Connecticut sues nine sports betting prediction platforms

Connecticut moves against nine prediction platforms as Underdog's federal bet sharpens

Stacie Stern said her company didn't want to sue. She said it anyway, on record, in five separate federal district courts within the same week Underdog surrendered its daily fantasy sports licences across seven states. The two moves together form a single argument: that the only clean resolution to the current regulatory scatter is a Supreme Court ruling on whether CFTC jurisdiction displaces state gambling law entirely.

Connecticut arrived at the same moment, moving against nine prediction-market platforms simultaneously. The newsroom has already reported the Connecticut action against Kalshi specifically. What the broader sweep tells you is something different — this is not targeted enforcement against one aggressive operator. Connecticut is drawing a line against the category.

That distinction matters for how you read Underdog's litigation posture. Kalshi entered these state fights from a position of market leadership, with the resources to sustain parallel proceedings and the profile to attract amicus support. Underdog is making the same constitutional argument — Supremacy Clause, CFTC exclusive jurisdiction, designated contract market status — from a structurally weaker position, having just voluntarily reduced its regulatory footprint in seven states. Surrendering licences removes the immediate enforcement risk in those jurisdictions. It also removes any ambiguity about what Underdog is: a federal exchange that has decided state licensing regimes do not apply to it, and is now asking federal courts to confirm that view permanently.

The five states where Underdog filed — Ohio, Massachusetts, Wisconsin, New Mexico, and Washington — are not chosen at random. Each is already engaged in litigation with Kalshi, the CFTC, or both. Underdog is threading into an existing legal architecture, which has strategic logic: the factual record in those jurisdictions is already being built, and any circuit-level ruling will affect all plaintiffs in the category, not just the first one named.

My read differs from the consensus here. The prediction-market legal community has largely framed this as a race to circuit court, with the assumption that a split among circuits is what finally forces Supreme Court intervention. I think that framing underweights the Illinois dimension. Representative Travis Weaver's House Bill 5811 — which would remove the exchange wager definition and the tiered transaction tax from the Sports Wagering Act before those provisions generate any measurable state revenue — is the only live legislative path that could simplify the constitutional question before the courts have to answer it. Weaver told CDC Gaming directly that once the tax starts producing revenue, it becomes politically difficult to repeal. He introduced the bill now, before the veto session, for exactly that reason.

If HB 5811 dies in committee and Illinois begins collecting on its 1.75% and 3.5% tiered structure, every state watching this litigation will have evidence that the tax model survives at least the initial legal challenge. That changes the incentive calculation for Connecticut, New Mexico, and the rest. States that were hesitant to legislate against federally licensed exchanges will have a working template, and the number of jurisdictions that Underdog and Kalshi must litigate against simultaneously grows.

Illinois licensed prediction markets at a $15 million initial fee, renewable at $1 million. No platform has paid it. The tax is in effect and generating nothing. Weaver called that situation plainly: they budgeted money for the attorney general to defend the taxes, not revenue from the taxes themselves. That is the structural tell. Illinois passed this law as a territorial claim, not a fiscal instrument, and Weaver knows it.