Underdog has filed lawsuits against Massachusetts, New Mexico, Ohio, Washington, and Wisconsin to stop the states from enforcing gambling laws against its prediction market products.
The lawsuits were filed in federal courts on September 8, 2026, with Underdog seeking permanent injunctions against state gambling laws that could be used to restrict its sports event contracts. The company is also asking the courts to declare that the state laws conflict with federal law and are unconstitutional under the Supremacy Clause.
Underdog has argued that its prediction markets fall under the federal regulatory framework for derivatives and that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over the products. As a result, the company is challenging the states’ ability to regulate its sports contracts as gambling.
Stacie Stern, Underdog’s senior vice president of government affairs and partnerships, commented:
“We’ve worked with them, we respect them, and we didn’t want to sue, but sometimes it’s the only way to resolve a dispute. With cases and divergent rulings across the country, everyone can see what’s happening in our industry: it’s a mess. We need the Supreme Court to decide whether we’ll have one enforceable federal standard or state-by-state regulation.”
The five states are already involved in legal disputes over prediction markets like Kalshi. Massachusetts and Ohio have taken action against the operator, while the CFTC has sued Wisconsin after it targeted the prediction platform.
