Date of Publication: March 6, 2026, 04:03h.
Last Updated: March 6, 2026, 04:03h.
- Asset management firm indicates its stake in the sports betting company negatively impacted a closed-end fund’s 2025 results
- Reports surface of notable staff reductions within the gaming enterprise
- The company is reorienting its focus toward prediction markets
BlackRock (NYSE: BLK), the largest asset management firm globally, reported that its investment in Underdog posed a challenge to the 2025 performance of one of its closed-end funds.
In its latest annual report for a variety of closed-end funds, BlackRock indicated that Underdog impacted the 2025 outcomes for the BlackRock Technology and Private Equity Term Trust (BTX), which manages $895.5 million in assets according to the issuer’s data.
“An excessive investment in Underdog Sports Inc. adversely affected relative performance. The stock declined amid regulatory pressures and greater scrutiny regarding Underdog’s transition to prediction market products, which impacted its valuation,” as stated in a BlackRock filing with the Securities and Exchange Commission (SEC).
The gaming company does not appear among BTX’s ten largest holdings.
Understanding the Underdog Scrutiny from BlackRock
While this may not ease the concerns of BTX investors, BlackRock’s remarks regarding Underdog hold significance.
In collaboration with Crypto.com, Underdog debuted its prediction market product last September, marking it as the first licensed daily fantasy sports (DFS) and sportsbook operator to do so. This shift led Underdog to forgo its plans for an online sportsbook in Missouri and resulted in the forfeiture of its DFS license in Arizona.
The actions taken by Arizona regulators have raised concerns that other DFS and sportsbook operators venturing into prediction markets might face similar license revocations.
Although BlackRock acknowledges that Underdog is a privately held entity, shares of larger companies like Underdog trade in secondary markets, providing shareholders and institutional investors ways to assess their investments. Following a $70 million funding round in March 2025, the company was appraised at $1.23 billion, placing it in the category of ‘unicorns.’
Additional Controversies Surrounding Underdog
Although not highlighted in the BlackRock SEC filing, additional controversies have arisen involving Underdog. Reports from last week revealed that the company laid off over 20% of its workforce across various departments, including DFS games, fraud detection, and marketing, citing its pivot toward AI and prediction markets as causes.
At least 125 former employees were let go, including some of the company’s original staff. These developments are particularly striking given that the company was recently valued at $1.23 billion.
Some ex-Underdog employees communicated to media outlets that they believe the workforce reduction is more closely linked to the company’s increased reliance on AI rather than its emphasis on prediction markets.
This news came just days after DraftKings (NASDAQ: DKNG) announced a 5% staff reduction aimed at saving $30 million annually, which also ignited discussions about AI implications.