Underdog sues Missouri over prediction market enforcement, its eighth state suit

Underdog has sued Missouri officials in a suit that is its eighth against a state. It comes as other prediction market disputes move towards hearings and appeals. On 6 November, dozens of state attorneys general filed amicus briefs backing New York against Kalshi in the Second Circuit and Wisconsin against the CFTC in the Seventh Circuit.

The case adds to a run of challenges that could shape where federally regulated sports event contracts can be offered.

What happened

Defendants include Attorney General Catherine Hanaway and officials at the Missouri Gaming Commission, according to Gambling Insider.

The original compliance deadline of 17 October was later moved to 30 October.

Underdog's lawsuit states that the Attorney General's office told it directly on 6 November that the state intended to begin unspecified enforcement action within three days. SBC Americas said it had not received a reply from the Attorney General's office at publication.

Crypto.com, Kalshi and Novig have already sued the state. PrizePicks, which did not receive a letter, stopped offering sports event contracts in Missouri.

Underdog's earlier suits were brought against Connecticut, Massachusetts, New Mexico, Ohio, Tennessee, Washington and Wisconsin. The company launched its prediction market platform in 38 states in July and has since expanded it to 46.

Elsewhere, a federal judge in Utah set a hearing on 20 November in the CFTC's case seeking to block state enforcement against prediction markets. California Attorney General Rob Bonta said in a press release that prediction markets should not be able to use federal loopholes to bypass state gambling rules.

Why it matters

Affiliates and operators promoting or running sports event contracts in Missouri should check their exposure now. The state has told operators to stop or obtain a licence, and the pre-emption question is being contested in court. Marketing partners may need to review whether campaigns tied to named operators in the state could be affected by any enforcement.

The suits suggest some operators are choosing litigation over licensing in states whose licence structures they say are unworkable.

The Underdog case also suggests how much the business model could depend on the courts.

With state coalitions filing in appellate courts and results still diverging, planning for several outcomes, rather than one national rule, is likely to be the safer approach.

What's next

Utah's motion to dismiss in the CFTC case is due on 10 November, with its response to the emergency relief request due on 11 November. The remaining briefs fall due ahead of the 20 November hearing.

Nevada has also asked to push its response to Crypto.com's petition back to 7 December, a request Crypto.com consented to.