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U.S. District Judge Colleen McMahon denied Novig’s request for a preliminary injunction, ruling that its sports event contracts are not swaps under the Commodity Exchange Act. The decision allows New York to require the platform to obtain a state gambling license or prohibit the listing and trading of those contracts.
Novig’s operator, Ludlow Exchange, received Commodity Futures Trading Commission designation as a contract market in June 2026 and began offering sports event contracts to New York customers in August. It sued Attorney General Letitia James and state gaming officials on Aug. 5, arguing that federal commodities law preempts state regulation.
Why it matters
Novig argued that the CFTC has exclusive jurisdiction over its event contracts because they qualify as swaps. McMahon rejected that argument at the preliminary injunction stage, writing that the contracts “bear more than a passing resemblance to sports betting.”
She concluded that the contracts do not depend on events associated with a potential financial, economic or commercial consequence within the meaning of the relevant provision of the act.
Market impact
The decision follows another New York federal judge’s refusal to block state gambling enforcement against prediction market platform Kalshi. Novig is also litigating the issue in other states, as are Kalshi, Polymarket and other platforms.
Sports gaming lawyer Daniel Wallach said New York could bring a state-court enforcement action against Novig. He added that federal courts in the Second Circuit have issued 10 rulings in sports prediction-market litigation, all favoring states.
Frequently asked questions
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What can New York require Novig to do after the ruling?
The decision allows New York to require Novig to obtain a state gambling license or prohibit the listing and trading of sports event contracts on its platform.
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Why did Novig argue that New York could not regulate its contracts?
Novig argued that its contracts qualify as swaps and that federal commodities law gives the CFTC exclusive jurisdiction, preempting state regulation.
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Why did the judge say Novig’s contracts were not swaps?
Judge Colleen McMahon concluded that the contracts do not depend on events associated with a potential financial, economic or commercial consequence under the relevant provision of the Commodity Exchange Act.
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How does the decision compare with the New York case involving Kalshi?
Another New York federal judge previously denied Kalshi’s request to block state authorities from enforcing gambling laws against its prediction market platform.
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What enforcement action did Daniel Wallach say New York could take?
The sports gaming lawyer said New York could bring a state-court civil enforcement action against Novig.
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