Underdog sues Tennessee officials over prediction market enforcement

Underdog has filed a complaint against Tennessee attorney general Jonathan Skrmetti and members of the Tennessee Sports Wagering Council, arguing that the state has overreached by applying state gaming laws to prediction markets rather than recognising federal preeminence, according to a report by The Tennessee Journal. The action was lodged in Nashville at the federal trial court for the Middle District of Tennessee.

The filing follows a September decision from the Sixth Circuit, issued late in the month, holding that regulators in Tennessee and Ohio are permitted to apply state gaming statutes against prediction market operators. In its complaint, Underdog said the prospect of enforcement represented a direct and imminent danger to its operations and its users, leaving it with a dilemma in which either path would inflict irreparable harm.

The source says regulation of event contracts remains unsettled. The Commodity Futures Trading Commission has carried forward an interim rule and a proposed classification of sports event contracts, while state gaming regulators have taken a dim view of CFTC-issued guidance and many argue that the nation's top court should step in. The court has so far deferred, and is not actively looking into prediction market cases, according to the report.

The report says the absence of clear guidance and a definitive ruling has produced continuing litigation among attorneys general, gaming regulators and private businesses, which at best buys reprieve for the winning party. The source gives no appeal status, hearing date or response from Skrmetti or the Tennessee Sports Wagering Council.