Novig filed suit in federal court on 5 August, seeking to stop New York from enforcing its gambling and sports wagering laws against the company’s sports event-contract markets. The case was brought in the Southern District of New York and asks for a preliminary injunction.
In court papers, Ludlow Exchange LLC, which does business as Novig, named Attorney General Letitia James and members of the New York State Gaming Commission as defendants. The company wants the court to block state officials from treating its contracts as illegal gambling.
According to the complaint, Novig received designation from the Commodity Futures Trading Commission as a Designated Contract Market on 16 June. It says that status means its event contracts are federally regulated instruments that can be listed, traded and settled only on federally registered exchanges.
The filing says Novig was founded in 2021 and created Ludlow Exchange in October 2025 as a wholly owned subsidiary to operate as a CFTC-regulated exchange. It also says Novig began offering event contracts to customers in New York on the day it filed suit.
Novig argues that Congress gave the CFTC exclusive jurisdiction over these transactions, and that state law is therefore preempted. The complaint describes event contracts as derivative instruments, and says they are “quintessential swaps” under the Commodity Exchange Act.
The company also says it has built out compliance controls around the market. Its platform limits trading to people aged 21 or older, lets users set daily, weekly or monthly limits, allows account freezes for periods ranging from one day to six months, and uses third-party identity screening to stop people from opening a second account to evade limits.
Novig says it also screens for prohibited traders, including people who may have undue influence or access to material non-public information, participates in an industry-wide exclusion program, and trains employees on trading practices. Its complaint says the threat of New York enforcement is imminent and existential, and that without relief it faces possible civil and criminal liability.
The company points to recent New York enforcement against other firms as the backdrop for its request. It cites the state’s actions against KalshiEX and Coinbase Financial Markets under Executive Law § 63(12), including a July 31 proceeding against KalshiEX and an April 21 proceeding against Coinbase, as evidence that New York is moving aggressively against federally regulated event-contract trading.
New York’s own January 30 industry alert took the opposite view. The attorney general warned that conducting, advertising or promoting unlicensed gambling through event contracts may bring civil and criminal penalties, said such sports-related contracts can amount to gambling under Penal Law § 225.00(2), and said violations of the Racing Law can trigger civil penalties, including $25,000 per day.
The alert also said the New York State Gaming Commission has general jurisdiction over gaming in the state and that there are nine licensed mobile sports operators in New York. It said unlicensed conduct can expose actors to injunctions, disgorgement, restitution, damages and criminal charges.
The broader federal backdrop is also part of the dispute. The CFTC filed its own suit against New York on 24 April, saying the state was trying to use gambling law to reach CFTC-registered contract markets. The agency said it sought to prevent New York from enforcing preempted state laws against its registrants, and its chairman said the agency would not allow state governments to undermine its authority over these markets.
