By PredictQ Team // Updated: July 2026
Underdog Predict is legal in 31 U.S. states plus Washington, D.C. as of July 2026. It operates under federal CFTC regulation through a Futures Commission Merchant structure, with event contracts currently listed on Crypto.com | Derivatives North America (CDNA), a CFTC-registered exchange. Underdog also owns its own DCM and DCO (Aristotle Exchange) after a March 2026 acquisition.
The federal answer is clean. The state answer is where it gets interesting, because Underdog Predict runs in fewer states than Kalshi or Polymarket and the map keeps moving as enforcement actions and federal litigation play out. Here’s the framework, the current state picture, and the court fights that will decide where this all lands.
The Federal Framework: FCM Plus CFTC-Regulated Exchange
Underdog Predict’s legal structure stacks four layers:
- Underdog Predict is a registered FCM, which allows it to offer event contracts to retail customers and route those trades to a registered exchange.
- Contracts trade on CDNA, a CFTC-registered Designated Contract Market and Derivatives Clearing Organization. Same federal designation held by Kalshi and Polymarket (via its acquired QCEX exchange).
- Underdog owns Aristotle Exchange, acquired March 9, 2026. Aristotle holds both DCM and DCO registrations and was the CFTC-approved exchange behind PredictIt. It gives Underdog the infrastructure to eventually list and clear contracts natively. The migration is announced, not confirmed complete.
- UDM Services, LLC runs the technical integration between the app and CDNA.
The CFTC framework is the strongest federal designation available to prediction markets, and federal registration is the legal basis for offering these contracts in states that never authorized sports betting, including California, Texas, and Florida, all of which are on Underdog’s live list.
State Availability
As of July 2026, Underdog Predict operates in 31 states plus DC. The list shifts with litigation and state regulatory positions, so the in-app eligibility check beats any published list, including this one.
States where Underdog Predict has been restricted or unavailable include Arizona, Colorado, Connecticut, Delaware, Illinois, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, and Tennessee. Several of those states are the subject of ongoing federal preemption fights that could change access.
Why Some States Push Back
The restrictions come from two directions. State gaming regulators have issued cease-and-desist orders arguing sports event contracts are unlicensed sports wagering under state law. And some legislators and attorneys general treat event contracts as gambling rather than federally regulated derivatives.
The counterargument, that CFTC regulation preempts state authority over federally registered contracts, is being litigated across the country. In 2026, the federal side has been winning more than losing.
The Third Circuit Ruling
The biggest legal development of the year: on April 6, 2026, the Third Circuit ruled 2-1 in Kalshiex LLC v. Flaherty, affirming Kalshi’s preliminary injunction against New Jersey. The court held that sports event contracts on a CFTC-registered exchange are swaps under the Commodity Exchange Act, and that federal law preempts state gambling regulation of them. It was the first federal appellate ruling on the question.
Two caveats. New Jersey can still seek en banc rehearing or Supreme Court review, and analysts expect the question may end up at SCOTUS. And the ruling didn’t automatically flip every platform’s map: Underdog Predict is still not live in New Jersey as of July 2026, because each operator makes its own rollout calls. The precedent binds Pennsylvania, New Jersey, and Delaware directly and gives every other circuit a roadmap.
The CFTC’s Offensive
The CFTC hasn’t waited on the courts. Starting in April 2026 with suits against Arizona, Connecticut, and Illinois, the agency has now sued nine states over their attempts to restrict CFTC-regulated prediction markets: Arizona, Connecticut, Illinois, New York, New Mexico, Minnesota, Rhode Island, Wisconsin, and Kentucky. The Kentucky suit (June 23, 2026) was the first against a state with a Republican attorney general, which tells you this fight doesn’t map onto party lines.
The states are organized too. A bipartisan coalition of 41 state attorneys general, co-led by Ohio AG Dave Yost, filed a formal comment with the CFTC in late April 2026 urging the agency to confirm that states keep authority over sports-related event contracts. And the CFTC opened a proposed rulemaking on prediction markets in June 2026, with the comment period closing July 27, 2026. Meanwhile North Carolina broke ranks: Governor Josh Stein signed SB 257 on July 7, 2026, formally recognizing the CFTC’s federal authority over prediction markets.
If the federal position keeps prevailing, Underdog Predict’s 31-state footprint has room to grow substantially. If states claw back authority, today’s map could shrink.
Age and Eligibility
Underdog Predict requires users to be 18 or older, with some states applying higher minimums. Geolocation confirms you’re physically in an eligible state when you trade, independent of your registered home address.
Tax Treatment
Predict event contracts are taxed as capital gains, not gambling income, the same treatment as other CFTC-regulated contracts on Kalshi or OG.com. Underdog issues 1099-B forms to users who cross reporting thresholds.
Underdog DFS is different: fantasy winnings fall under state-by-state rules and generate separate forms. If you’re doing volume on both sides, talk to a tax professional.
The Coalition for Prediction Markets
Underdog joined the Coalition for Prediction Markets in December 2025 alongside Kalshi, Robinhood, Coinbase, and Crypto.com. The group exists to push back on state enforcement and advocate for federal preemption. Membership signals Underdog is committed to the CFTC framework for the long haul, not testing it opportunistically.
The PredictIt Connection
Useful legal context: through Aristotle, Underdog now owns PredictIt, the politics-focused market that ran for years under a limited CFTC No-Action letter. With Aristotle holding full DCM and DCO status under Underdog’s ownership, PredictIt sits on stronger regulatory footing than it ever had. It remains a separate product from Underdog Predict.
Margin Trading: Not Available
Underdog Predict doesn’t offer margin. OG.com has announced plans for margin prediction contracts pending certification; Underdog has signaled nothing similar.
What This Means for You
In the 31 eligible states plus DC, you get full access to every available Predict category. In restricted states, access could open up depending on how the litigation runs through 2026 and 2027. And even where Predict is blocked, Underdog DFS may still be available under state fantasy sports rules, since the two products are regulated separately.
Bottom Line
Underdog Predict is legal under federal CFTC regulation and live in 31 states plus DC. The regulatory structure matches Kalshi’s and Polymarket’s federal standing, and the state-level patchwork reflects an industry-wide legal war, not anything specific to Underdog. With the Third Circuit ruling, the CFTC suing nine states, and North Carolina writing federal deference into law, the momentum in 2026 points toward more access, not less.
Check your state and sign up HERE.
Disclosures: PredictQ may receive compensation when readers sign up for platforms through links on this page. Information accurate as of July 2026. State availability varies and regulatory conditions continue to evolve. Trading event contracts involves substantial risk and is not appropriate for all participants. This content is for informational purposes only and does not constitute legal advice. Must be 18 or older. If you or someone you know has a gambling problem, call 1-800-GAMBLER.