Underdog, operating as Underdog Predict, has initiated five federal lawsuits against officials from Massachusetts, New Mexico, Ohio, Washington, and Wisconsin. Filed on September 8, the lawsuits seek a declaration that the state's gambling laws should not apply to Underdog's sports event contracts and aim for a permanent injunction against their enforcement.
By involving exchange entities in these legal actions, Underdog aims to assert that its sports event contracts are governed by federal derivatives law, a claim that could potentially render state laws unenforceable in this context. This legal move highlights ongoing tensions between prediction-market companies and state gambling regulators regarding sports event contracts.
Interestingly, just three days prior to the lawsuits, Underdog's CEO and co-founder, Jeremy Levine, announced that the company would cease offering its Drafts product in a range of states including Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio. While Massachusetts and Ohio appear on both lists, the withdrawal of the Drafts product affects a broader scope of jurisdictions.
Underdog is thus pursuing dual strategies: reducing its Drafts offering in seven states while also seeking protection for its prediction-market business from state gambling law enforcement in five federal courts.
