Underdog sues five states to block prediction market enforcement
Missouri's attorney general sent cease-and-desist letters to prediction market operators, alleging that Kalshi allowed users aged 18 to 21 to wager below the state's legal sports betting age of 21. Underdog earlier sued Massachusetts, New Mexico, Ohio, Washington, and Wisconsin in early September 2026 to block state enforcement actions against its prediction markets. The lawsuits come amid a shifting legal landscape where federal preemption shields for CFTC-registered platforms are fraying in multiple circuits.
Underdog's five-state offensive shows operators are done waiting for federal rescue. Each state case Underdog wins weakens the gambling-framing theory that Ohio, Tennessee, and Missouri are using to squeeze CFTC-registered platforms. Each loss supplies the next state attorney general a template to copy, multiplying defense costs across the industry.
The Sixth Circuit already ruled Kalshi's sports contracts subject to state gambling laws in Ohio and Tennessee, and Missouri's under-21 allegations open a fresh front. Smaller platforms without Underdog's legal budget face the steepest climb. State enforcement is setting compliance bars in real time while the CFTC's swap-rule proposal remains in White House review. The first operator to lose another major state case becomes the template every competitor races to copy.
Underdog joins Kalshi and Coinbase in a multi-front legal fight against state gambling-framing theories, with Kalshi already losing preemption in the Sixth Circuit and Coinbase retreating in Michigan. Ohio's casino commission sent 10 cease-and-desist notices to operators days before Missouri's action, showing state commissions are accelerating enforcement ahead of any federal rule fix.