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Underdog has sued Connecticut officials in federal court, asking a judge to stop the state from treating its sports event contracts as illegal gambling. The Tuesday filing argues the company operates as a federally regulated designated contract market, which puts trading under the Commodity Futures Trading Commission's exclusive jurisdiction and renders state enforcement preempted under the Commodity Exchange Act. The suit answers cease-and-desist orders the Connecticut Department of Consumer Protection sent to nine prediction market platforms last week, including Underdog, Polymarket, Coinbase, Crypto.com and Robinhood.
Why it matters
Connecticut is among more than a dozen states that have taken enforcement action or filed suit against prediction market platforms over sports event contracts. DCP Commissioner Bryan Cafferelli framed the state's position: "Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards."
Underdog is fighting on multiple fronts. Earlier this month it sued Ohio, Massachusetts, Wisconsin, New Mexico and Washington to shield its sports contracts from state enforcement, while Connecticut separately sued Kalshi last month to block its event contracts, escalating a months-long legal fight.
Market impact
The defining legal question for the sector is now whether CFTC-designated contract markets preempt state gambling law, and the state-by-state pace is accelerating. Kalshi and Polymarket dwarf Underdog in prediction market volume, but capital keeps flowing in: IG Group announced in July it is acquiring Underdog for up to $1.3 billion, after the firm raised $70 million at a $1.23 billion valuation in March 2025.
Watch whether courts grant the injunctive relief Underdog seeks, and whether more federally regulated platforms copy the litigation playbook against state regulators.
Frequently asked questions
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Why does Underdog argue only the CFTC can regulate its sports event contracts?
Underdog says it operates as a federally regulated designated contract market, which places trading under the Commodity Futures Trading Commission's exclusive jurisdiction and makes state enforcement preempted under the Commodity Exchange Act.
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Which prediction market platforms received Connecticut cease-and-desist orders?
The Connecticut Department of Consumer Protection sent cease-and-desist orders to nine platforms last week, including Underdog, Polymarket, Coinbase, Crypto.com and Robinhood.
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How many states have moved against prediction market sports contracts?
Connecticut is among more than a dozen states taking enforcement action or filing suit. The state also sued Kalshi last month, and Underdog has sued five other states this month: Ohio, Massachusetts, Wisconsin, New Mexico and Washington.
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Can Connecticut block sports event contracts as illegal gambling?
Connecticut says sports betting may only be offered by licensed sportsbooks that follow its regulations. Underdog counters that federal law preempts the state because the CFTC exclusively polices its designated contract market.
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How much is IG Group paying to acquire Underdog?
IG Group announced in July it is acquiring Underdog for up to $1.3 billion. The firm raised $70 million at a $1.23 billion valuation in March 2025.
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