Novig has filed lawsuits against Wisconsin, Massachusetts, New Mexico, New York, and Washington, challenging state efforts to restrict its federally regulated sports prediction markets just weeks after its national relaunch
Novig, a federally registered sports prediction market platform, has launched legal action against five U.S. states within two weeks of its near-nationwide relaunch. The operator is seeking to block state-level enforcement actions that could restrict its ability to offer event contracts, escalating a growing conflict between federal and state authorities over the regulation of sports-focused prediction markets.
States Targeted in Novig’s Legal Offensive
On August 14, Novig filed a lawsuit in federal court against Wisconsin, following similar actions in Massachusetts, New Mexico, New York, and Washington. Each of these states has recently taken steps to challenge or restrict the operation of federally regulated prediction market platforms. The lawsuits name state attorneys general and gaming regulators as defendants, with Novig arguing that state enforcement threatens its business model and conflicts with federal oversight by the Commodity Futures Trading Commission (CFTC).
Wisconsin, in particular, has moved aggressively against event-contract trading, having previously filed suits against platforms including Crypto.com, Kalshi, Polymarket, and Robinhood. Novig’s filings seek injunctive and declaratory relief to prevent state authorities from applying state gambling laws to its federally regulated contracts, which the company claims is essential for its continued operation.
Federal vs. State Authority in Prediction Markets
The legal dispute centers on whether states can enforce their gambling laws against platforms like Novig, which operate under CFTC registration as Designated Contract Markets (DCMs). Novig received CFTC approval and DCM status on June 16, 2026, and relaunched its sports prediction markets in 47 states on August 4. The company reported over $125 million in notional trading volume during its first week, with activity concentrated in parlay contracts and baseball markets.
State regulators argue that sports event contracts offered by prediction markets may violate state gambling statutes, regardless of federal registration. In Wisconsin, Novig’s lawsuit follows a recent federal court decision denying the CFTC’s request for a preliminary injunction against the state. The court found that the CFTC had not demonstrated a likelihood of success in its argument that sports event contracts fall under the Commodity Exchange Act’s definition of swaps, and that Wisconsin’s gambling laws appear to cover such contracts.
Player Impact and Market Uncertainty
For players, the ongoing legal battles create uncertainty about the availability of sports prediction markets in affected states. Novig has stated that it faces a lose-lose scenario: continuing to offer event contracts could expose it to civil and criminal penalties, while withdrawing from these states would mean forfeiting market share and revenue. The company also highlights differences from other platforms, such as a minimum trading age of 21, aligning with the most common legal age for sports betting in the U.S.
Meanwhile, other prediction market operators, including Kalshi, are also engaged in litigation with state authorities. In New York, the Attorney General has sued Kalshi for allegedly operating an illegal, unlicensed gambling business, seeking $36 billion in relief. Tribal entities, such as the Ho-Chunk Nation in Wisconsin, have also entered the legal fray, challenging prediction market operations under the Indian Gaming Regulatory Act.
Broader Regulatory Landscape
The outcome of these lawsuits could set important precedents for the future of sports prediction markets in the U.S. The tension between federal CFTC oversight and state gambling enforcement remains unresolved, with courts so far declining to grant federal regulators exclusive authority over event contracts involving sports. Wisconsin’s recent legalization of a tribal-run online sports betting model adds another layer of complexity, as tribal and commercial interests intersect with emerging prediction market platforms.
As litigation continues, operators, regulators, and players face an evolving landscape where the legal status of sports prediction markets may differ sharply from state to state. The next steps will likely depend on further court rulings and potential legislative or regulatory changes at both the state and federal levels.
To understand the dispute, it’s important to distinguish between traditional sports betting and event contracts offered by prediction markets. While both allow users to speculate on sports outcomes, event contracts are regulated as financial instruments under federal law when offered by a Designated Contract Market. However, states may still assert authority over gambling activity within their borders, leading to overlapping and sometimes conflicting regulatory regimes. The current wave of litigation will help clarify where those boundaries lie.
