Underdog has sued Connecticut officials in federal court, seeking to stop the state from treating its sports-event contracts as illegal gambling as the regulatory fight over prediction markets spreads across the U.S.

The lawsuit follows cease-and-desist orders issued by the Connecticut Department of Consumer Protection to nine prediction market platforms, including Underdog, Polymarket, Coinbase, Crypto.com and Robinhood.

Underdog argues that its prediction market operates as a federally regulated designated contract market, or DCM, and therefore falls under the Commodity Futures Trading Commission’s jurisdiction rather than state gambling regulation.

The company is seeking declaratory and injunctive relief that would prevent Connecticut officials from enforcing state gambling laws against its event-contract business. Underdog also argues that Connecticut’s restrictions are preempted by the Commodity Exchange Act because Congress gave the CFTC authority over trading conducted through federally regulated derivatives exchanges.

Connecticut takes the opposite view. “Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards,” DCP Commissioner Bryan Cafferelli said.