Exchange markets threaten Underdog Pickem

The real threat is not better fantasy content, it is a cheaper and more widely available way to place fast sports positions. Underdog makes most of its money from repeat Pick'em play, the daily and weekly product that keeps users transacting, while Kalshi and Robinhood are pushing the same habit loop through federally regulated event contracts that can reach all 50 states and are priced more like an exchange than a sportsbook.

• Underdog’s core high frequency engine is Pick'em, not season long drafts. Best Ball is a big seasonal tournament product, but Pick'em is the format users can play every football weekend and every baseball or basketball day, and that is where most revenue comes from. That makes casual repeat action the pressure point.
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• Kalshi’s edge is distribution plus structure. It operates under federal commodities oversight rather than state by state gaming licenses, and Robinhood has already put Kalshi powered event contracts inside its main app. That means a user can open the same app used for stocks and buy a sports outcome contract without entering a sportsbook workflow.
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• The economic pitch is simple. Prediction markets generally charge much lower take rates than sportsbooks, with Polymarket at 0% and Kalshi around 1% to 1.5%, versus roughly 4% to 5% sportsbook hold. As sports volumes have scaled, Kalshi and Polymarket have turned sports into the main liquidity engine, which makes these products feel less niche and more like a mainstream alternative.
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The next step is a sports trading interface that feels even more like consumer betting while keeping exchange economics and federal market access. As Robinhood extends sports contracts, and Kalshi adds packaged formats like parlays, Underdog will need to defend the convenience of its single wallet sports ecosystem and keep moving fantasy users into products that exchange style rivals cannot replicate as easily.