Prediction market operator Novig has sued Wisconsin Attorney General Josh Kaul and state gaming administrator John Dillett, seeking to stop Wisconsin from applying its gambling laws to sports event contracts traded on the company’s federally regulated exchange.
Summary
- Novig sued Wisconsin officials seeking to block state gambling laws from reaching its sports contracts.
- CFTC designated Ludlow Exchange as a contract market on June 16, enabling federally regulated trading.
- Novig began offering event contracts to Wisconsin customers roughly one week before filing its lawsuit.
- A Wisconsin federal judge previously denied the CFTC preliminary relief against the state’s enforcement campaign.
- Wisconsin is the fifth state Novig has sued since August 4 over prediction market regulation.
Ludlow Exchange LLC, which operates as Novig, filed the 45-page complaint on Aug. 14 in the U.S. District Court for the Western District of Wisconsin. Novig wants preliminary and permanent injunctions and a declaration that federal commodities law preempts the Wisconsin statutes when applied to its event contracts.
Novig argues CFTC oversight overrides Wisconsin law
Novig’s case rests on the Commodity Exchange Act. The company argues that its sports contracts are federally regulated derivatives and that Congress placed transactions on designated contract markets within the Commodity Futures Trading Commission’s exclusive jurisdiction. That is Novig’s legal position, not a finding already made by the Wisconsin court.
The CFTC formally designated Ludlow Exchange as a designated contract market on June 16. Its approval requires compliance with the Commodity Exchange Act, CFTC regulations and the agency’s core principles. Novig says it began offering the disputed contracts to Wisconsin residents roughly one week before bringing the lawsuit.
In addition, Novig enters Wisconsin with an important adverse precedent at the preliminary stage. Wisconsin sued Kalshi, Polymarket, Crypto.com and intermediaries including Robinhood and Coinbase in April, alleging their sports event contracts amounted to unlawful commercial gambling and a public nuisance.
The CFTC then sued Wisconsin and asked a federal judge to prevent state enforcement. Judge William Griesbach denied that request on July 28, finding that the CFTC had not shown a likelihood of success on its preemption claim or the other requirements for preliminary relief. The ruling was not a final judgment on the underlying dispute. As crypto.news previously reported, the Wisconsin court rejected the CFTC’s attempt to shield prediction markets from the state’s gambling enforcement at that stage.
Novig has now sued officials in five states
Wisconsin marks the fifth state targeted in Novig’s current legal campaign. The company has also filed cases against officials in New York, Massachusetts, Washington and New Mexico since Aug. 4 as it expands its federally regulated exchange.
The lawsuits form part of a wider federal-state battle over who controls sports prediction markets. In related coverage, crypto.news reported that the CFTC is fighting multiple states over whether federal derivatives regulation preempts state gambling laws. Courts have reached different preliminary conclusions, leaving the issue unsettled nationally.
Novig has also been expanding commercially. The company announced a multiyear partnership with the New York Mets on July 30, naming itself the club’s exclusive official prediction market partner.
Meanwhile, Novig has asked the Wisconsin court for expedited consideration because it claims the threat of state enforcement creates “imminent and existential” risks to its business. The complaint says the company could otherwise face enforcement under Wisconsin’s commercial gambling statutes or withdraw from the market while the case proceeds. Those claims remain Novig’s allegations.
As of the latest publicly indexed filings reviewed, Wisconsin officials had not yet filed a substantive response and the court had not ruled on Novig’s requested injunction. The next major question is whether the Western District of Wisconsin will distinguish Novig’s case from the CFTC’s unsuccessful preliminary-injunction bid or follow similar reasoning on federal preemption.
