Underdog seeks to block Connecticut crackdown on sports event contracts

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Underdog blocks CT sports contract ban

Highlights

Underdog files federal lawsuit against Connecticut officials after receiving cease-and-desist orders that target its sports event contracts, citing federal regulatory preemption.
Connecticut Department of Consumer Protection issued orders last week to nine platforms, including Underdog, Polymarket, Coinbase, Crypto.com, and Robinhood, amid broader sector enforcement.
IG Group announced a deal in July to acquire Underdog for up to $1.3 billion, following Underdog's $70 million Series C raise at a $1.23 billion valuation in March 2025.

Federal challenge to state enforcement

As reported by The Block, Underdog sues Connecticut officials in federal court after the state issues cease-and-desist orders targeting sports-related event contracts offered by prediction market platforms.

In the lawsuit filed Tuesday, the company says it operates as a federally regulated designated contract market and argues that the Commodity Futures Trading Commission has exclusive jurisdiction over trading on such platforms. Underdog says any state enforcement action is therefore meritless and also argues Connecticut's order is preempted because it conflicts directly with the Commodity Exchange Act framework.

Underdog is seeking declaratory and injunctive relief to preserve its ability to operate in Connecticut. The state's Department of Consumer Protection issued the orders last week to nine platforms, including Underdog, Polymarket, Coinbase, Crypto.com and Robinhood.

DCP Commissioner Bryan Cafferelli says state law allows sports betting to be offered only by legal, licensed sportsbooks that comply with Connecticut regulations and technical standards.

Sector pressure and deal backdrop

Earlier this month, Underdog also sues five other states, Ohio, Massachusetts, Wisconsin, New Mexico and Washington, in an effort to shield its sports event contracts from similar enforcement actions.

Connecticut is among more than a dozen states that have taken enforcement action or filed lawsuits against prediction market platforms over sports event contracts. The state sued Kalshi last month to block those offerings, intensifying a months-long legal fight over the status of such products.

While Kalshi and Polymarket are larger players in the prediction market sector, Underdog remains financially significant in the space. UK-based IG Group announced in July that it is acquiring Underdog for up to $1.3 billion, and the company raised $70 million in Series C funding at a $1.23 billion valuation in March 2025.

Our earlier coverage of the U.S. Senate’s failed vote on the CLARITY Act explained how divisions in Congress stalled a proposed federal market-structure framework for digital assets. We noted that the setback leaves companies seeking clearer rules from Washington and keeps regulators relying on existing authority while the policy fight continues.

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