Fresh off its prediction market launch, Novig filed a federal lawsuit against New York regulators.
Key Takeaways
- Novig became the latest prediction market operator to challenge New York regulators.
- Novig just launched prediction markets in 47 states Tuesday.
- Kalshi recently lost a temporary injunction bid against New York in a federal court
Attorney General Letitia James and New York Gov. Kathy Hochul (D) announced on July 31 they submitted a lawsuit that accuses Kalshi of operating an illegal gambling platform. Kalshi joined Coinbase Financial Markets and Gemini Titan as targets of the state officials.
New York is hoping to restrict prediction market sites, which were allowed to launch without state licensure through Commodity Futures Trading Commission (CFTC) approval. Novig’s lawsuit aims to secure a preliminary injunction against James and the New York State Gaming Commission, preventing it from attempting to interfere with its sports event contracts.
“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 § 63(12) for offering the type of contracts at issue here,” the lawsuit reads. “Novig, having just secured its status as a Designated Contract Market (“DCM”) registered by the CFTC, brings this action to prevent Defendants from doing the same to Novig,” counsel wrote in the lawsuit.
State gaming regulators are in charge of licensing and monitoring approved sports betting sites. Prediction market operators argue their event contracts differ from traditional sportsbooks because they are federally regulated derivatives rather than state-regulated wagers.
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Novig joins prediction market battle
If the federal judge in the U.S. District Court for the Southern District of New York approves Novig’s request for a preliminary injunction, state officials and gaming regulators would be prohibited from enforcing restrictions and prohibitions on the platform’s prediction markets.
“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 lawyers wrote. “New York’s threatened enforcement of its laws is preempted several times over.”
Novig previously operated as a state-licensed sportsbook after it debuted in Colorado in 2024. It pivoted to a sweepstakes operation in late 2024 before diving into the world of prediction markets earlier this year. Unlike competitors, Novig only offers sports markets.
The platform received its CFTC approval as a Designated Contract Market on June 16. It launched its sports contracts in 47 states, including New York, on Tuesday.
Although New York has not sought direct enforcement against Novig, its previous approach suggests it will take issue with Novig’s prediction markets.
Legal squabbles
U.S. District Court for the Southern District of New York Judge Analisa Torres denied Kalshi’s request for a preliminary injunction against the state in early July.
Operators such as Kalshi, Polymarket, and others are growing at extraordinary speeds and have shown little willingness to back down from legal fights with state regulators.
