Gaming enterprise Underdog has initiated a federal lawsuit against Connecticut authorities, requesting an injunction to prevent them from classifying its sports-themed event contracts as unlawful gambling.
Within the complaint submitted on Tuesday, Underdog stated that it functions as a federally overseen designated contract market (DCM). The company contended that because the Commodity Futures Trading Commission possesses “exclusive jurisdiction” over DCM trading oversight, any regulatory measures taken by Connecticut would lack any legal foundation.
Underdog is pursuing both a declaratory judgment and an injunction to safeguard its operational presence within the state. Furthermore, the firm asserted that Connecticut’s directive halting event contract availability is “additionally preempted” since it directly contradicts the regulatory structure of the Commodity Exchange Act.
This legal challenge comes after the Connecticut Department of Consumer Protection (DCP) distributed cease-and-desist mandates last week targeting nine prediction market operators, which comprise 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,” stated DCP Commissioner Bryan Cafferelli.
Nationwide battle
Earlier in the month, Underdog similarly filed lawsuits against five additional states—Ohio, Massachusetts, Wisconsin, New Mexico, and Washington—in an effort to protect its sports event contracts from state-level penalties.
Although Kalshi and Polymarket significantly exceed Underdog in market share within the prediction industry, the British firm IG Group revealed in July its plans to purchase Underdog for a sum reaching $1.3 billion. The business previously secured $70 million through a Series C funding round in March 2025, achieving a valuation of $1.23 billion.
Connecticut stands among more than twelve states that have pursued regulatory enforcement or legal action against prediction market services regarding sports event contracts. The state previously initiated a lawsuit against Kalshi last month to stop the platform from providing these event contracts, intensifying an ongoing legal dispute that has lasted for months.
Originally published at https://www.theblock.co/news/regulation/2026-09-16-underdog-sues-connecticut-415242.
