TL;DR:
- Underdog sued Connecticut officials in federal court, arguing that its federally regulated event contracts fall under exclusive CFTC jurisdiction rather than state gambling rules.
- The lawsuit follows cease-and-desist orders against nine prediction-market platforms, while Connecticut insists sports betting must be offered only by licensed sportsbooks.
- Underdog has also sued five other states, as more than a dozen jurisdictions challenge sports event contracts and the company prepares for IG Group’s acquisition.
Sports gaming company Underdog has sued Connecticut officials in federal court, seeking to stop the state from treating its sports-related event contracts as illegal gambling. The company argues that it operates as a federally regulated designated contract market, or DCM, and that the Commodity Futures Trading Commission has exclusive jurisdiction over trading conducted on those venues. The lawsuit asks for declaratory and injunctive relief. The central dispute is whether federal commodities oversight can override Connecticut’s effort to apply state gambling rules to prediction-market contracts. Underdog also argues the state’s order conflicts with the Commodity Exchange Act.
NEW: Underdog has filed a federal lawsuit against Connecticut in response to the State’s demand that the prediction market cease and desist from offering sports-event contracts to persons located within the state. pic.twitter.com/UzT7wR3ajV
— Daniel Wallach (@WALLACHLEGAL) September 16, 2026
The case follows cease-and-desist orders issued last week by Connecticut’s Department of Consumer Protection to nine prediction-market platforms, including Underdog, Polymarket, Coinbase, Crypto.com and Robinhood. State officials maintain that sports betting may only be offered by licensed sportsbooks complying with Connecticut regulations and technical standards. That position places event contracts directly inside the state’s gambling framework, while Underdog insists they belong exclusively under federal derivatives regulation. The competing interpretations create a jurisdictional clash that could determine whether federally regulated prediction markets can continue offering sports-linked contracts in Connecticut without obtaining a separate state sportsbook license.
Underdog Expands Its Legal Fight Across Multiple States
Connecticut is not the only jurisdiction confronting Underdog. Earlier this month, the company also sued officials in Ohio, Massachusetts, Wisconsin, New Mexico and Washington, seeking to protect its sports event contracts from state enforcement actions. The widening litigation campaign shows that the question is becoming national rather than confined to one state’s gaming rules. Connecticut itself is among more than a dozen states that have taken enforcement action or filed lawsuits against prediction-market platforms over sports contracts, and the state separately sued Kalshi last month in an effort to block similar offerings.
The legal fight arrives while Underdog is also undergoing a major corporate transition. IG Group said in July that it would acquire the company for as much as $1.3 billion, following Underdog’s $70 million Series C financing at a $1.23 billion valuation in March 2025. The dispute therefore reaches beyond a single enforcement order and into the operating model of a growing prediction-market business. A federal court ruling could shape how Underdog and competing platforms navigate overlapping state gambling laws and federal commodities regulation, particularly as more states challenge sports event contracts and platforms seek nationwide access.
