Underdog sues Missouri over state regulation of prediction markets

Underdog filed a federal lawsuit on 8 November 2026 in the U.S. Federal Court for the Western District of Missouri to stop Missouri from treating its event-contract products as sports betting. The complaint names Missouri Attorney General Catherine Hanaway and officials from the Missouri Gaming Commission as defendants, asks the court to declare state enforcement preempted by federal commodities law and seeks a permanent injunction. On the same day Underdog also applied for a preliminary injunction to Judge Beth Phillips to bar enforcement until the case is resolved; Missouri must respond by 23 November 2026 unless the court sets another deadline.

Case details and the parties involved

The litigation covers two related companies and distinct business functions. Underdog Exchange lists event contracts on its market, while Underdog Predict operates as a futures commission merchant (FCM). The dispute began with a 17 September 2026 letter from the Missouri Attorney General's Office to Underdog Sports Wagering LLC, a related company, offering two options: stop the activity or obtain a state licence and comply with Missouri's tax and age rules. The AG's Office later notified Underdog of enforcement beginning three days after that notice — on 6 November 2026 — after the state had extended the original compliance deadline to 30 October 2026.

Regulatory context and federal guidance

Underdog argues the Commodity Exchange Act and federal commodities law pre-empt state gambling regulation of event contracts, including those tied to sports outcomes. Missouri counters that contracts tied to sporting events are sports betting, not swaps, under the federal Commodity Exchange Act.

On 5 November 2026 the Commodity Futures Trading Commission (CFTC) issued an interpretation stating exchanges cannot bar U.S. traders from entering markets provided traders meet qualifying requirements. The CFTC gave exchanges 30 days to remove access restrictions that conflict with federal regulations or to explain why restrictions should remain. Underdog says withdrawing from Missouri could violate federal law and disrupt existing client positions; under the state's policy traveling users could not open new positions or cash out, while open positions would remain on the market.

Timeline and next steps

Underdog originally filed suits on 8 September 2026 against officials in Massachusetts, New Mexico, Ohio, Washington and Wisconsin. The Missouri complaint and injunction application were filed on 8 November 2026; the state’s response to the preliminary-injunction request is due by 23 November 2026 unless a new deadline is set by the court. The plaintiffs seek a judicial declaration that federal law pre-empts state enforcement and a permanent injunction against Missouri actions. For regulatory coverage see regulation and related reporting in news.