Novig Launches Nationwide Prediction Markets, Then Sues New York to Keep Operating There

Novig went nationwide with its federally regulated sports prediction market on August 4, launching in 47 states including New York. One day later, the company sued that same state in federal court to keep it from shutting the platform down.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, names New York Attorney General Letitia James and members of the New York State Gaming Commission as defendants. Novig is asking a judge for a preliminary injunction that would block the state from enforcing its gambling laws against the company’s sports event contracts before any enforcement action can even be filed.

A Preemptive Strike, Not a Response

The timing wasn’t accidental. Novig’s suit came through Ludlow Exchange, the CFTC-registered unit that runs its markets, and it was filed before New York brought any case of its own. That’s a deliberate break from how these fights have typically played out, where states sue first and prediction market operators respond after the fact.

Novig’s legal team pointed directly to what’s already happened to two other companies in the space. “New York has moved aggressively against federally regulated event-contract trading within its borders, suing both KalshiEX LLC and Coinbase Financial Markets, Inc. under Executive Law Section 63(12) for offering the type of contracts at issue here,” the complaint reads. “Novig, having just secured its status as a Designated Contract Market registered by the CFTC, brings this action to prevent Defendants from doing the same to Novig.”

New York sued Kalshi on July 31, seeking a minimum of $36 billion in damages. Novig launched in the state anyway four days later, then went to court asking a federal judge to get ahead of the same treatment.

The CFTC Argument at the Center of It All

Novig’s case rests on the same argument Kalshi and other prediction market operators have made in courtrooms across the country: that sports event contracts are financial derivatives regulated exclusively by the Commodity Futures Trading Commission under the Commodity Exchange Act, not gambling products subject to state-by-state licensing. Novig received its Designated Contract Market status from the CFTC on June 16, roughly five months after its exchange arm, Ludlow Exchange, first applied back in January.

“Despite the CFTC’s exclusive jurisdiction over event contracts, Novig expects that New York will imminently bring an enforcement action against it along the same lines as the other lawsuits that Defendants have already brought against similarly situated parties,” Novig’s counsel wrote. “New York’s threatened enforcement of its laws is preempted several times over.”

So far, that federal preemption argument hasn’t gained traction in Manhattan courts, where Kalshi’s own attempts have stalled. No hearing date has been set on Novig’s injunction request.

From Betting Exchange to Sweepstakes Book to Prediction Market

Novig’s path to this point has been anything but linear. The company launched in 2022 as a peer-to-peer betting exchange, briefly operated as a licensed Colorado sportsbook, and then pivoted to a nationwide sweepstakes sportsbook model in 2024 before shuttering that product entirely for its current prediction market build. The platform now limits trading to users 21 and older and covers game and futures markets across the NFL, MLB, UFC, and pro tennis, with an interface designed to resemble a traditional sportsbook more than a typical prediction market screen.

The company says it has already surpassed $6 billion in cumulative trading volume, a figure it’s calling the fastest growth rate of any sports prediction market to date. That momentum followed a $75 million funding round in February that pushed Novig’s total capital raised past $100 million, and came just days after the company signed on as the official prediction market partner of the New York Mets — a deal that puts Novig’s branding inside Citi Field while its lawyers simultaneously argue in court that the state has no authority over its product.

What Comes Next

Novig’s suit adds a third name to New York’s growing list of prediction market fights, alongside Kalshi and Coinbase Financial Markets. How a federal judge rules on the preliminary injunction will matter well beyond this one case — a win for Novig would strengthen the CFTC-preemption argument the entire prediction market industry has been leaning on, while a loss would hand New York and other skeptical states more ammunition to argue these platforms need to play by the same rules as licensed sportsbooks. For now, Novig is operating in the state it’s suing, betting that federal registration outruns state enforcement before the two ever collide in court.