Underdog Challenges Connecticut in Expanding Sports Betting Legal War

The company argues that because it operates under the Commodity Futures Trading Commission's authority, state-level gambling laws cannot preempt its federal framework. Underdog’s complaint asserts that Connecticut's recent cease-and-desist order—which targeted nine platforms including Polymarket, Coinbase, and Robinhood—is legally meritless. Commissioner Bryan Cafferelli of the Department of Consumer Protection maintains that sports-tied contracts remain subject to state licensing requirements, regardless of federal registration.

This litigation highlights a deepening rift in the U.S. court system. While the Third Circuit has previously signaled that federal commodities law might protect such contracts from state oversight, the Ninth Circuit recently ruled against Kalshi, suggesting that the CFTC is not a national gambling regulator. With 38 active cases pending across 21 states, the jurisdictional tug-of-war is increasingly likely to require intervention from the U.S. Supreme Court. For Underdog, the regulatory pressure arrives during a critical transition period as the company navigates a $1.3 billion acquisition by the UK-based IG Group.