On Thursday, September 17, 2026, SBC Americas reported that Underdog filed a federal lawsuit against Connecticut officials, becoming the latest prediction markets operator to challenge state efforts to regulate sports event contracts.
The complaint, filed Wednesday, targets Connecticut Attorney General William Tong and the state’s Department of Consumer Protection (DCP). Underdog is seeking a declaratory judgment that Connecticut cannot apply state gaming laws to event contracts, along with a permanent injunction barring state officials from enforcing gambling laws against its prediction market products.
The lawsuit comes one week after Underdog’s subsidiary, Underdog Predict, received a cease-and-desist letter from the DCP. The Sept. 9 notice, issued by DCP Director of Gaming Kristofer Gilman, ordered Underdog to immediately halt advertising, promotion, and operation of sports event contracts in Connecticut and to permit all state residents to withdraw their funds. Gilman warned that noncompliance could result in civil penalties under the Connecticut Unfair Trade Practices Act and potential criminal charges under state gaming law.
Underdog was one of nine companies to receive similar cease-and-desist letters from the DCP, along with Novig, Polymarket, and ProphetX, all accused of illegally offering sports-related prediction markets to Connecticut residents. The state has also issued nearly 30 subpoenas to gaming service providers, data companies, media organizations, and technology firms as part of its broader effort to scrutinize the prediction markets industry.
In its complaint, Underdog argues that sports event contracts fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC) and are therefore protected from state interference under the Supremacy Clause of the U.S. Constitution. The company pointed to the CFTC’s own federal lawsuit against Connecticut, filed in April, as supporting its position.
Underdog’s filing also cited Connecticut’s state court lawsuit against Kalshi, filed by Tong in late August, as evidence of an “imminent risk” of enforcement against Underdog itself. That case followed a federal court ruling by Judge Vernon Oliver denying Kalshi’s request for a preliminary injunction against the state, a decision Kalshi has since appealed to the Second Circuit.
In a statement, Tong dismissed the lawsuit, saying it repeated “failed arguments from other prediction markets” and asserting that courts have consistently found sports event contracts to be equivalent to sports betting. DCP Director of Communications Kaitlyn Krasselt declined to comment on the pending litigation but noted that the state’s position was reflected in recent court filings, including Judge Oliver’s ruling in the Kalshi matter.
The Connecticut suit is part of a broader legal strategy by Underdog, which last week filed similar preemptive lawsuits against Massachusetts, New Mexico, Ohio, Washington, and Wisconsin.
Robinhood has also taken action in response to Connecticut’s enforcement push, filing a motion to intervene in the CFTC’s lawsuit against the state.
According to data from TickerTracker, Underdog recorded more than $204 million in notional sports event contract trading volume on its in-house exchange between Sept. 10 and 16 alone. The company’s internal figures show nearly $600 million in total trading volume from Sept. 1 through Sept. 16.
Source: SBC Americas
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