate on most regulated gambling platforms, and it is also the demographic most acutely at risk of developing gambling disorders.
“Contests 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.”
- This is the New York Gaming Commission’s explicit rule, adopted in October 2023, that describes Underdog’s Pick’em product with enough precision to function as a direct description of it. Choosing whether a player will go over or under a points total is exactly what Pick’em is.
- The complaint notes (¶ 54) that Underdog did stop offering “Pick’em Champions” in New York after this rule passed, but continued offering its standard Pick’em product. That continued operation forms the basis of ongoing liability claims.
The Damage Extends Far Past Four Plaintiffs
Public Health
Unlicensed gambling operations carry specific, documented public health consequences that licensed frameworks are designed to prevent. Underdog’s operation bypassed every one of those safeguards.
- Peer-reviewed research cited in the complaint (Nower et al., Journal of Gambling Studies, 2018) directly links daily fantasy sports-style betting to gambling addiction and suicidal ideation. Underdog’s Pick’em product falls within the category studied.
- The brain’s reward system is triggered by gambling in ways that produce compulsive behavior. The complaint notes (¶ 49) that this mechanism causes participants to risk assets “in hopes of getting something of even greater value,” a cycle that accelerates with accessible mobile platforms that disguise the gambling as a game.
- The average age of a Pick’em user on Underdog’s platform is 18, per the company’s own Terms of Use (cited at ¶ 50). Eighteen-year-olds are neurologically among the most vulnerable to developing gambling disorders, as the prefrontal cortex governing impulse control is not fully developed until the mid-twenties.
- New York’s licensed operators are required to fund and operate problem gambling programs, including the Council on Problem Gambling’s seven resource centers statewide, workshops, conferences, and addiction referral services. None of Underdog’s revenue contributed to this infrastructure. The people harmed by Underdog’s platform had no access to the resources its taxes were supposed to fund.
- Licensed platforms in New York are required to implement self-exclusion programs, deposit limit notifications, voluntary “break” options, and tracking of gambling disorder trends. Underdog operated outside all of these systems, meaning problem gamblers using the platform had no state-mandated exits available to them.
- The complaint (¶ 43) describes Underdog’s practice of offering “free” deposit-match bonuses while simultaneously assuring users they are not gambling. This combination specifically weaponizes the psychology of problem gambling: removing financial friction at the point of entry while eliminating the psychological trigger (recognizing oneself as a gambler) that might prompt someone to seek help.
Economic Inequality
The structural design of Underdog’s Pick’em operation extracted money from ordinary users while enriching a company that paid none of the taxes, licensing fees, or compliance costs that its licensed competitors bear.
- Licensed mobile sports wagering operators in New York pay a 51% tax rate on gross gaming revenue. That is among the highest in the country. Underdog collected bets from New York users for the entire proposed class period without paying a cent of that tax. Every dollar Underdog kept is a dollar that should have flowed to state programs.
- The complaint frames the unjust enrichment count (Count IV, ¶ 89) explicitly around this tax evasion: “Defendant enriched themselves by saving the costs they reasonably should have expended on complying with regulations and tax requirements.” The cost savings are not incidental; they are the mechanism of the scheme.
- Daily fantasy sports companies are, by documented industry analysis cited in the complaint (¶ 18), “extremely lucrative for the companies that provide the service, while most consumers lose money.” Underdog’s Pick’em, operating as an unlicensed sportsbook with vigorish built in, compounds this structural disadvantage further, because consumers were betting against a house that also controlled the betting line.
- The four named plaintiffs collectively represent a demographic of ordinary consumers, not high-rollers. Brian Ballentine placed over 150 Pick’em entries. All four downloaded a free app that offered a deposit match. The entry point was low, the losses were distributed across thousands of small bets, and the resulting harm is individually small enough that most people would not pursue a lawsuit alone. That economic structure is what makes the class action mechanism necessary and what allowed Underdog’s operation to run as long as it did.
- The complaint estimates the class at thousands of consumers nationwide. The federal amount-in-controversy exceeds $5,000,000. That figure represents real money extracted from real people who were told they were playing a game, not funding a corporation’s unlicensed revenue stream.
What Underdog’s Tax Evasion Actually Cost
What Now: Who Is Accountable and What You Can Do
The class action is pending in the Eastern District of New York. Here is who holds power over this situation and what leverage exists to apply pressure right now.
Leadership and Corporate Structure on Record
- Defendant is Underdog Sports, LLC d/b/a Underdog Fantasy, a Delaware LLC with principal operations at 150 Waterbury Street, Brooklyn, New York 11206.
- The complaint names specific attorneys of record for plaintiffs: David S. Stellings, Wilson M. Dunlavey, and Jacob S. Miller of Lieff Cabraser Heimann & Bernstein, LLP, 250 Hudson Street, 8th Floor, New York, NY 10013.
- Underdog’s senior leadership and board members are not named in the source complaint. They are [REDACTED – Not in Source]. The company’s ownership and investor structure are not disclosed in the complaint and should be targets of public records requests and discovery.
Regulatory Watchlist
- New York State Gaming Commission: The primary regulator for sports wagering and interactive fantasy sports in New York. Already adopted Rule 5602.1(a)(4) banning Pick’em-format contests. Complaint documents Underdog’s continued operation of Pick’em in New York despite this rule.
- New York State Office of the Attorney General: Predecessor AG Schneiderman moved against DFS operators in 2015. The current AG’s office has jurisdiction over the deceptive practices claims (NY General Business Law § 349) alleged in this complaint.
- Federal Trade Commission (FTC): Has jurisdiction over deceptive advertising practices conducted across state lines. Underdog’s national marketing of a fantasy product that regulators in seven states have determined is illegal wagering is directly relevant to FTC jurisdiction.
- State Gaming Commissions in Florida, Massachusetts, Arkansas, Maryland, West Virginia, and Wyoming: All have already issued cease-and-desist orders or equivalent directives. Monitor these bodies for enforcement follow-through and any financial penalties.
- Consumer Financial Protection Bureau (CFPB): Has jurisdiction over deceptive financial products and unfair practices in consumer financial transactions. Underdog’s deposit-match offers made during a sign-up flow that never displayed Terms of Service may fall within CFPB purview.
- Department of Justice (DOJ): Unlicensed sports wagering operations that operate across state lines can implicate federal wire fraud and illegal gambling statutes. The DOJ’s involvement has not been disclosed in the source material, but the multi-state nature of this operation makes it a relevant body to watch.
Mutual Aid and Grassroots Action
- If you used Underdog Fantasy’s Pick’em product and lost money, you may be a class member. Contact Lieff Cabraser Heimann & Bernstein (lchb.com) directly, or visit ClassAction.org where this complaint is publicly indexed. Document your losses: screenshots of bets placed, deposits made, and any communications with the app.
- Share this investigation with anyone you know who uses Pick’em-format apps, including PrizePicks and Betr, which received cease-and-desist orders alongside Underdog in Florida. The structural issue is industry-wide, and most users have no idea they are betting against the house.
- Contact your state gaming commission and ask specifically whether Pick’em-format apps are licensed in your state. Commissions in states that have not yet acted often respond to constituent complaints by opening investigations.
- If you or someone you know developed a gambling problem through a platform like Underdog Fantasy, contact the National Council on Problem Gambling helpline at 1-800-522-4700. The harm is real and documented. You are not alone, and you were deliberately not told you were gambling.
- Push your state legislators to pass or strengthen interactive fantasy sports licensing laws with explicit bans on proposition-betting formats. New York’s Rule 5602.1(a)(4) is a model that other states have not yet adopted.
- Support journalism and legal organizations that track the sports betting industry, including legal oversight groups like the Sports Lawyers Association and consumer advocacy organizations that specialize in gambling regulation. Public accountability requires sustained pressure.
The source document for this investigation is attached below.
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