Underdog, operating under the name Underdog Predict, has initiated a series of five federal lawsuits against officials from Massachusetts, New Mexico, Ohio, Washington, and Wisconsin as of September 8. These lawsuits seek a declaration and a permanent injunction to block the enforcement of state gambling laws related to Underdog's sports event contracts.
Through these legal actions, Underdog aims to establish that its sports event contracts are governed by federal derivatives law, which could prevent state regulators from imposing penalties. This legal move highlights an ongoing dispute between prediction-market firms and state gambling regulators concerning the regulation of sports event contracts.
Interestingly, just three days before these lawsuits were filed, Underdog's CEO and co-founder Jeremy Levine announced that the company would cease offering its Drafts product in several states including Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio. The Drafts withdrawal affects a broader range of jurisdictions, but Massachusetts and Ohio appear on both lists.
Underdog is now pursuing two simultaneous strategies: reducing its Drafts offering in seven states while seeking legal protection for its prediction-market operations across five federal courts against state gambling enforcement actions.
