Novig Sues Wisconsin AG Josh Kaul Over Sports Event Contracts

Novig has filed a federal lawsuit against Wisconsin Attorney General Josh Kaul and state gaming administrator John Dillett, asking a court to block the state from treating its sports event contracts as illegal gambling. The company’s exchange subsidiary, Ludlow Exchange LLC, filed the 45-page complaint on Aug. 14 in the U.S. District Court for the Western District of Wisconsin.

The move comes just over a week after Novig began offering event contracts to Wisconsin customers, and the company says it sued preemptively rather than wait for the state to come after it the way it went after other prediction-market operators earlier this year.

A Preemptive Strike Rooted in Wisconsin’s Broader Campaign

Wisconsin opened its offensive against sports-linked prediction markets in April, suing Kalshi, Polymarket, Robinhood, Crypto.com and Coinbase over event contracts tied to sporting outcomes. The state alleges those contracts violate its commercial gambling statutes and amount to a public nuisance, regardless of how the operators are federally licensed. Those cases remain pending in the same federal district where Novig just filed.

Novig wasn’t part of that original round of lawsuits, but the company argues enforcement against it was all but inevitable given Wisconsin’s track record. Rather than wait to get sued, Novig is seeking preliminary and permanent injunctions along with a declaration that federal commodities law preempts Wisconsin’s gambling statutes as applied to its contracts. The company has also asked for expedited consideration, describing the threat of state enforcement as an “imminent and existential” risk to its business.

Wisconsin is actually the fifth state Novig has sued since Aug. 4 — the company previously filed similar cases in New York, New Mexico, Massachusetts and Washington as it works to lock down its legal footing across the country while it scales up.

The Jurisdiction Fight: Swaps or Sports Bets?

At the core of the dispute is a question that’s now playing out in multiple states at once: are these sports-linked contracts financial instruments regulated exclusively by federal authorities, or are they simply bets dressed up in derivatives language?

Novig argues its products are swaps under the Commodity Exchange Act, placing them under the Commodity Futures Trading Commission’s exclusive jurisdiction per CEA Section 2(a)(1)(A), with federal preemption of conflicting state law addressed under Section 16(e). Ludlow Exchange was authorized as a CFTC-designated contract market on June 16, a designation that requires ongoing compliance with CFTC regulations and core principles.

Wisconsin isn’t budging. The state maintains that contracts tied to sports outcomes are gambling under its law no matter how they’re classified federally, and that its authority to regulate them doesn’t disappear just because a company obtained a federal designation.

An Unfavorable Precedent Already on the Books

Novig faces a complication that’s specific to Wisconsin: the CFTC itself already tried this argument in the state and lost. The federal regulator sued Wisconsin officials seeking to block enforcement against Kalshi and the other April defendants, but Judge William Griesbach denied the agency’s request for a preliminary injunction on July 28, ruling that the CFTC hadn’t shown a likelihood of success on its preemption theory. That case remains pending, and it’s unclear how much weight the same court will give Novig’s version of the same argument.

Novig differs from Kalshi and Polymarket in one notable way — the company offers exclusively sports-related contracts and has avoided branching into political, news, or so-called “mention markets” that have drawn additional scrutiny elsewhere. Whether that distinction matters to a Wisconsin court weighing gambling law against federal preemption claims remains to be seen.

As of the latest filings, Wisconsin officials had not filed a substantive response, and the court had not ruled on Novig’s request for expedited relief. With similar fights already underway in New York, New Mexico, Massachusetts and Washington, the outcome in Wisconsin could set an early tone for how courts nationally sort out where sports prediction markets fit between commodities law and state gambling regulation.

Why This Keeps Happening State by State

The pattern across all five of Novig’s recent filings is largely the same: launch in a state, then move quickly to court once it becomes clear regulators are paying attention. That strategy reflects how fractured the legal landscape has become for prediction-market operators trying to offer sports contracts nationwide. Rather than one clean federal ruling settling the jurisdiction question everywhere, each state is left to litigate the same CEA preemption argument independently, and judges in different districts are free to reach different conclusions.

That’s exactly what makes Wisconsin’s stance notable. It’s one of the only states where a federal judge has already weighed in on the preemption question and sided with the state, even if only at the preliminary-injunction stage. Every other prediction-market operator watching these cases now has a data point suggesting that a federally issued CFTC designation isn’t an automatic shield against state gambling enforcement, at least not in front of Judge Griesbach’s court.

For everyday bettors, the practical stakes are straightforward: if Novig and its peers ultimately lose these fights, sports-outcome contracts could disappear from state after state the same way daily fantasy operators once faced piecemeal state-by-state bans and approvals. If they win, it could open the door to a parallel, less-regulated form of sports wagering operating alongside licensed sportsbooks under a completely different regulatory framework. Either outcome would reshape how sports contracts and traditional betting markets coexist going forward, which is why operators, regulators and bettors alike are watching how the Wisconsin case unfolds.