Washington cites 9th Circuit in push to dismiss Underdog sports betting suit
Washington state has filed a motion to dismiss a lawsuit brought by prediction market operator Underdog. The motion cites the Ninth Circuit's ruling in KalshiEX v. CFTC as grounds. The suit names Underdog Exchange DCM Inc. and UDM LLC, which does business as Underdog. State officials argue Underdog's claim that its sports-based event contracts are exempt from Washington gambling laws is doomed under the appellate precedent. The filing follows other state enforcement actions against federally registered prediction market platforms.
The Washington filing extends the post-Ninth Circuit crackdown to Underdog, which now faces the same preemption collapse that already hit Kalshi in Ohio and Tennessee. Underdog must fund a state defense while its IG Group acquisition closes, adding integration risk to legal stress.
A Washington defeat would join the Sixth Circuit pattern as template law the next attorney general copies. Polymarket and Robinhood, silent in some states, must weigh whether federal registration still justifies national exposure or whether geofenced settlements are cheaper. The CFTC's swap-rule proposal sits in White House review, slower than any courtroom clock.
Underdog joins Kalshi as the second platform to lose federal preemption cover in the Ninth and Sixth Circuits, deepening the circuit split that may force Supreme Court intervention while the CFTC's swap rule lingers in review.