Underdog Sues Connecticut Over Prediction Market Crackdown

Underdog Sports Inc. filed a federal lawsuit against Connecticut state officials on September 15, 2026, challenging a state cease-and-desist enforcement action targeting its sports prediction platform, Underdog Predict. The complaint, filed in the U.S. District Court for the District of Connecticut (Underdog Sports Inc. v. Tong et al., Case No. 3:26-cv-01482), requests declaratory and injunctive relief to prevent Connecticut’s gambling laws from applying to Underdog’s contracts.

Underdog wants a declaratory judgment that state gaming law can’t apply to its event contracts, plus a permanent injunction. Its lawyers wrote that the state’s “threat of enforcement is plainly inconsistent with Article VI, Clause 2, of the United States Constitution,” the Supremacy Clause, and that “any enforcement efforts are therefore preempted.” The case has been assigned to Judge Stefan R. Underhill.

Tong wasn’t impressed. “This is nothing more than the recycling of failed arguments from other prediction markets,” he said in a statement. “Multiple courts have affirmed that sports event contracts are no different than sports betting and are not magically shielded by federal law.”

What Connecticut Told Underdog

The legal conflict stems from a September 9, 2026 cease-and-desist order signed by Gaming Division Director Kristofer Gilman. The order instructed Underdog to immediately halt all advertising, promotion, and offering of sports event contracts within Connecticut, while requiring the platform to facilitate account balance withdrawals for resident users. Failure to comply exposes operators to civil penalties under the Connecticut Unfair Trade Practices Act and potential criminal referral under state gaming statutes.

Governor Ned Lamont announced the enforcement sweep on September 10, confirming that identical orders were issued to nine unauthorized platforms: Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini, and Underdog Predict.

“Prediction markets have branded themselves as legal and safe, but the reality is they are not adhering to Connecticut’s consumer protection standards and gaming laws,” Governor Lamont stated.

The Case Against the Platforms

The state’s charge sheet goes beyond licensing. The release says prediction markets accept bets from people under the legal age of 21 and from people on the state’s voluntary self-exclusion list, one of the core responsible gambling tools in the licensed market. It also says they offer wagers on Connecticut college sports, which state law bans outright.

Only three platforms are licensed for sports wagering in Connecticut: DraftKings through Foxwoods, FanDuel through Mohegan Sun, and Fanatics through the Connecticut Lottery.

The Crackdown Reaches the Suppliers

Connecticut didn’t stop at the exchanges. The DCP issued nearly 30 subpoenas: nine to licensed gaming service providers, 15 to media organizations, and more to app stores and payment companies that aren’t licensed. The licensee list includes PayPal, Plaid, Paysafecard, Sportradar and Genius Sports. The other group takes in Apple’s App Store, Google Play, Apple Pay, Google Wallet and Stripe.

The state says none of those businesses are under investigation. They may hold information “pertinent to the state’s investigation,” which suggests Connecticut wants to see who is helping the platforms reach its residents.

Four Platforms Are Talking

Underdog chose the courtroom, but not everyone did. Novig, ProphetX, Gemini and Webull replied to the orders and are in talks with Cafferelli about next steps, the CT Insider and the New Haven Register reported. Polymarket, Coinbase, Crypto.com, Robinhood and Underdog Predict hadn’t responded as of those reports.

Cafferelli had said around the time of the announcement that one site had committed to comply. “We are hopeful these actions will curb illegal prediction market activity in our state, especially as the betting season ramps up with the start of the NFL season this week,” he told WSHU.

Underdog’s Six-State Playbook

Connecticut is the sixth state Underdog has sued. Earlier in September it filed pre-emptive suits against officials in Ohio, Massachusetts, Wisconsin, New Mexico and Washington, none of which had taken firm action against it. The argument is the same each time: Underdog runs a designated contract market regulated by the CFTC, and the Commodity Exchange Act gives that agency “exclusive jurisdiction” over what trades on it.

Connecticut has been here before. A federal judge in the state ruled in August that sports event contracts are unlicensed gambling and not protected by federal commodities law, in a case Kalshi brought. The state has since sued Kalshi as well. The CFTC and the Department of Justice have taken the other side, suing Connecticut, Illinois and Arizona in April, and Underdog’s complaint points to that suit as backing for its position.

Another Letter, Another State

The fight isn’t limited to Connecticut. Two days after Underdog filed, Missouri Attorney General Catherine Hanaway sent the company a letter of her own, saying it lets anyone in Missouri who is at least 18 bet on sports when the state’s age limit is 21. That letter, dated September 17, gives Underdog 30 days to confirm it has complied or stopped.