Underdog has initiated a lawsuit against officials in Connecticut, aiming to prevent the state from categorizing its sports-related prediction-market contracts as illegal gambling, as reported by The Block.
The company is seeking both declaratory and injunctive relief to maintain its operations in Connecticut. Underdog argues that it operates as a federally regulated designated contract market (DCM) and that the Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over trading activities on DCMs.
According to Underdog, Connecticut's enforcement actions are baseless and conflict with the federal framework established by the Commodity Exchange Act.
This legal action comes in response to 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 has mandated these companies to halt advertising, promoting, or offering sports event contracts to residents of Connecticut, while also ensuring customers can withdraw their funds.
DCP Commissioner Bryan Cafferelli stated, “Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that comply with our regulations and technical standards.”
Connecticut officials argue that sports event contracts resemble sports wagers and can only be provided through licensed sportsbooks according to state gambling regulations. Governor Ned Lamont has also indicated that prediction markets are operating outside the state's consumer protection framework.
Concerns have been raised by Connecticut regulators regarding age restrictions, self-excluded individuals, and contracts associated with collegiate sporting events. The state has issued nearly 30 subpoenas to payment processors, technology providers, media organizations, and other entities as part of its ongoing investigation.
This lawsuit represents the latest development in a larger legal debate over whether sports event contracts should be classified as financial products under federal law or treated as sports betting under state regulations.
Earlier this month, Underdog also filed lawsuits against Ohio, Massachusetts, Wisconsin, New Mexico, and Washington over similar state enforcement actions. Additionally, Connecticut took legal action against Kalshi last month, seeking to prevent the prediction-market operator from offering sports event contracts within the state.
In July, IG Group announced its intention to acquire Underdog for as much as $1.3 billion. The company had previously raised $70 million in Series C funding at a valuation of $1.23 billion in March 2025.