Novig Challenges Gambling Enforcement in Four States by Asserting CFTC Jurisdiction Over Event Contracts

Novig has filed lawsuits against Massachusetts, New Mexico, New York, and Washington within a week of launching sports event contracts. The company argues its prediction market offerings constitute event contracts under exclusive Commodity Futures Trading Commission oversight, placing them beyond state gambling statutes. The first suit landed in New York a day after launch, with the others filed in rapid succession.

All four states have pursued temporary restraining orders or preliminary injunctions against prediction market operators in 2026. Novig seeks preliminary injunctions to halt enforcement of state gambling laws.

Federal Preemption Claims and Recent State Enforcement Actions

In the New York filing, Novig’s counsel wrote: “Despite the CFTC’s exclusive jurisdiction over event contracts, Novig expects that New York will imminently bring an enforcement action against it along the same lines as the other lawsuits that Defendants have already brought against similarly situated parties. New York’s threatened enforcement of its laws is preempted several times over.”

Washington Attorney General Nick Brown filed against Kalshi in March. In late July, King County Superior Court Judge John McHale ruled the state showed a “likelihood of success on the merits” that Kalshi’s event contracts, including sports offerings, violate the Washington Gambling Act. The resulting injunction bars Kalshi from offering such contracts temporarily.

New York pursues a $36 billion claim against Kalshi for alleged unlicensed gambling. Governor Kathy Hochul and Attorney General Letitia James announced the action after courts denied emergency relief. Hochul stated: “Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules.”

Massachusetts sued Kalshi last September over unlicensed online sports bets, missing consumer protections, and allowing users aged 18 to 21 to trade despite the state’s 21-and-over sports betting age. In New Mexico, Attorney General Raúl Torrez sued Kalshi in June for bypassing the state’s regulated system that protects consumers, ensures accountability, and respects tribal sovereignty. The CFTC filed suit against New Mexico afterward.

As reported by Yogonet International, Daniel Wallach, founder of Wallach Legal and UNHLaw Sports Wagering, assessed the suits’ prospects. Wallach noted prospects for success are dim in MA, NY & WA in light of recent PM court rulings favoring states, but that may be besides the point. “Preemptive federal suits ensure 90+ day uninterrupted launch while allowing enough time for possible appellate reversals (CA1, 2 & 9 & MSJC).”

Practical Buffer Despite Adverse Precedents

Recent rulings have sided with state regulators, limiting Novig’s odds in three of the four jurisdictions. That reality carries enforcement risk if courts reject the preemption argument outright and allow injunctions to take hold quickly. Yet the federal filings create a tactical window exceeding 90 days of operations, buying time for potential reversals on appeal.

Prediction market operators face a fragmented landscape where state actions outpace federal clarity. Novig’s approach underscores the value of immediate litigation to test boundaries, but sustained market access will hinge on appellate outcomes rather than initial district court reactions. Regulators and entrants should track developments in the identified circuits as they shape permissible entry strategies ahead.

Reporting: Yogonet International

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