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Judge denies Novig injunction, letting New York enforce its gambling law

Judge denies Novig injunction, letting New York enforce its gambling law

Rule Changes

A federal court ruled the exchange's sports event contracts are not 'swaps,' so New York can require a license or bar the listings

3 days ago: Novig appeals the denial

Overview

Updated 8 minutes ago

A federal judge in Manhattan refused to stop New York from enforcing its gambling laws against Novig, an online exchange where customers trade on the results of sporting events. The November 10 ruling means Novig must obtain a state gambling license or stop listing sports contracts for New York customers.

The case turns on a definition. Novig argued its contracts are 'swaps' under the Commodity Exchange Act, which would give the Commodity Futures Trading Commission exclusive authority and shut New York out. Judge Colleen McMahon disagreed: the contracts depend on game results, she wrote, but not on events with a financial or commercial consequence.

Why it matters

If other courts agree, prediction markets that list sports contracts must win state gambling licenses or stop serving those states.

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Key Indicators

35
Pages in Judge McMahon's opinion
The opinion and order denying Novig's motion for a preliminary injunction.
24
Tribes that filed an amicus brief backing New York
The court accepted the brief from federally recognized tribes and tribal organizations on September 17, 2026.
10
Second Circuit rulings favoring states, per attorney Daniel Wallach
Wallach's count of federal rulings in the Second Circuit on sports prediction-market cases, cited in reporting on the decision.

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People Involved

CM
Colleen McMahon
U.S. District Judge, Southern District of New York
Wrote the November 10 opinion denying Novig's preliminary injunction
 Letitia James
Letitia James
New York Attorney General
Defending New York's gambling laws against Novig and other event-contract exchanges
DW
Daniel Wallach
Attorney who tracks sports prediction-market litigation
Outside observer

Organizations Involved

LE
Ludlow Exchange, LLC (Novig)
Event-contract exchange
Operating under CFTC designation; appealing the injunction denial

A CFTC-designated contract market that matches buyers and sellers of sports event contracts instead of taking the other side of the trade.
Commodity Futures Trading Commission
Commodity Futures Trading Commission
Federal regulator
Designated Novig; issued an October 2026 rulemaking on event contracts

The federal agency that oversees derivatives markets and designates contract markets.
NY
New York State Gaming Commission
State regulator
Can require Novig to obtain a license or stop listing sports contracts

New York's gambling regulator, which in October 2025 told Kalshi to stop offering what it called unlicensed mobile sports wagering.
KA
KalshiEX LLC
Event-contract exchange
Fighting New York enforcement; its appeal is consolidated with Coinbase's

A CFTC-designated exchange that lists event contracts and has been litigating state gambling authority since 2025.

Timeline

October 2025 November 2026

14 events Latest: 3 days ago Showing 8 of 14
Tap a bar to jump to that date

  1. Novig appeals the denial

    Latest Legal

    Reporting on November 12 says Novig appealed the preliminary-injunction denial.

  2. Judge denies Novig's injunction

    Legal

    McMahon rules the sports contracts are not swaps and that New York may require a license or bar the listings.

  3. Second Circuit refuses to pause state cases

    Legal

    A motions panel denies an injunction pending appeal in consolidated Kalshi and Coinbase cases.

  4. CFTC issues event-contract rulemaking

    Regulatory

    The commission publishes an interim final rule and a notice of proposed rulemaking on event contracts.

  5. Novig files reply

    Legal

    The exchange responds to the state's arguments against an injunction.

  6. Tribes weigh in for New York

    Legal

    The court accepts an amicus brief from 24 federally recognized tribes and tribal organizations supporting the state.

  7. New York files opposition

    Legal

    The state argues its gambling laws apply and that the contracts are not swaps.

  8. Court denies temporary restraining order

    Legal

    Judge McMahon refuses Novig's request for emergency relief.

  9. Novig moves for a preliminary injunction

    Legal

    The exchange asks the court to block state enforcement while the case proceeds.

  10. Novig sues New York

    Legal

    Ludlow Exchange seeks declaratory and injunctive relief against the attorney general and gaming officials, arguing federal preemption.

  11. New York opens case against Kalshi

    Enforcement

    The state begins an enforcement proceeding against KalshiEX over its sports event contracts.

  12. CFTC designates Novig a contract market

    Regulatory

    The Commodity Futures Trading Commission approves Ludlow Exchange as a designated contract market.

  13. New York targets Coinbase and Gemini

    Enforcement

    The attorney general begins proceedings against Coinbase Financial Markets and Gemini Titan over sports-related event contracts.

  14. New York tells Kalshi to stop

    Enforcement

    The State Gaming Commission directs KalshiEX to cease making what it calls an unlicensed mobile sports-wagering platform available in New York.

Scenarios

1

Second Circuit affirms that states can license or bar sports event contracts

Likely Resolves by Q2 2027

Discussed by: Judge McMahon's opinion and New York's November 5 notice, which flagged the Second Circuit's denial of an injunction pending appeal in the Kalshi and Coinbase cases

A merits panel takes up the consolidated Kalshi and Coinbase appeals. If it agrees that sports event contracts fall outside the swap definition, the Novig ruling becomes circuit precedent and other states can copy New York's licensing demand.

2

Novig gets a New York gambling license and keeps listing sports contracts

Possible Resolves by End of 2027

Discussed by: Judge McMahon's opinion, which framed the remedy as licensing or delisting

New York's gambling regulator would have to approve Ludlow Exchange as a mobile sports wagering operator. That would settle access in New York, though the federal preemption question would remain for other states.

3

CFTC finalizes a rule treating sports event contracts as swaps

Uncertain Resolves by End of 2027

Discussed by: The CFTC's October 9 interim final rule and proposed rulemaking, which Novig cited to the court

A final rule could settle the definition question in federal favor. McMahon's opinion suggests preemption would not automatically follow, so the fight would move to whether a federal rule can override state gambling law.

4

Novig stops offering sports contracts in New York

Possible Resolves by Q1 2027

Discussed by: State regulators' stated remedy and the November 10 ruling

If Novig loses the appeal or decides licensing is too costly, it can delist sports contracts for New York users. The exchange would keep its CFTC designation but lose access to a large betting market.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

May 2018

Murphy v. NCAA (2018)

The Supreme Court struck down the Professional and Amateur Sports Protection Act, the 1992 federal law that barred most states from authorizing sports betting. New Jersey had spent years challenging the ban after its voters approved sports wagering in 2011.

Then

States began passing sports-betting laws within months, and New Jersey took its first legal bets in June 2018.

Now

Most states built licensing regimes for mobile and retail sports betting, creating the state rules Novig is now fighting.

Why this matters now

The decision gave states control over sports wagering. Novig's case tests whether a federal commodities designation can take that control back.

2024

Kalshi v. CFTC (2024)

Kalshi, a CFTC-regulated exchange, sued the agency after it tried to block contracts on which party would control Congress. A federal district court ruled the CFTC had exceeded its authority, and Kalshi listed the contracts in October 2024.

Then

A federal appeals court declined to stay the ruling, and the contracts traded through the 2024 election.

Now

The case established that event contracts could trade on regulated exchanges, opening the path for sports contracts and the state fights that followed.

Why this matters now

Novig is the next step: if event contracts can trade federally, can states still treat the sports versions as gambling?

Sources

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SBC Americas Gambling Insider DeFi Rate DocketBird AskSpinner Tipline Wireopedia Lypp Realize The Block