New U.S. Court Ruling on Prediction Markets: Novig's Request Denied
A U.S. federal court has ruled that Novig's sports prediction contracts do not qualify as swaps, potentially strengthening state regulatory authority.
A new development has emerged in the ongoing legal debate over the status of sports-focused prediction markets in the United States. The U.S. District Court for the Southern District of New York has denied prediction market platform Novig's request for a preliminary injunction against state regulators. According to the court's November 10, 2026 ruling, the sports event contracts offered by the company do not qualify as swaps under the federal Commodity Exchange Act. The decision leaves the door open for New York State to apply its own gambling and sports betting laws to these products.
Why Did the Federal Court Reject Novig's Request?
The ruling, issued by U.S. District Judge Colleen McMahon, focused on which regulatory authority has jurisdiction over sports prediction contracts. Ludlow Exchange LLC, the company behind Novig, had obtained designated contract market (DCM) status from the U.S. Commodity Futures Trading Commission (CFTC) in June 2026.
The company began offering sports event-based contracts to users in New York in August. However, it subsequently faced regulatory challenges under the state's gambling and sports betting laws. On August 5, 2026, Novig filed a lawsuit against New York Attorney General Letitia James and officials from the New York State Gaming Commission.
The company's central argument was that its sports event contracts qualified as swaps under federal commodities law and therefore fell under the CFTC's exclusive jurisdiction.
The court, however, rejected that argument at the preliminary injunction stage. Judge McMahon concluded that the contracts in question did not meet the definition of a swap under federal law.
The ruling allows New York to require Novig to obtain a state gambling license or prohibit the offering and trading of sports contracts on the platform.
What Does the Ruling Mean for Kalshi and Polymarket?
The decision involving Novig is part of a broader legal debate over the regulation of prediction markets in the United States. Platforms such as Kalshi and Polymarket are also facing similar regulatory challenges in various states.
According to The Block, another federal judge in New York had previously rejected Kalshi's request to prevent state authorities from enforcing gambling regulations.
The latest decision suggests that prediction market platforms operating under federal authorization may not automatically be exempt from state regulations.
Daniel Wallach, an attorney specializing in sports betting and gaming law, suggested that the developments in New York could encourage state regulators to pursue more aggressive enforcement actions.
However, the ruling against Novig does not mean that every legal aspect of the company's lawsuit has been resolved. At this stage, the court has only denied the request for a preliminary injunction.
Why Does This Matter for the Cryptocurrency Market?
Prediction markets have increasingly become an area where blockchain-based financial applications intersect with traditionally regulated markets.
The activities of platforms such as Polymarket, in particular, have kept the debate over whether event contracts should be classified as financial derivatives or gambling products at the forefront of regulatory discussions.
Although the Novig ruling does not directly constitute cryptocurrency regulation, it carries implications for the legal treatment of blockchain-based platforms offering similar products.
The continuing disputes over regulatory jurisdiction in the United States could influence the future operating conditions of prediction markets.
Author's Assessment
The ruling against Novig highlights the continuing regulatory uncertainty surrounding prediction markets in the United States. The legal view that platforms operating under federal commodities regulations may not be entirely exempt from state-level oversight appears to be gaining ground.
However, the fact that the decision was issued at the preliminary injunction stage is significant. The final legal outcome will depend on ongoing litigation and potential appellate court rulings.
For the cryptocurrency industry, the key issue to monitor is under what circumstances similar contracts will fall under federal financial regulations or state gambling laws.
Prediction Markets, Novig, Kalshi, Polymarket, CFTC
Spotted an error? Let us know · Our editorial standards
Disclaimer: This content is for informational purposes only and is not investment advice. Cryptocurrencies are high-risk; make investment decisions based on your own research.
Content Editor and Writer
Dr. Mesut İnan is a researcher, academic and crypto journalist who has been producing content about cryptocurrencies since 2018. He brings a different perspective to the industry by combining his expertise in sociology with the cryptocurrency ecosystem. Before joining Kriptofoni as co-founder, content editor and writer, İnan worked for several cryptocurrency media platforms: he was an editor and writer at Kriptokoin from 2018 to 2023 and at COINTURK from 2023 to 2024. İnan made a valuable contribution to the ecosystem with his book on Bitcoin, "Bitcoin Sen Bizim Her Şeyimizsin" (Bitcoin, You Are Our Everything). Alongside his academic background, his regular analyses, news and commentary have made him one of the well-known names in cryptocurrency journalism in Turkey. İnan continues his work as a writer and educator and remains a prominent expert voice in the cryptocurrency field.
All articles
