Novig takes preemption argument to a fourth state court

Tarek Mansour had already won the fight once. In September 2024, a federal judge in the Southern District of New York held that Kalshi's congressional control contracts were protected from state interference by the Commodity Exchange Act — that a designated contract market operating under CFTC jurisdiction sits beyond the reach of state gaming law. That ruling did not end the argument. It moved it.

Novig, the smaller and quieter DCM operator, has been running the same preemption theory through state courts since that precedent landed, and the filing in Wisconsin is the fourth time the company has asked a state judiciary to accept that federal designation forecloses state enforcement authority. The legal mechanism is not novel. The question is whether it holds outside the conditions that produced the New York result.

The Supremacy Clause analysis is straightforward in the abstract: where Congress has expressly occupied a field, state law that conflicts with or obstructs the federal scheme is displaced. What is not straightforward is the scope of that field. The CEA grants the CFTC jurisdiction over contracts of sale of a commodity for future delivery, and Dodd-Frank extended that framework to include swaps. The CFTC's own guidance treats DCM designation as conferring the right to list contracts without prior state approval. Whether that guidance, taken together with the statutory text, displaces state gaming authority on all exchange-listed event contracts is an open interpretive question — and one that federal courts have answered differently depending on the specific contract at issue.

The thing I keep returning to is that preemption arguments in regulatory litigation tend to be decisive or irrelevant, and the line between those two outcomes is drawn by the specific statutory language, not the general principle. Every state court Novig has approached so far has had to decide not just whether preemption exists but whether the contracts at issue — prediction markets, in their current form — are the kind of instruments Congress intended to protect when it structured the CEA's field preemption provision. That is not a question the New York decision settled definitively. It answered the question for one contract, in one court, in one procedural posture.

The Wisconsin filing matters because state courts are not required to follow federal district court readings of federal law, and a circuit split at the appellate level — if one develops — is the only path to Supreme Court clarification. Four state cases running simultaneously increases the probability of a conflicting outcome somewhere. A single adverse state appellate ruling would give the CFTC a reason to intervene that it does not currently have. Whether the Commission would want that reason is not on the public record.