Prediction market operator Novig has launched a federal lawsuit against Wisconsin's top law enforcement and gaming officials, escalating a multi-state legal campaign over whether state gambling prohibitions can reach sports event contracts traded on federally designated exchanges.
The company filed a 45-page complaint on Aug. 14 in the U.S. District Court for the Western District of Wisconsin against Attorney General Josh Kaul and gaming administrator John Dillett. Novig is seeking preliminary and permanent injunctions, along with a declaratory judgment that the Commodity Exchange Act preempts Wisconsin's gambling statutes when applied to its sports-focused event contracts.
At the center of the dispute is a fundamental question that remains unresolved at the national level: whether prediction market contracts constitute federally supervised derivatives subject to exclusive CFTC jurisdiction, or whether states retain authority to regulate them as commercial gambling.
The Legal Argument
Novig's case rests on its contention that sports-related contracts offered through its platform are federally regulated derivatives. The company argues that Congress placed transactions on designated contract markets within the Commodity Futures Trading Commission's exclusive jurisdiction, thereby overriding state-level gambling laws.
The CFTC formally designated Ludlow Exchange LLC, Novig's operational arm, as a contract market on June 16. That designation requires compliance with the Commodity Exchange Act, CFTC regulations, and the agency's core principles. Novig began offering event contracts to Wisconsin residents approximately one week before filing its litigation.
Novig has asked the court for expedited proceedings, asserting that potential state enforcement actions present "imminent and existential" threats to its operations. The complaint states the company could face enforcement under Wisconsin's commercial gambling statutes or be forced to withdraw from the market while the case proceeds.
An Adverse Precedent
Novig enters Wisconsin with a significant preliminary-stage setback already on the record. In April, the state filed lawsuits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, alleging their sports event contract offerings violated Wisconsin's prohibition on commercial gambling and constituted a public nuisance.
The CFTC subsequently sued Wisconsin and sought judicial intervention to halt state enforcement measures. On July 28, Judge William Griesbach denied that request, finding the CFTC had not demonstrated a likelihood of success on its preemption argument or met other requirements for preliminary relief. The ruling was not a final judgment on the merits.
The decision left the core question of federal versus state authority over prediction markets unsettled. Courts in different jurisdictions have reached varying preliminary conclusions, leaving operators navigating a patchwork of legal uncertainty.
A Five-State Legal Campaign
Wisconsin represents the fifth state Novig has sued since Aug. 4. The company has also filed cases against government officials in New York, Massachusetts, Washington, and New Mexico as part of its nationwide expansion strategy for its federally regulated exchange.
Note: Filing dates for individual states other than Wisconsin are based on Novig's stated timeline since Aug. 4.
Novig emphasizes its operational model as distinct from competing prediction platforms. The company exclusively provides sports-focused contracts, avoiding event contracts tied to political developments or international affairs. The platform also maintains a minimum age requirement of 21 for all users.
Commercial Expansion Amid Legal Battles
While pursuing litigation across multiple states, Novig has continued expanding commercially. On July 30, the company announced a multiyear partnership with the New York Mets, designating itself as the team's exclusive official prediction market collaborator. The arrangement includes advertising at Citi Field and during broadcasts, plus access to official MLB data feeds.
The next major question in Wisconsin is whether the Western District will distinguish Novig's case from the CFTC's unsuccessful preliminary-injunction bid or follow similar reasoning on federal preemption. As of the latest publicly indexed filings, Wisconsin officials had not yet filed a substantive response, and the court had not ruled on Novig's requested injunction.