Novig Sues Fifth State After Launching Sports Event Contract Markets

• Novig filed a lawsuit against Wisconsin to prohibit the state from enforcing its state gambling laws
• The company has now sued five states since launching its sports event contracts markets
• Novig has sued Wisconsin, New York, New Mexico, Massachusetts, and Washington

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Novig recently filed a lawsuit in Wisconsin to prohibit the state from enforcing its gambling laws, now having taken preemptive legal action in five states to protect its recently launched sports event contract markets.

Novig filed a lawsuit in U.S. District Court for the Western District of Wisconsin against Wisconsin Attorney General Joshua L. Kaul and John Dillett, administrator of the Wisconsin Department of Administration Division of Gaming. The complaint requests declaratory and injunctive relief against the state, also requesting Wisconsin be enjoined from enforcing preempted gambling laws against Novig’s federally regulated sports event contract transactions.

The preemptive lawsuit is similar to four others filed in New York, New Mexico, Massachusetts, and Washington.

Preemptive Legal Action in Wisconsin

This is the fifth lawsuit Novig has filed since launching its sports event contract markets on Aug. 4.

According to its lawsuit, Novig described Wisconsin’s actions against federally regulated event-contract trading as “aggressive,” citing filed lawsuits against Kalshi, Polymarket, and Crypto.com.

“Novig, having just secured its status as a Designated Contract Market (“DCM”) registered by the CFTC, brings this action to prevent Defendants from doing the same to Novig,” counsel wrote in its suit.

In its lawsuit, Novig requests a preliminary injunction against Wisconsin to prohibit the state from enforcing its gambling laws and regulations against the company’s prediction market offerings.

Wisconsin has made its position on these types of contracts “unmistakably clear,” counsel wrote, with multiple lawsuits against multiple prediction market operator companies.

“Despite the CFTC’s exclusive jurisdiction over event contracts, Novig expects that Wisconsin 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. Wisconsin’s enforcement of its laws is preempted several times over. The only court of appeals to reach the issue has held as much,” Novig counsel noted in its lawsuit.

Four States Take Action

Massachusetts, New Mexico, New York, and Washington have all shown aggressiveness in state and federal courts when it comes to defending their perceived rights to enforce state gambling laws against what they view as illegal forms of gaming.

In late July, the State of Washington secured a preliminary injunction against prediction market operator Kalshi after Washington Attorney General Nick Brown filed a lawsuit against the company in March.

New York has also vied with DCMs over the past year for regulatory control, most recently filing a lawsuit against Kalshi seeking $36 billion from the company for alleged illegal gambling.

After courts denied Kalshi emergency relief in July, New York Gov. Kathy Hochul (D) and Attorney General Letitia James announced a lawsuit against the company, alleging the platform runs an illegal gambling operation in the Empire State.

Massachusetts also filed a lawsuit last September against Kalshi for promoting and accepting online sports bets in the commonwealth without following state sports betting laws or having a license to do so.

The lawsuit alleges Kalshi’s sports event contracts bypass key consumer protections that are required of licensed sports betting operators. Kalshi has not undergone the necessary comprehensive processes required by the MGC to ensure its operations are in alignment with state regulations. Kalshi also allows users between the ages of 18 and 21 to trade contracts on its platforms, when the legal age for sports betting in the state is 21.

New Mexico has also become a crowded legal battleground for prediction markets. Attorney General Raúl Torrez announced in June the New Mexico Department of Justice (DOJ) filed a lawsuit against Kalshi, Inc., and KalshiEX LLC, alleging the prediction market company operates illegal sports betting in the state.

In response, Polymarket officials sued several New Mexico Gaming Control Board members, as well as Attorney General Torrez, in direct response to the state’s lawsuit against Kalshi. Polymarket filed its lawsuit in U.S. District Court for the District of New Mexico.

The CFTC also filed a lawsuit in federal court against the state of New Mexico after its legal action against Kalshi.