Underdog Sports has filed federal lawsuits in Ohio, Massachusetts, Wisconsin, New Mexico and Washington, asking judges to stop state authorities from blocking its sports-event contracts. The complaints seek permanent injunctions and declaratory judgments that state gambling and wagering laws, as applied to its prediction markets, are pre-empted by the Supremacy Clause.
As reported on Sept. 4, Underdog had already said it would surrender fantasy-sports licences in seven states, including Pennsylvania, rather than pull back on its prediction-market business. The company said Drafts contests already entered would continue to settle normally, but no new drafts would be accepted in those states after the NFL kickoff.
The filings ask courts to bar state gaming regulators or attorneys general from “unlawfully exercising jurisdiction over, regulating, or terminating” Underdog’s offering of lawful derivatives contracts on federally regulated markets. They also argue that the Commodity Futures Trading Commission has exclusive jurisdiction over trading on designated contract markets and that Underdog completed the agency’s approval process for event contracts.
Jeremy Levine said regulators in the seven DFS states had made clear that Underdog could not keep both its fantasy licences and its CFTC-regulated prediction-market product. Stacie Stern said the company is “licensed by the federal government to offer markets”, that it had worked with state regulators and did not want to sue, but that litigation was sometimes the only way to resolve the dispute.
The five states are already part of a wider legal fight over prediction markets. CDC Gaming reported that each is involved in litigation touching Kalshi, the CFTC or similar platforms, and a Wisconsin federal court decision dated July 30 denied the CFTC’s bid for injunctive and declaratory relief against Wisconsin.
