Underdog sues Connecticut to stop sports prediction market crackdown

Sports gaming firm Underdog has sued Connecticut officials in federal court, seeking to block them from treating its sports-related event contracts as illegal gambling. 

In the lawsuit filed Tuesday, Underdog said that it operates as a federally regulated designated contract market (DCM), arguing that since the Commodity Futures Trading Commission has "exclusive jurisdiction" to regulate trading on DCMs, any enforcement action by Connecticut would be "meritless."

Underdog is seeking declaratory and injunctive relief to protect its ability to operate in the state. The company also argued that Connecticut's order to block event contracts offerings is "additionally preempted" because it directly conflicts with the Commodity Exchange Act's framework.

The lawsuit follows cease-and-desist orders the Connecticut Department of Consumer Protection (DCP) issued last week to nine prediction market platforms, including Underdog, Polymarket, Coinbase (COIN), Crypto.com and Robinhood (HOOD).

"Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards," said DCP Commissioner Bryan Cafferelli.

Nationwide battle

Earlier this month, Underdog also sued five other states — Ohio, Massachusetts, Wisconsin, New Mexico, and Washington — seeking to shield its sports event contracts from state enforcement.

While Kalshi and Polymarket dwarf Underdog in the prediction market sector, the UK's IG Group announced in July that it is acquiring Underdog for up to $1.3 billion. The firm raised $70 million in its Series C funding at a $1.23 billion valuation in March 2025.

Connecticut is among more than a dozen states that have taken enforcement action or filed lawsuits against prediction market platforms over sports event contracts. It sued Kalshi last month to block the platform from offering such event contracts, escalating the state's months-long legal fight against the company.