Novig Sues Wisconsin Attorney General as Sports Prediction Market Legal Fight Widens

Novig has sued Wisconsin Attorney General Josh Kaul and state gaming administrator John Dillett, asking a federal court to block the state from treating its sports event contracts as illegal gambling. The complaint, filed by Novig’s operating entity Ludlow Exchange LLC in the U.S. District Court for the Western District of Wisconsin, argues that Novig’s sports contracts are swaps regulated exclusively by the Commodity Futures Trading Commission, not bets subject to state gambling law.

The 45-page lawsuit is a preemptive strike. Novig says it began offering event contracts to Wisconsin residents just over a week ago and moved to sue before the state could bring its own enforcement action, pointing to Wisconsin’s history of going after other prediction-market operators over nearly identical contracts.

Wisconsin’s Broader Campaign Against Prediction Markets

Wisconsin opened its offensive against sports-linked prediction markets in April, suing Kalshi, Polymarket, Robinhood, Crypto.com and Coinbase over event contracts tied to sporting outcomes. The state alleges those contracts violate its commercial gambling statutes and amount to a public nuisance, regardless of how the operators are federally licensed.

Novig is now the sixth operator to become entangled in Wisconsin’s push, and it’s asking the court to move quickly with an expedited preliminary injunction rather than wait to see how the state responds to its recent Wisconsin launch.

The Core Legal Question: Swaps or Bets

At the heart of the dispute is a jurisdictional fight that’s now playing out in multiple states. Novig argues its contracts qualify as swaps under the Commodity Exchange Act, placing them under the CFTC’s exclusive jurisdiction under CEA Section 2(a)(1)(A), with federal preemption of conflicting state law addressed in CEA Section 16(e). Ludlow Exchange was authorized as a CFTC-designated contract market on June 16.

Wisconsin isn’t budging on its position that sports outcomes remain gambling under state law no matter how a contract is federally classified. Courts have split on the question so far. The Third Circuit sided with the swaps argument in April’s KalshiEX LLC v. Flaherty, ruling that the CEA preempted New Jersey’s gambling law for Kalshi’s sports contracts traded on a CFTC-regulated market. But a Nevada federal court reached the opposite conclusion in North American Derivatives Exchange v. State of Nevada, finding at the preliminary stage that Crypto.com’s sports contracts weren’t swaps subject to CFTC jurisdiction.

Novig also faces an unfavorable precedent specific to Wisconsin: a federal judge already rejected a CFTC request for a preliminary injunction against Wisconsin officials, ruling the agency hadn’t provided enough evidence to support its preemption theory. That case remains pending, and it sets a tougher bar for Novig’s own request in the same court.

The distinction courts are wrestling with matters beyond legal technicalities. A federal designation as a swap doesn’t automatically exempt an operator from state statutes — the operator still has to prove its contracts genuinely comply with the CEA and that federal law overrides the specific state rule being challenged. With appellate courts split and district judges reaching different conclusions on nearly identical facts, the sports prediction-market industry is likely headed toward a circuit split that could eventually draw Supreme Court attention.

A Five-State Legal Push and a Mets Partnership

Wisconsin is the fifth state Novig has sued since August 4, following earlier suits in New York, New Mexico, Massachusetts and Washington. The pattern suggests a deliberate strategy: establish federal protection for its sports contracts state by state rather than wait to be sued. Novig previously held a Colorado sports betting license before shifting to its current federally regulated exchange model, and it markets its platform as sports-focused and 21-plus, distinguishing itself from political-prediction operators that have drawn heavier regulatory scrutiny.

The legal fight comes as Novig also expands its consumer footprint. The company recently struck an exclusive marketing partnership with the New York Mets, becoming the first MLB team to feature a prediction-market platform, with branding rights at Citi Field and access to official MLB data. For bettors tracking how sports-linked prediction markets stack up against traditional operators, Bettors Insider’s Novig review breaks down how the platform’s contracts work and where they currently operate.

The outcome in Wisconsin, and in the other pending state cases, will help determine whether sports-based prediction markets can function as a nationally regulated product or remain subject to a patchwork of state gambling restrictions. With billions of dollars in prediction-market trading volume now flowing through platforms like Kalshi, Polymarket and Novig, the jurisdictional question is no longer a niche legal debate — it’s shaping how an entire emerging category of sports contracts will be allowed to operate across the country.