Just days after launching its federally regulated sports prediction market, Novig has widened its legal battle with state regulators, filing four federal lawsuits against New York, Massachusetts, New Mexico and Washington.
The cases, filed between August 6 and August 8, follow the Commodity Futures Trading Commission’s approval of Novig as a Designated Contract Market (DCM). Each lawsuit is asking whether states can enforce their gambling laws against federally regulated prediction markets, or does the Commodity Exchange Act leave that authority solely with the CFTC?
The timing also stands out. As legal analyst Daniel Wallach pointed out, all four states have already sought temporary restraining orders or preliminary injunctions against federally regulated prediction markets in state court. By heading to federal court first, Novig is trying to establish that federal law preempts those state enforcement efforts.
3 days into its launch of sports prediction markets, Novig has sued 4 states–New York, Massachusetts, New Mexico, and Washington. What do these states have in common? They pursued TROs & PIs vs. DCMs in state court. Goal may be to tie up likely enforcing states in federal court. pic.twitter.com/McCTQZBfDr
— Daniel Wallach (@WALLACHLEGAL) August 9, 2026Novig takes its federal lawsuits beyond New York
The latest lawsuits build on Novig’s August 5 complaint against New York, where it asked a federal court to block the state from enforcing its gambling laws against the company’s sports event contracts.
As we previously reported, Novig says its markets are federally regulated derivatives, not sports wagers, and therefore fall under the CFTC’s exclusive authority. The company says the threat of enforcement is immediate, pointing to New York’s recent legal action against Kalshi and Coinbase Financial Markets.
Novig also highlights the safeguards built into its platform, including a minimum age of 21, deposit and trading limits, self-exclusion tools, identity verification, market surveillance and screening designed to prevent insider trading.
Four states, one legal strategy
Although each complaint references different state laws, the legal arguments are largely the same.
In Massachusetts, Novig says Attorney General Andrea Campbell and the Massachusetts Gaming Commission are wrongly treating federally regulated event contracts as sports wagering. The complaint points to the state’s successful preliminary injunction against Kalshi and argues that the state has made clear that “any company that wants to be in the sports gaming business in Massachusetts must play by our rules.” Novig maintains that federal law overrides those licensing requirements for designated contract markets.
In Washington, the complaint references guidance issued by the Washington State Gambling Commission declaring prediction markets unauthorized, as well as the state’s lawsuit against Kalshi. Novig argues Washington is trying to classify federally regulated event contracts as gambling, bookmaking and online gambling, despite Congress giving the CFTC exclusive oversight of those markets.
In New Mexico, the company challenges Attorney General Raúl Torrez’s lawsuit against Kalshi, which accuses the exchange of operating unlawful sports betting. Novig argues the state is wrongly treating federally regulated event contracts as gaming devices and gambling activities.
Novig says Congress gave the CFTC exclusive authority
Across all four lawsuits, Novig’s central argument is that sports event contracts traded on federally designated exchanges qualify as “swaps” under the Commodity Exchange Act and are therefore subject to the CFTC’s exclusive jurisdiction.
The complaints also lean heavily on the history of the Commodity Exchange Act, arguing Congress intended to prevent states from imposing their own rules on federally regulated derivatives markets. They cite recent federal court decisions involving Kalshi, including the Third Circuit’s ruling in KalshiEX LLC v. Flaherty, which Novig says supports its preemption argument.
The lawsuits also reference the CFTC’s ongoing rulemaking on prediction markets. In a proposed rule released in June, the agency said sports event contracts based on aggregate professional and collegiate sporting outcomes are generally unlikely to be considered contrary to the public interest, provided exchanges maintain appropriate surveillance and integrity safeguards.
Company says state enforcement threatens its business
Novig argues that without federal court intervention, it faces an impossible choice: stop operating in major states or risk significant civil and potentially criminal penalties.
The company says Washington could seek restitution, disgorgement, civil penalties and criminal sanctions similar to those pursued against Kalshi. Massachusetts, it argues, could impose civil fines, criminal penalties and injunctive relief, while New Mexico’s laws expose it to public nuisance claims as well as civil and criminal liability.
According to Novig, those risks amount to irreparable harm because sovereign immunity would prevent the company from recovering its losses even if it ultimately won in court.
New York becomes the first test
While Novig has expanded its legal campaign across four states, New York is already emerging as the first major procedural hurdle.
According to court filings pointed out by Daniel Wallach, New York is the only case in which Novig has asked for an emergency preliminary injunction before any enforcement action has been filed against it. The case has been assigned to U.S. District Judge Analisa Torres, who recently denied Kalshi’s request for similar emergency relief.
Things have heated up in the SDNY lawsuit, as the New York AG's Office has accused Novig of trying to obtain an emergency ex parte TRO without providing advance notice to the NYAG, urges Court not to entertain ex parte motion and afford NYAG an opportunity to be heard. pic.twitter.com/4JSqfkjXHG
— Daniel Wallach (@WALLACHLEGAL) August 9, 2026The New York Attorney General’s Office has urged the court to reject Novig’s request for an ex parte temporary restraining order, saying the company sought emergency relief without giving the state advance notice.
In a letter seen by ReadWrite and filed on August 7, the Attorney General’s Office told the court Novig had failed to satisfy the standard for obtaining a TRO without allowing defendants to be heard, arguing that “Plaintiff’s failure to provide notice therefore amounts to an attempt to obtain an ex parte TRO … and should not be entertained by this Court.” The state instead asked Judge Torres to proceed through ordinary briefing on Novig’s preliminary injunction request once defendants are properly served.
The filing also points out that Judge Torres recently denied Kalshi’s request for comparable emergency relief, arguing Novig’s case should proceed in the same way.
Federal courts could shape the next phase of the prediction market battle
Rather than waiting to defend itself in state court, Novig is asking federal judges to settle the central question first: whether states can regulate sports event contracts that trade on federally approved exchanges.
New York is likely to provide the first indication of how courts will respond. Judge Torres must decide whether the company has shown enough urgency to justify emergency relief before the case reaches the merits.
Featured image: Canva / Novig
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