Underdog Launches Suits in Five States to Shield CFTC-Approved Contracts After DFS License Surrenders
TL;DR — Underdog has filed lawsuits in Ohio, Massachusetts, Wisconsin, New Mexico, and Washington seeking to preemptively block them from trying to shut down its sports-event contracts, a decision that was made after the company surrendered its daily fantasy sports (DFS) licenses in seven states. According to each lawsuit, the CFTC has exclusive jurisdiction to regulate trading on designated contract markets.
SCCG Take — The dual move prioritizes CFTC products over DFS but faces uncertain court reception given adverse rulings elsewhere. Operators should track Supremacy Clause outcomes for regulatory clarity.
Underdog has filed lawsuits in five states to block enforcement of gambling laws against its sports-event contracts. The actions come days after the company surrendered daily fantasy sports licenses in seven states. The moves reflect mounting legal pressure on prediction market operators.
Federal Preemption Claims in Five Jurisdictions
The lawsuits target Ohio, Massachusetts, Wisconsin, New Mexico, and Washington. Each seeks a permanent injunction and declaratory judgment that state gambling or wagering laws violate the Supremacy Clause when applied to Underdog’s offerings. The complaints state the CFTC holds exclusive jurisdiction over trading on designated contract markets.
Underdog asserts it has fully complied with CFTC-approval procedures. It now faces imminent threat of state regulators or attorneys general terminating its federally regulated market activities. Parallel cases involving Kalshi remain active in all five states, with restrictions in Washington and Massachusetts, an Ohio federal ruling classifying such platforms as gambling operations, a CFTC suit against Wisconsin, and ongoing New Mexico tribal litigation. All challenges continue, according to reporting by CDC Gaming.
License Surrender Follows NFL Season Start
Jeremy Levine, CEO and Founder, announced the DFS license surrenders in Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio after the NFL’s kickoff. Already-entered drafts will continue, but new drafts are unavailable in those states. Levine posted on X that the states have taken a legal viewpoint the company disagrees with.
“Those states have taken the legal viewpoint we disagree with,” Levine said. “If we off our CFTC-licensed products we cannot offer fantasy sports in those states. So, we had to choose. We could keep our fantasy licenses in those states or surrender the licenses and offer effectively our full experience, minus drafts.”
Levine added that the company has some idea about bringing back drafts but that it remains too early to commit. The overlapping litigation exposes the practical limits of operating under conflicting federal and state frameworks, with outcomes still unresolved across these jurisdictions.
Reporting: CDC Gaming
Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.
Underdog is betting federal preemption trumps state gambling law — a risky play given Kalshi's losses in the same jurisdictions.
We are watching regulatory friction turn into full-blown constitutional litigation. Underdog chose CFTC contracts over DFS revenue in seven states, then proactively sued five more to shield those products. With Kalshi already losing similar federal preemption arguments in Ohio and facing restrictions elsewhere, this is a high-stakes test of whether prediction markets can operate nationwide or face a patchwork shutdown.
- Filed suits in OH, MA, WI, NM, WA claiming CFTC jurisdiction preempts state gambling law under Supremacy Clause
- Surrendered DFS licenses in seven states (MA, MD, MI, MS, NJ, PA, OH) to prioritize CFTC-regulated contracts
- Kalshi precedent unfavorable: federal court already ruled against preemption in Ohio, restrictions live in MA and WA
SCCG angle: SCCG has direct lines into state regulators, tribal gaming authorities, and federal compliance advisors across all five litigation states. If you are operating event contracts or considering market entry, we connect you to the legal and lobbying teams who can map exposure, craft state-by-state strategies, and position you ahead of enforcement — before the lawsuits land.
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