Novig loses New York injunction bid over sports contracts

A federal judge in New York denied Novig's request for a preliminary injunction against the state's attorney general and gaming regulators on 10 November, ruling that the company's sports event contracts resemble conventional sports wagers and cannot be shielded from state gambling law under the federal Commodity Exchange Act.

US District Judge Colleen McMahon, in a 35-page ruling, wrote that common sense compelled the finding. Novig had argued its peer-to-peer contracts on sporting outcomes qualified as financial derivatives under CFTC jurisdiction, which would preempt state enforcement. McMahon acknowledged that sporting outcomes can constitute events under federal commodities law but held that Novig's products lack the inherent financial or commercial consequences required to classify them as swaps. She pointed specifically to a four-game NFL parlay offering potential returns of more than 111 times the stake.

New York may now pursue enforcement action against Novig unless the company obtains a state gambling licence or withdraws from the market. Novig's parent, Ludlow Exchange LLC, holds a CFTC contract market designation received in June. The ruling does not impose a nationwide shutdown but extends the legal setbacks Novig has accumulated across New Mexico, Massachusetts, Washington and Wisconsin, where it filed suit in August.