Novig Sues Wisconsin AG Josh Kaul Over Sports Prediction Market Event Contracts

Sports prediction market operator Novig has filed a federal lawsuit against Wisconsin Attorney General Josh Kaul and state gaming administrator John Dillett, seeking to block the state from treating its sports event contracts as illegal gambling. The 45-page complaint, filed by Novig’s operating subsidiary Ludlow Exchange LLC on Friday in the U.S. District Court for the Western District of Wisconsin, marks the fifth state Novig has sued since launching its prediction market on Aug. 4.

Novig argues its sports contracts are swaps regulated exclusively by the Commodity Futures Trading Commission under the Commodity Exchange Act, not wagers subject to Wisconsin’s gambling statutes. The company is asking for both preliminary and permanent injunctions, along with a declaration that federal commodities law preempts the state’s gambling code as applied to its products.

A Preemptive Strike Following a Familiar Pattern

Novig’s Wisconsin filing wasn’t triggered by an actual enforcement action — it’s a preemptive move. The company pointed directly to Wisconsin’s April lawsuit against Kalshi, Polymarket, Robinhood, Crypto.com and Coinbase, in which the state alleged those companies’ sports-linked event contracts amounted to unlawful commercial gambling and a public nuisance. Novig’s counsel wrote that the company “expects that Wisconsin will imminently bring an enforcement action against it along the same lines” as those existing cases.

The company only began offering event contracts to Wisconsin residents about a week before filing suit. Ludlow Exchange was designated a CFTC-regulated contract market on June 16, which Novig says places its products squarely under federal jurisdiction via CEA Section 2(a)(1)(A), with federal preemption of conflicting state law addressed under CEA Section 16(e). Wisconsin isn’t budging, maintaining that contracts tied to sports outcomes are bets under state law no matter how they’re classified federally.

Wisconsin is the fifth state Novig has sued in less than two weeks, following earlier complaints in New York, New Mexico, Massachusetts and Washington. Each case follows the same playbook: get ahead of state enforcement by asking a federal court to declare the CEA controlling before regulators can act. For bettors trying to keep track of where sports betting in Wisconsin currently stands amid the legal back-and-forth, the state’s broader regulatory picture remains a moving target.

An Uphill Climb in Wisconsin Specifically

Novig faces a tougher road in Wisconsin than in some of the other states it has sued. The CFTC itself already tried this exact preemption argument against Wisconsin officials, and a federal judge denied the agency’s request for a preliminary injunction in July, ruling the CFTC hadn’t presented enough evidence to support its theory. That case remains pending, and Novig’s own complaint will now play out in the same federal district.

The broader legal landscape isn’t entirely bleak for prediction market operators, though. In April, the Third Circuit ruled in KalshiEX LLC v. Flaherty that the CEA preempted New Jersey gambling law as applied to Kalshi’s sports contracts, finding they qualified as swaps traded on a CFTC-regulated market. That precedent gives Novig at least one appellate win to point to, even as the Wisconsin fight over the same underlying question remains unresolved.

Novig’s complaint also notes the company previously operated under a Colorado sports betting license before withdrawing in 2024 to pursue federal designation instead — a detail meant to show the operator has tried the state-regulated route and is now betting entirely on the federal framework holding up in court. With state attorneys general pushing back across the country and courts split on the preemption question, the sports prediction market industry’s legal status is likely to stay unsettled for months to come.