Underdog Fantasy has taken five state regulators to court, filing preemptive lawsuits in Ohio, Massachusetts, Wisconsin, New Mexico, and Washington to block any attempt to shut down its sports-event contract products. The move follows the company’s decision to hand back its daily fantasy sports (DFS) licenses across seven states. At stake is whether Underdog can keep offering event-based contracts to consumers in markets where its traditional fantasy operations have already been wound down. It is a legal gamble, and a telling one.
Why Underdog’s Legal Offensive Matters for Operators
The lawsuits mark a shift in how a major fantasy operator is choosing to defend its footprint: not by negotiating quietly with regulators, but by going to court first. That decision carries weight for anyone watching the collision between fantasy sports and event-contract models.
- Preemptive litigation over negotiation: Underdog is asking courts to draw a line before regulators act, rather than waiting for enforcement to arrive. This flips the usual sequence.
- By surrendering DFS licenses in seven states, the company appears to be separating its fantasy business from its sports-event contract offering, treating them as distinct products under distinct legal theories.
- A template for peers: If the courts side with Underdog, other operators gain a roadmap for defending event contracts without leaning on a fantasy license.
- The five states named span very different regulatory temperaments, which makes the outcome harder to predict and the precedent, if one emerges, broader.
What Actually Happened
Underdog filed the suits in Ohio, Massachusetts, Wisconsin, New Mexico, and Washington state. Each filing seeks to preemptively stop the respective state from moving against the company’s sports-event contracts. The trigger was the company’s own choice to surrender DFS licenses in seven states, a step that reshaped how it operates in those jurisdictions.
The distinction the company is drawing sits at the heart of the dispute. Sports-event contracts and daily fantasy sports are treated by Underdog as separate products, governed by separate rules. Regulators have not always accepted that separation (a distinction they have been slow to endorse in practice). And while the fantasy license question looks settled from Underdog’s side, the event-contract question is exactly what the courts have now been asked to resolve.
A Regulatory Patchwork, Five Ways
State-level oversight of fantasy and event-contract products remains fragmented. What passes muster in one state can draw scrutiny in the next. That inconsistency is precisely why a single operator can find itself defending the same product across five separate courtrooms.
| State | Action Taken by Underdog |
|---|---|
| Ohio | Lawsuit filed to preemptively block enforcement against sports-event contracts |
| Massachusetts | Lawsuit filed seeking the same protection |
| Wisconsin | Lawsuit filed to shield event-contract operations |
| New Mexico | Lawsuit filed against potential regulatory shutdown |
| Washington | Lawsuit filed; Washington has historically taken one of the harder lines on fantasy contests, which raises the stakes here |
The surrender of DFS licenses in seven states, meanwhile, sits alongside this litigation as a parallel track. Two products, two strategies.
The Business Calculation Behind the Filings
Litigation is expensive, slow, and public. Underdog chose it anyway. That choice suggests the company views its sports-event contracts as core to its future revenue, not a peripheral experiment it can afford to abandon under pressure.
There is a defensive logic at work too. By filing first, Underdog controls the venue, the timing, and the framing of the legal question. Rather than responding to a cease-and-desist on a regulator’s terms, the company sets the terms of the fight. Which raises a harder question: how many other operators are watching to see whether this posture actually works before deciding their own approach?
For the broader market, the read-through is direct. Event-contract products have been expanding fast, and the regulatory response has lagged the commercial reality. Underdog’s suits force the issue into the open, and companies with similar offerings, from the Underdog Fantasy sports contract platform to its competitors, now have a live test case to track.
What the Precedent Could Set in Motion
Courts rarely issue rulings that stay confined to one company. A decision in any of these five states gives regulators and operators alike something concrete to point to. If Underdog prevails, the argument that event contracts stand apart from DFS licensing gains legal footing. If it loses, the surrender of those seven licenses starts to look less like strategy and more like a warning shot the company failed to heed.
Either way, the fragmented regulatory map that made this litigation necessary is not going anywhere soon. That is the tension operators have to price in.
Frequently Asked Questions
What are sports-event contracts?
They are products that let users take positions on the outcome of sporting events, structured as contracts rather than as traditional daily fantasy contests. Underdog treats them as legally distinct from its DFS offering, and that distinction is the crux of the current lawsuits.
Why did Underdog surrender its DFS licenses in seven states?
The company gave up those licenses as part of a broader repositioning. Handing them back appears to separate its fantasy business from its event-contract business, though Underdog has not detailed every reason publicly.
In which states did Underdog file lawsuits?
Ohio, Massachusetts, Wisconsin, New Mexico, and Washington.
What does a preemptive lawsuit accomplish?
It asks a court to block enforcement before a regulator acts, letting the operator choose the venue and framing rather than reacting to a shutdown order. It is a proactive defense, not a response to one.
Could this affect other fantasy operators?
Yes. A ruling in any of the five states would create precedent that competitors and regulators can cite, shaping how event contracts are treated well beyond Underdog itself.
