On September 8, Underdog Predict initiated five federal lawsuits against officials in Massachusetts, New Mexico, Ohio, Washington, and Wisconsin. The company seeks a declaratory judgment and a permanent injunction to block the enforcement of state gambling laws concerning its sports event contracts.
By including exchange entities in these lawsuits, Underdog aims to argue that its sports event contracts are protected under federal derivatives law, contesting their continued enforcement. These cases highlight the ongoing tensions between prediction-market firms and state gambling regulators regarding sports event contracts.
Just days before the lawsuits were filed, Underdog's CEO and co-founder Jeremy Levine announced the decision to discontinue the company's Drafts product in several states, including Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio.
Notably, Massachusetts and Ohio appear on both lists. While the cessation of the Drafts product affects a broader range of states, it indicates a strategic shift. Underdog is currently balancing two approaches: reducing its Drafts offering in seven states while simultaneously seeking federal court protection for its prediction-market operations against state gambling enforcement.
