New York federal judge denies Novig's injunction bid, rules its sports event contracts are not swaps

A federal judge in New York denied a preliminary injunction sought by sports prediction market platform Novig, ruling that its sports-related event contracts do not qualify as swaps under the Commodity Exchange Act.

According to a Tuesday court filing, U.S. District Judge Colleen McMahon of the Southern District of New York concluded that the state may apply its gambling and sports-wagering laws to Novig’s activity. The decision allows New York to require Novig either to obtain a state gambling license or prohibit the listing and trading of sports event contracts on its platform.

Ludlow Exchange, LLC, the legal entity behind Novig, received the Commodity Futures Trading Commission's designation as a contract market in June 2026 and began offering sports event contracts to New York customers in August. 

On Aug. 5, 2026, the company sued New York Attorney General Letitia James and officials at the New York State Gaming Commission, arguing that federal commodities law preempts state regulation of its products. It contended that the CFTC has "exclusive jurisdiction" over event contracts, which qualify as swaps under the act.

Judge McMahon rejected that argument at the preliminary injunction stage. She wrote that Novig’s sports event contracts “bear more than a passing resemblance to sports betting” and fall outside the CEA’s definition of a swap. 

"The Court concludes that Novig’s contracts do not depend on events or contingencies that are ‘associated with a potential financial, economic, or commercial consequence’ within the meaning of § 1a(47)(A)(ii). Accordingly, they are not ‘swaps’ under the CEA," the filing said.

Larger shift

The ruling follows a similar decision earlier this year by another New York federal judge that denied Kalshi's request to block state authorities from enforcing gambling laws on its prediction market platform. Novig is also litigating the same issue in multiple other states, as Kalshi, Polymarket, and other prediction market platforms are doing.

"NY Attorney General Letitia James could literally cross the street and file a state-court civil enforcement action against Novig as soon as today," sports betting and gaming lawyer Daniel Wallach wrote on X. 

Wallach added that he's seeing a larger shift where state regulators may move from defending their enforcement authority to exercising it proactively in state court. The lawyer said federal courts within the Second Circuit have now issued 10 rulings in sports prediction-market litigation, all of which have favored the states.

The Block has reached out to Novig for comment.