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Underdog sues five states to protect prediction markets

Underdog has launched legal action against five US states to stop them from applying local gambling laws to its prediction markets.

Written by the BettingEdgeHub desk, 10 September 2026

Underdog has filed lawsuits against Massachusetts, New Mexico, Ohio, Wisconsin, and Washington. The company wants a permanent injunction to stop these states from enforcing local gaming laws against its prediction markets. This legal move comes immediately after the operator gave up its daily fantasy sports licenses in seven states. Underdog claims its event contracts are governed solely by federal commodities regulators.

A new legal strategy

The operator recently withdrew its daily fantasy sports products from Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio, and Pennsylvania. While some observers viewed this as a retreat, the company was preparing for a major legal battle. Underdog is now focusing heavily on prediction markets as its main source of future growth. The timing of the lawsuits aligns with the start of the lucrative NFL betting season.

Traditional betting under threat

The American Gaming Association has expressed concern that prediction markets are taking customers away from traditional sportsbooks. The trade group projects that sports bettors will wager 29.5 billion dollars legally during the 2026 NFL season. This figure is flat compared to the previous year, and the association blames prediction platforms for halting growth. Underdog chose to target these five states because they are already involved in legal disputes over prediction markets.

Different courts across the country have reached opposing decisions on whether sports event contracts are subject to state or federal law. The issue may eventually be decided by the US Supreme Court. New Jersey recently asked the Supreme Court to rule on whether federal law prevents states from regulating these contracts. Underdog executives hope a final decision will establish a single federal standard instead of a confusing patchwork of state regulations.