Judge McMahon Denies Novig Injunction, Leaving New York Free to Apply Gambling Law to Sports Contracts
A Manhattan federal judge denied Novig's preliminary injunction bid over sports event contracts, and the exchange has appealed to the Second Circuit.
Judge Colleen McMahon of the US District Court for the Southern District of New York has denied a preliminary injunction sought by Ludlow Exchange LLC, which operates as Novig, leaving New York free to apply its gambling law to the exchange's sports event contracts.
The ruling was issued on 10 November, according to Gaming.net and PM Pulse. Novig, a prediction market exchange, had asked the court to stop New York Attorney General Letitia James and Gaming Commission officials from enforcing state gambling rules against its sports contracts. Novig filed a notice of interlocutory appeal the same day, according to RG.org.
What the court decided
The court found that Novig had not shown it was likely to succeed on its claim that federal law overrides New York's rules, according to PM Pulse. That is the standard a party must meet to win a preliminary injunction, and the decision does not end the case.
Several outlets describe the reasoning in similar terms:
- Swap status. The Commodity Exchange Act (CEA) gives the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps. Outlets report McMahon held Novig's sports contracts are not swaps.
- Preemption. According to Casino.org, she added that even if the contracts were swaps, federal law would not automatically displace New York's authority over gambling.
- Product comparison. PM Pulse reports she saw "no qualitative difference" between Novig's product and a traditional FanDuel sports bet.
- Plain-language finding. RG.org quotes the opinion as saying Novig's "sports event contracts are sports betting."
- Compliance argument. According to RG.org, she rejected Novig's claim that it could not comply with both state and federal law, calling it "ridiculous" and saying the company could obtain a New York licence and geofence.
PM Pulse also reports that the opinion said the CFTC's August order to Kalshi "smacks of a collusive effort" between regulator and regulated company.
Reports describe the outcome as leaving New York able to require a gambling licence, or an end to sports event contracts for New York customers. No order shutting Novig down has been reported.
How the case reached this point
The CFTC designated Ludlow a contract market in June 2026, and Novig began offering sports contracts to New York customers in August, according to Focus Gaming News. Ludlow sued in the Southern District of New York in early August, naming James and Gaming Commission officials including Robert Williams and Brian O'Dwyer, per the court docket (No. 26-cv-6676).
| Date | Step |
|---|---|
| June 2026 | CFTC designates Ludlow Exchange a contract market (Focus Gaming News) |
| August 2026 | Novig begins offering sports contracts in New York |
| Early August 2026 | Ludlow sues James and Gaming Commission officials |
| 11 August 2026 | McMahon denies a temporary restraining order and sets a briefing schedule |
| 21 and 31 August 2026 | Attorney General's response and Novig's reply due |
| 11 September 2026 | Oral argument set |
| 10 November 2026 | Preliminary injunction denied (per Gaming.net, PM Pulse) |
In her 11 August order, McMahon denied emergency relief without deciding the merits. She said she would not undermine Judge Analisa Torres's decision in the Kalshi case by granting a restraining order without full briefing. Torres had denied KalshiEX's restraining order and preliminary injunction request in KalshiEX v. Williams, No. 1:25-cv-08446. The August order also floated combining the preliminary and permanent injunction motions, so the scope of the November ruling matters for what remains pending.
Why it matters for event contract operators
The decision runs against the direction of the Illinois preliminary injunction on licensing and tax rules for sports event contracts, where Judge Pacold blocked state rules. Federal courts are now split on how far state gambling law reaches CFTC-designated exchanges, and the Second Circuit appeal will test the New York view.
The swap question at the center of the ruling is also before the regulator. The CFTC has proposed placing event contracts inside the swap definition, with comments due 18 November. A final rule would bear directly on the argument Novig lost on at this stage.
Novig is fighting on several fronts. Crypto.com and Novig sued the Missouri Attorney General on 16 October, according to RG.org, and reported cases also exist in Washington, Massachusetts and New Mexico. Other operators face similar pressure from states: Kalshi has sued Louisiana officials, Utah has filed criminal charges against Kalshi and its co-founders, which are allegations only, and Robinhood, Coinbase, Gemini and Moomoo agreed to halt Ohio sports event contracts.
For operators, compliance teams and payment partners, the practical points are that a federal contract market designation has not stopped New York from contesting the product, and that licensing and geofencing were treated by the court as workable routes. The appeal to the Second Circuit, and any move by New York to enforce, are the next developments to watch.
Status reviewed on 11 November 2026. Case dates and the August order come from the Ludlow Exchange v. James docket, while ruling details and quotations are as reported by RG.org, Casino.org, Gaming.net and PM Pulse. More regulation news and North America coverage.
Frequently asked questions
What did the judge decide in the Novig case?
Judge Colleen McMahon denied the preliminary injunction Novig requested against New York officials. According to PM Pulse, she found Novig had not shown it was likely to succeed on its preemption claims. The decision is an interim ruling, so the case continues and a final judgment on the merits has not been issued.
Are Novig's sports event contracts swaps under federal law?
At this stage, the court said no. Outlets report that McMahon held the contracts are not swaps under the Commodity Exchange Act, and that even if they were, federal law would not automatically displace New York's authority over gambling, according to Casino.org. The finding was made while ruling on an injunction request.
Can New York now stop Novig from offering sports contracts?
Reports say the ruling leaves New York free to require a gambling licence or an end to sports event contracts for New York customers. According to RG.org, the judge said Novig could seek a New York licence and geofence. No shutdown order against Novig has been reported.
Has Novig appealed the New York ruling?
Yes. According to RG.org, Novig filed a notice of interlocutory appeal the same day as the ruling, sending the injunction denial to the Second Circuit. Interlocutory means the appeal targets an interim order rather than a final judgment in the case.
Who is Novig and who is it suing in New York?
Novig is the trade name of Ludlow Exchange LLC, which the CFTC designated a contract market in June 2026, according to Focus Gaming News. Ludlow sued New York Attorney General Letitia James and Gaming Commission officials in the Southern District of New York in early August 2026.
