A federal judge in Manhattan has refused to stop New York from applying its gambling laws to Novig, the sports prediction market run by Ludlow Exchange LLC. In a 35-page opinion and order filed on Monday 10 November 2026, Judge Colleen McMahon of the Southern District of New York denied Novig’s request for a preliminary injunction against Attorney General Letitia James and the state Gaming Commission. Her conclusion is blunt: “Novig’s sports event contracts are sports betting.”
The ruling means New York can require Novig either to get a state gambling licence or to stop listing and trading its sports contracts there, even though the Commodity Futures Trading Commission (CFTC) approved Novig as a federal exchange in June. It is not a final judgment. The court docket shows a notice of interlocutory appeal filed the same day as entry 74, so the Novig lawsuit now heads to the Second Circuit.
Why the judge says Novig’s contracts are not swaps
The whole case turns on one definition. Under the Commodity Exchange Act, the CFTC has “exclusive jurisdiction” over swaps traded on a designated contract market. One branch of the blockchain, where users swap tokens directly from their own wallets without handing custody of their funds to a company.">swap definition covers payments that depend on an “event or contingency associated with a potential financial, economic, or commercial consequence”. If Novig’s sports contracts fit that phrase, New York’s gambling rules arguably cannot touch them. If they do not, the state is free to act.
Judge McMahon split the phrase in two. On the first half she sided with Novig, and with the Third Circuit (Flaherty) and the Sixth Circuit (Schuler, 25 September 2026): a sports result is an “event”. She used Novig’s own markets on the Giants and Commanders game of Thursday 12 November as the example. Whether the Giants win by 2.5 points or more either happens or it does not.
The second half sank the claim. Following the Sixth and Ninth Circuits, she read “associated with a potential financial, economic, or commercial consequence” in the light of the rest of the definition, which talks about interest rates, currencies, commodities and securities. A game, she held, is not that kind of event. Reading the words as Novig wants would turn almost any bet into a federal swap, she wrote, from casino games to a friendly wager on a ping pong match, and would expose ordinary betting that happens off federal exchanges to federal criminal liability. She called it “preposterous” to suggest that Congress, with its 2010 amendments to the Act, meant to criminalise broad swaths of gambling and quietly repeal the Indian Gaming Regulatory Act, a point pressed by the tribes.
The CFTC’s own position did not help Novig. In October the agency proposed to define sports, political, cultural and weather contracts as swaps and, at the same time, issued an interim final rule saying sportsbook bets and casino games are not swaps. Both texts were first released on 9 October and updated on 19 October, the order notes. The judge found the two “inherently contradictory” and said the shift “appears calculated to influence the outcome of the ongoing litigation”. Since the Supreme Court’s Loper Bright decision of 2024, courts owe no deference to an agency’s reading of a statute, and she gave none.
Novig’s marketing was quoted against it. The order cites the company saying “Our north star is to be the largest sports betting platform in the world”, and notes that its parlays and player props mirror the bets sold by FanDuel and BetMGM. In one footnote, the judge points out that Novig takes no side in trades and earns its money from fees on both bettors, and calls it “not a difference that makes a difference”.
Even if they were swaps, New York keeps its gambling law
Expecting an appeal, the judge also ruled on the fallback question: what if a higher court decides the contracts are swaps after all? Her answer is that the CFTC’s exclusive jurisdiction is narrower than Novig claims. A savings clause in the same section of the law keeps the jurisdiction of other federal and state authorities. In her reading, states cannot regulate the licensing or operation of a designated contract market, but they can apply their gambling rules to the betting that happens on it.
She drew the line with Minnesota. A federal court there found in July that a state law making it a crime to run any prediction market was probably preempted, in part. New York, by contrast, does not try to ban the exchange; it regulates sports bets placed on it. Field preemption failed because Congress wrote explicit gambling preemption elsewhere in the Act and left it out here.
Conflict preemption failed too, and this is where the CFTC took its sharpest criticism. Novig relied on a CFTC order of 11 August 2026 telling Kalshi to keep running its exchange as normal while New York sought to stop it. The judge wrote that this “Kalshi Order” “smacks of a collusive effort between a regulator and regulatee to generate a claim for conflict preemption”, and rejected the attempt. She added that the CFTC rule now in force bars the listing of event contracts that relate to gaming. Complying with both laws is possible, in her view: Novig could take a New York licence, as it did in Colorado in 2023, and geofence its service to customers physically in the state. To run nationally it could seek a licence in each state that allows sports betting, she wrote, noting that FanDuel’s sportsbook is offered in 24 states.
How the Novig lawsuit got here
Novig is not a crypto company, but it sits in the same fight as Kalshi, Coinbase and Gemini. The timeline below is drawn from the order and the docket.
| Date | Step in the New York fight |
|---|---|
| 2021 | Novig, Inc., the parent company, is founded |
| 2023 | Novig obtains a Colorado internet sports betting licence, later handed back |
| Oct 2025 | New York’s Gaming Commission orders Kalshi to stop offering sports contracts in the state |
| Apr 2026 | New York’s Attorney General opens proceedings against Coinbase Financial Markets and Gemini Titan |
| 16 Jun 2026 | The CFTC designates Ludlow Exchange (Novig) a contract market |
| 31 Jul 2026 | New York starts an enforcement proceeding against Kalshi |
| Aug 2026 | Novig sues New York and asks for a preliminary injunction |
| 11 Aug 2026 | Judge McMahon refuses a temporary restraining order |
| Sep 2026 | The court accepts a brief from 24 tribes and tribal groups backing New York |
| Early Nov 2026 | New York tells the court a Second Circuit motions panel refused Kalshi and Coinbase injunctions pending appeal |
| 10 Nov 2026 | Preliminary injunction denied (Dkt 73); notice of interlocutory appeal filed (Dkt 74) |
Novig, which is headquartered in New York, began offering sports contracts to New York customers in August 2026. It accepts only users aged 21 and over and lets them set deposit and trading limits. Users trade against each other through a central order book, and contracts are cleared fully collateralised by a clearing house, according to the CFTC designation order cited by the court.
The CFTC backs the platforms in court while Politico reports a Kalshi probe
Washington has spent the autumn on the platforms’ side. The United States and the CFTC sued Utah to stop its case against Kalshi in late October, and on 7 November the agency gave prediction markets 30 days to unblock states that courts had ordered them to block. Judge McMahon’s order shows how little weight that stance carries with federal judges in New York.
The regulator may also be looking at Kalshi from the other side. Politico reported on 10 November, citing an unnamed person with direct knowledge of the probe, that the CFTC had privately warned Kalshi it could face charges over whether it properly notified the agency of dozens of new products; under the self-certification system, exchanges list contracts by filing a certification rather than waiting for approval. According to the report, the inquiry has run for months; no charges have been filed, and the CFTC has made no public statement on it. Kalshi spokesperson Elisabeth Diana told Politico the matter was a procedural error over a handful of contracts, many of which never went live, and added, as relayed by Cointelegraph: “We are already addressing the issue.”
What it means for Kalshi, Coinbase and crypto users
For the crypto side of the market, the Novig ruling matters more than its size suggests. New York’s proceedings against Coinbase Financial Markets and Gemini Titan, and its enforcement action against Kalshi, rest on the same reading of the law. Kalshi’s and Coinbase’s own lawsuits against the state are already before the Second Circuit, where a motions panel refused Kalshi and Coinbase an injunction pending appeal in a non-precedential summary order; a merits panel will decide, and no hearing date has been set.
The trend in that circuit is one-sided. According to The Block, Daniel Wallach counts 10 rulings by federal courts within the Second Circuit in sports prediction-market cases, all in favour of the states. Elsewhere the picture is mixed: the Third Circuit sided with Kalshi in Flaherty, while the Sixth and Ninth Circuits sided with the states, and district courts in Connecticut and Nevada read the “event” wording against the platforms. That kind of split between appeals courts is what usually sends a question to the Supreme Court.
Crypto users touch these markets more and more. Phantom opened Kalshi’s markets to US users, paid in the CASH stablecoin. Our Kalshi profile tracks its licences and the state cases against it. A licence-or-leave rule in New York, if it spreads, would hit sports contracts first, since that is the category judges keep calling betting; political, economic and weather contracts were not before the court.
A quick explainer: event contracts versus sports bets
An event contract pays a fixed amount, often $1, if something happens and nothing if it does not, and its price between 0 and 1 reads as the market’s estimate of the odds. Federal exchanges such as Kalshi and Novig match buyers and sellers rather than betting against customers, which is why they argue they run markets, not sportsbooks. Judge McMahon found that for the customer the product is the same; only the counterparty differs. Our guide on how prediction markets work and how the law treats them covers the mechanics in more detail.
Next steps: the Second Circuit and the CFTC’s own rules
Novig’s appeal joins the Kalshi and Coinbase appeals already before the Second Circuit. The denial does not by itself force Novig to close its New York markets; that depends on whether the state now acts against it, and the docket does not show any such step yet. The Block said it had asked Novig for comment; its article, published early on Wednesday, carried no reply.
In Washington, the CFTC’s proposed rule to bring sports contracts into the swap definition is still only a proposal, which the judge said has no legal effect. On Kalshi, the open questions are which contracts the CFTC is looking at, whether any filing follows and when. None of that is public.