Q&A: How Underdog is using community to spur US DFS growth

Meeting Underdog Fantasy founder Jeremy Levine, you can’t help but be struck by his passion, not only for the Underdog business but for his fellow US sports fans. It was that passion which drove him to found his own daily fantasy sports (DFS) business in 2020 after previously creating Draft, a business he sold to Flutter Entertainment in 2017 for $48m. Levine’s zeal comes across in all aspects of the Underdog Fantasy business and has been magnified in recent months by a new scrutiny on one of Underdog’s offerings, that of pick’em fantasy contests, the legality of which he has vehemently defended. EGR North America talks to Levine about the challenges of this debate and the wider development of the DFS business.

EGR NA: What are the biggest takeaways from your long career in fantasy and draft contest-related businesses?

Jeremy Levine (JL): Always put the customers first. The whole mission for underdog is to help American sports fans increase their enjoyment with sports. I’ve spent 14 years building games for American sports fans and the common theme throughout that time has always been to innovate and create new products and games for American sports fans. At Underdog that’s been the focus since day one. We believed if we built the best products, we could build the biggest company in this space. Three and a half years on, we believe it more than ever.

EGR NA: Dialogue between you and your fantasy users has long been a feature of the Underdog offering but it has taken on a wider dimension since the recent controversy around pick’em games. Why is it so important to state your case?

(JL): We think it’s important for customers to know what’s happening. You’ve got FanDuel and DraftKings trying to do anything they can to protect their monopolies and turning their backs on the customers they built their business on. Fantasy Sports customers and sports fans in America want to play games and want to be able to enjoy sports. They’re getting that choice taken away by FanDuel and DraftKings and the regulatory capture they have successfully been implementing to get 80% market share, and are continuing to try to implement to stave off competitors.

It’s not just the pick’em categories, they’ve been anti-competitive in many ways. We are significantly larger than they are in fantasy sports, we’ve got more active customers enjoying our products, we’re making more money than them, and they know we’re not stopping with just our existing games. We have been very transparent from the very beginning about our intent to build the largest sports gaming company in America and they’re threatened by that. They know we can innovate and build the best product for American sports fans.

We’ve got over 100 engineers, we’ve made the choice to take a really long-term view to build our own technology, something FanDuel and DraftKings haven’t done. When we launch our sports betting products, which will be next year, they will be entirely on our tech stack, which will allow us to build something fundamentally different. The products FanDuel and DraftKings offer aren’t built for the American consumer; they’re built for the UK and Europe and over the last 10 years, they’ve brought the same sportsbook platform to American consumers and have shopped it down their throats. The American consumer in 2023 is very different to who those sports betting platforms were built for and that’s who we are building for now. They know where we can go with the customers we have and the product we’re going to build, ultimately we’re going to disrupt their market share and they’re doing whatever they can to protect it.

EGR NA: Do you have any plans to expand Underdog internationally?

JL: We are very focused on the American sports fan and sports in America. We believe that as long as we continue to execute and build the best products for sports fans in America, then we can build the largest company in this space. Once we do that, we’ll have the right to do whatever we may want to do next, but for now, our sole focus is on the American sports fan.

EGR NA: During the development of Underdog, you’ve attracted some very high-profile investors. In what ways does this support, aid, and motivate you to push the business forward?

JL: Capital obviously helps to fund companies, but companies are run by people. It’s always been important at Underdog that we have the best people to build the products we want and the business we want. Right now we have over 300 people, with over 100 engineers, and the capital we’ve been able to access has given us the lifeblood to build the products for our consumers.

EGR NA: Underdog has just launched GuardDog, an investment initiative to support startups develop responsible gambling solutions. Why is this important?

JL: We’re so excited about GuardDog. Again, our mission is to help American sports fans increase their enjoyment of more sports but people have to be playing within their means and, as operators, we must offer our games responsibly. So, as with anything we do, we look adopt best-in-class and we’ve done that with responsible gaming. We also look to innovate and wanted to see how we could push the whole category forward.

As we looked, we saw the space needed more focused innovation. Twelve years ago I went through a program called TechStars, which was an accelerator program that made investments and connected with mentors. It really became the hub of the startup ecosystem where I lived in Boston. We realised that sort of program didn’t exist in responsible gaming and so GuardDog is our mission is to help spur innovation in the space.

We will do that by becoming the central hub that not only gives capital, but makes connections, gives access to amazing advisors and mentors, gives access and introductions to downstream investors, and helps accelerate companies that are focused on helping customers play responsibly.

We want the word to get out there because we don’t know where the next idea is going to come from and a lot of innovation comes from startups. If we can be that fabric and that connective tissue that helps spread innovation, then we’re going to do a lot of good for the customers that we were born to and built to serve.

EGR NA: Where for you are the next big areas of innovation in DFS?

JL: I can’t tell you exactly what we’re building but we are always trying to evolve the experience and build new games for American sports fans. That process is only accelerating for us.

EGR NA: What do you have in store at Underdog over the next 12 months?

JL: A lot. Again, it’s continuing to build product and focus on building games and great experiences for American sports fans. That’s been a lot of what we’ve done in the last 12 months and we will be doing even more in the next 12.