KEY TAKEAWAYS
- Underdog sued Missouri on Nov. 8, claiming that Attorney General Catherine Hanaway’s Office warned of impending enforcement action.
- Several prediction market operators took Missouri to court after receiving cease-and-desist letters in September.
- Underdog’s pivot to prediction markets as its primary business focus brought the former DFS operator into the ongoing litigation battle across the U.S.
Underdog is the latest prediction markets operator to respond to a Missouri cease-and-desist letter by taking the state to federal court, as it continues to battle attorneys general and gaming regulators in court.
The lawsuit, dated Sunday, Nov. 8 and filed in the U.S. District Court for the Western District of Missouri, claims the company stands to suffer serious harm to its business if Missouri officials make further efforts to shut down sports prediction markets.
The operator, which is set to be sold to IG Group for $1.3bn, seeks a preliminary injunction to stop Missouri from taking enforcement action and inflicting those alleged harms on the company.
Underdog claims Missouri AG vowed enforcement action
Underdog’s lawsuit cites letters that state AG Catharine Hanaway’s office sent to several operators in September.
Hanaway’s office stated then that companies including Underdog had two options: either halt all “sports wagering” in Missouri or obtain a license from the Missouri Gaming Commission (MGC). The letter initially gave the company a deadline of Oct. 17 to comply, although it later extended it to Oct. 30.
“The threat of Defendants’ attempted enforcement of Missouri law poses a direct and imminent threat to Underdog’s business and its users, and leaves Underdog with a ‘Hobson’s choice’ wherein both its options will cause irreparable harm,” wrote counsel for Underdog.
The lawsuit also claims that on Friday, Nov. 6, Hanaway’s office notified Underdog directly that the state intended to begin taking unspecified enforcement actions against the company within three days.
“Underdog therefore faces a real and imminent risk of attempted enforcement, exposing it to civil penalties, potential criminal liability, forced cessation of operations in Missouri, and severe collateral consequences to its nationwide operations,” added the lawsuit.
SBC Americas reached out to Hanaway’s office for comment but had not heard back at the time of publishing.
Underdog joins other PM operators suing Missouri
Underdog launched its prediction market platform in July in 38 states and has since expanded it to 46 states, giving up its state sports betting and daily fantasy sports licenses in some of those jurisdictions.
That pivot has resulted in states targeting the company along with other prediction market platforms such as Crypto.com, Kalshi, Novig, Robinhood, and Polymarket. Those five firms also received C&Ds from Missouri. Crypto.com, Kalshi, and Novig all responded by suing Hanaway’s office.
In a filing in late October, Kalshi argued that Missouri cannot feasibly demand that prediction market operators seek a sports wagering license in the state because the Show-Me State’s two untethered licenses are occupied by DraftKings and Circa Sports, while the remaining license allocations would require the company to partner with a casino or a professional Missouri sports team.
A spokesperson for Hanaway’s office told SBC Americas at the time that the AG is confident that federal courts will not prevent her from enforcing the law against Kalshi and its competitors.
Meanwhile, although it did not receive a cease-and-desist letter itself, fellow DFS-turned-prediction markets operator PrizePicks chose to stop offering sports event contracts in Missouri amid the state’s wider attempted crackdown.
Underdog barks in courts across the country
Underdog first began offering prediction markets in September 2025 via a partnership with Crypto.com and acquired Aristotle Exchange, a CFTC-registered designated contract market (DCM), in March. It subsequently launched its own Underdog Exchange in July.
An IG Group investor presentation earlier this year forecasted that prediction markets will go from accounting for 14% of Underdog’s total handle in 2025 to 46% in 2026 and up to 99% in the years beyond 2027.
As it pursues its new line of business full-throttle, it is prepared to fight for the right to offer sports as a core component. Missouri is the eighth state Underdog sued, after:
Underdog SVP of Government Affairs and Partnerships Stacie Stern told SBC Americas recently that the company acknowledges that both it and state gaming regulators believe they are on the right side of the law, and that a lawsuit is sometimes “the only way to resolve a dispute.”
“With cases and divergent rulings across the country, everyone can see what’s happening in our industry: it’s a mess,” added Stern. “We need the Supreme Court to decide whether we’ll have one, enforceable federal standard or state-by-state regulation.”
In October, founder and CEO Jeremy Levine said during a virtual IG Group shareholder seminar that Underdog is primed to succeed regardless of whether the Supreme Court ultimately rules that sports event contracts cannot be offered at the federal level above state gaming laws. The company would revert to player-only fantasy markets in the majority of states if SCOTUS decided it could no longer offer sports event contracts as a federal financial product.
