At a glance
- US District Judge Colleen McMahon has denied sports prediction market Novig a preliminary injunction against New York’s attorney general and gaming regulators, finding that its sports event contracts are not swaps under the Commodity Exchange Act (CEA).
- The ruling, filed on Tuesday in the Southern District of New York, lets the state require Novig to obtain a gambling licence or stop offering sports contracts to New Yorkers.
Novig, which operates through Ludlow Exchange LLC, had asked the court to bar Attorney General Letitia James and the state’s Gaming Commission officials from enforcing state gambling law against it, The Block reported. Casino.org said the opinion runs to 35 pages.
A preliminary injunction is an early court order that freezes the situation while a case is argued. Denying one does not end the lawsuit, and it does not itself order Novig to shut down.
What Novig argued
The Commodity Futures Trading Commission (CFTC) designated Novig a contract market in June 2026, and New Yorkers could trade its sports contracts from August, according to The Block. It sued on 5 Aug, arguing that its contracts are swaps, that the CFTC has “exclusive jurisdiction” over them, and that federal law therefore pre-empts New York’s sports-betting rules.
What the judge said
Under the CEA, one kind of swap is a contract that depends on an event “associated with a potential financial, economic, or commercial consequence”. Judge McMahon found that a game result does not meet that test. “Accordingly, they are not ‘swaps’ under the CEA,” the ruling says, as quoted by The Block, adding that the contracts “bear more than a passing resemblance to sports betting”.
Casino.org reported that the opinion compares Novig’s point spreads, player props and parlays with products sold by licensed sportsbooks, and quotes the judge: “The Court is not required to disregard common sense.” The outlet added that Novig once held a sports betting licence in Colorado, before moving to its federally regulated exchange model. Casino.org also said the opinion was critical of the CFTC’s recent positions on sports contracts.
Why it matters
The CFTC has been pushing in the other direction: it has told prediction markets to stop geofencing states. The states keep pushing back. Last week California tribes won a preliminary injunction against Kalshi, and Arkansas sued Kalshi as an illegal gambling operation.
The Block noted that another New York federal judge denied Kalshi a similar request earlier this year. Gaming lawyer Daniel Wallach counted 10 federal rulings in Second Circuit sports prediction market cases so far, every one in the states’ favour, The Block reported, citing his post on X.
What happens next
The case continues. Neither outlet reported a response from Novig, and no hearing date was given. New York has not announced any enforcement step.
Related: On 11 Nov Kalshi confirmed a CFTC probe into how it filed some event contracts
This article is for information only and is not investment advice.