A federal judge in Manhattan has denied Novig’s bid to stop New York applying its gambling laws to the company’s sports event contracts, finding at the preliminary-injunction stage that the products are not swaps under federal commodities law.
Judge Colleen McMahon issued the 35-page opinion Nov. 10 in Ludlow Exchange LLC v. James, rejecting Novig’s claim that the Commodity Exchange Act gave the Commodity Futures Trading Commission exclusive authority over the contracts. She found that Novig had not shown a likelihood of succeeding on the merits, so did not consider the remaining tests for a preliminary injunction.
The decision means New York may require Novig to obtain a state gambling licence or stop listing and trading the sports contracts in the state. It does not itself order the company to shut down. Novig filed an appeal with the U.S. Court of Appeals for the Second Circuit on the day of the ruling.
McMahon concluded that, although sports outcomes can be an event or contingency for purposes of the Commodity Exchange Act, Novig’s contracts lacked the potential financial, economic or commercial consequence required to qualify as swaps. “The Court is not required to disregard common sense,” she wrote. “Novig’s sports event contracts are sports betting.”
Ludlow Exchange operates the Novig platform as an exchange where customers take opposing positions and trades match when buyers and sellers agree on price. Novig does not take the other side of each trade, but the judge found that structure did not alter the substance of its products. The platform offered point spreads, player propositions and parlays, including a four-game NFL parlay with a potential payout of more than 111 times the stake, which McMahon compared with bets available from traditional sportsbook operators.
Novig’s parent was founded in 2021 and its exchange operator, Ludlow, was formed in October 2025. The CFTC approved Ludlow as a designated contract market on June 16, and Novig announced on Aug. 4 that it would make sports-related contracts available to New York customers. The company sued Attorney General Letitia James and Gaming Commission officials on Aug. 5; the court had already rejected its request for a temporary restraining order that month.
The judge also rejected the broader pre-emption argument. While states cannot directly regulate the operation or licensing of a federally designated contract market, she concluded that the Commodity Exchange Act did not prevent New York from enforcing gambling regulation against these contracts. She said Novig could seek a New York licence and use geofencing.
McMahon questioned the consistency of the CFTC’s policy positions. The agency withdrew a June 2024 proposal that would have treated sports event contracts as prohibited gaming in February, then issued an October proposal treating sports-related contracts as swaps alongside an interim final rule saying casino-style gambling products, including sportsbook sports-wagering contracts, are not swaps. The court said the agency had not identified a meaningful distinction between the two.
The result adds to the New York-side of a wider judicial divide over federally regulated event contracts. The Third Circuit ruled in April that Kalshi’s sports-related contracts were swaps and that federal law pre-empted New Jersey gambling law, while McMahon’s ruling reached the opposite conclusion on Novig’s products and New York enforcement. As reported Nov. 3, the Second Circuit separately declined to shield Kalshi and Coinbase from New York and Connecticut gambling-law enforcement while their appeals proceed.
