Underdog has sued Connecticut officials in federal court, seeking to block the state from treating its sports-related prediction-market contracts as illegal gambling, The Block reported.
Underdog is seeking declaratory and injunctive relief to continue operating in Connecticut, arguing that it is a federally regulated designated contract market (DCM) and that the Commodity Futures Trading Commission (CFTC) has “exclusive jurisdiction” over trading on DCMs.
The company argues that Connecticut’s enforcement action is “meritless” and “additionally preempted” because it conflicts with the federal framework established under the Commodity Exchange Act.
The lawsuit follows cease-and-desist orders issued by the Connecticut Department of Consumer Protection (DCP) to nine prediction-market platforms, including Underdog, Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull and Gemini.
The state ordered the companies to stop advertising, promoting or offering sports event contracts to Connecticut residents and provide customers with access to withdraw their funds.
DCP Commissioner Bryan Cafferelli said: “Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards.”
Connecticut officials maintain that sports event contracts function as sports wagers and can only be offered through licensed sportsbooks under state gambling regulations. Governor Ned Lamont has also said prediction markets were operating outside the state’s consumer protection framework.
Connecticut regulators have raised concerns over age restrictions, self-excluded individuals and contracts linked to collegiate sporting events. The state has also issued nearly 30 subpoenas to payment processors, technology providers, media organizations and other entities as part of its investigation.
The lawsuit is the latest in a broader legal dispute over whether sports event contracts should be regulated as financial products under federal law or treated as sports betting under state gambling laws.
Earlier this month, Underdog sued Ohio, Massachusetts, Wisconsin, New Mexico and Washington over similar state enforcement efforts. Connecticut also sued Kalshi last month, seeking to block the prediction-market operator from offering sports event contracts in the state.
IG Group announced in July that it would acquire Underdog for up to $1.3 billion. The company raised $70 million in Series C funding at a $1.23 billion valuation in March 2025.