Underdog Hinders 2025 Performance of BlackRock Closed-End Fund

• Asset manager says a stake in the sports wagering company detracted from a closed-end fund’s 2025 performance
• Staffers recently reported significant layoffs at the gaming company
• The operator is shifting its emphasis to prediction markets

BlackRock (NYSE: BLK), the world’s largest asset manager, said a position in Underdog was a detractor to the 2025 performance of one of its closed-end funds.

In the recently issued annual report for a slew of closed-end funds, BlackRock noted Underdog dinged the 2025 showing of the BlackRock Technology and Private Equity Term Trust (BTX). That fund has $895.5 million in assets under management, according to issuer data.

Finally, an overweight position in private company Underdog Sports Inc. detracted from relative performance. The stock dipped as regulatory challenges and increased scrutiny around Underdog’s shift into prediction market products pressured its valuation,” according to a BlackRock filing with the Securities and Exchange Commission (SEC).

The gaming company doesn’t rank among BTX’s top 10 holdings.

Inside the Underdog Scrutiny BlackRock References

Though it’s likely of little solace to BTX investors, BlackRock’s commentary around Underdog has merit.

That decision by Arizona regulators stoked speculation the state will pull licenses of other DFS and sportsbook operators that also venture into prediction markets.

As BlackRock notes, Underdog is a privately held company, but shares of larger closely held firms do trade on secondary markets, giving shareholders and institutional investors avenues for valuing their stakes. Following a $70 million funding round in March 2025, the gaming company was valued at $1.23 billion, putting it in “unicorn” territory.

More Underdog Controversy

Though not mentioned in the BlackRock SEC filing, there are other sources of controversy at Underdog. Reports surfaced last week that terminated more than 20% of its staff across multiple departments, including some DFS games, fraud detection, and marketing, citing artificial intelligence (AI) and the prediction markets push as the reasons.

At least 125 now former staffers were let go by Underdog, including some that were among the company’s first employees. Those are bad optic considering the company isn’t a year removed from being valued at $1.23 billion.

Some ex-Underdog workers said media outlets they believe the headcount reduction is more attributable to the operator’s increasing embrace of AI than it is the result of its focus on prediction markets.

The news emerged just days after DraftKings (NASDAQ: DKNG) said it’s reducing its staff by 5% in a bid to save $30 million annually. That announcement also stoked plenty of AI-related chatter.