Underdog sues five states over sports event contracts

Underdog, which trades as Underdog Predict, has filed five federal lawsuits on September 8 against officials from Massachusetts, New Mexico, Ohio, Washington, and Wisconsin. In order to get a favorable verdict, the lawsuits are aimed at getting a statement of decleration and getting a permanent injunction against the enforcement of the state gambling laws in those stated states in case of Underdog sports events contracts. By including exchange entities in lawsuits, Underdog is attempting to prove that its sports event contracts fall under the federal derivatives law and cannot be continued. The five lawsuits are part of new controversies between prediction-market firms and state gambling regulators connected with sport event contracts. Just three days before the lawsuits were filed, the CEO and co-founder of Underdog, Jeremy Levine, declared that the company would stop offering its Drafts product in such states as Massachusetts, Maryland, Michigan, Mississippi, New Jersey, Pennsylvania, and Ohio. The two lists of states are identical only in relation to Massachusetts and Ohio. That is, the withdrawal of Drafts product will concern a larger array of jurisdictions but another one. Now Underdog is pursuing two parallel strategies—scaling back its Drafts offering in seven states while asking five federal courts to shield its prediction-market business from state gambling enforcement.