Novig has asked a federal court in Wisconsin to stop state officials from taking action against its sports event contracts, opening another front in the prediction-market industry’s effort to use federal commodities law to overcome state gambling restrictions.
Ludlow Exchange LLC, a Novig subsidiary, filed the 45-page complaint in the U.S. District Court for the Western District of Wisconsin against Attorney General Josh Kaul and state gaming administrator John Dillett. The company is seeking expedited consideration of a preliminary injunction that would bar the officials from enforcing Wisconsin gambling law against its platform while the case proceeds.
The lawsuit arrives shortly after Novig began offering its contracts to Wisconsin users, according to the complaint. It places the company directly in the path of an unresolved legal dispute already being fought in the same court, where Wisconsin has sued five other operators over sports-based event contracts.
Novig’s case centers on whether contracts tied to sports results can be treated as federally regulated financial products rather than gambling under state law. A ruling favoring Ludlow Exchange could give the company a stronger basis to offer sports contracts in states that prohibit or tightly control online sports betting. A ruling for Wisconsin would reinforce states’ ability to apply their gambling laws even when an operator has received federal commodities-market approval.
Federal designation at the center of Novig’s claim
Ludlow Exchange argues that its sports contracts are swaps governed by the Commodity Exchange Act and subject to the Commodity Futures Trading Commission’s exclusive jurisdiction. The CFTC listed Ludlow Exchange as a designated contract market on June 16 in an industry filing, giving it the federal status on which Novig’s legal strategy relies.
A designated contract market is a venue authorized to list certain derivatives contracts under CFTC rules. Novig contends that state gambling prohibitions cannot be used to bar contracts listed through such a federally regulated market.
Wisconsin has taken the opposite view in its litigation against other prediction-market businesses. The state alleges that contracts based on sports outcomes are bets under Wisconsin law, regardless of how the products are characterized under federal commodities rules. Its April lawsuits accuse five companies of violating the state’s commercial gambling ban and creating a public nuisance.
Those cases remain pending in the Western District of Wisconsin. Ludlow Exchange was not among the five companies named by the state in April, but its complaint cites those actions as evidence that it faces a credible risk of enforcement after making its products available in Wisconsin.
The company says it offers only sports-related contracts in the state. Its complaint says it does not list contracts linked to international news or so-called mention markets, which allow users to trade on whether a person, company, or subject will be mentioned in a specified setting. Novig also says users must be at least 21 years old.
Wisconsin dispute follows setback for the CFTC
The case adds pressure to an issue on which the CFTC has already suffered an early court setback in Wisconsin. The agency has brought its own pending suit against Wisconsin officials, arguing that federal law preempts the state’s efforts to regulate certain event contracts.
In July, a federal judge denied the CFTC’s request for a preliminary injunction, finding that the agency had not shown it was likely to prevail at that stage. The decision did not resolve the underlying preemption question, but it left Wisconsin free to continue defending its position while the litigation moves forward.
That ruling creates a difficult backdrop for Novig. Its complaint relies on a legal argument similar to the CFTC’s: that federal oversight under the Commodity Exchange Act displaces conflicting state rules. Yet the agency’s inability to secure early relief suggests the court will scrutinize whether sports contracts fit within the category of transactions Congress intended to place beyond state gambling enforcement.
The dispute also exposes a practical divide in the growing event-contract market. Operators describe contracts as regulated instruments that let users take positions on measurable outcomes. State regulators often focus on the experience of the customer, who pays for a position whose value depends on a game’s result, an arrangement they say falls within traditional definitions of wagering.
Fifth state lawsuit since Aug. 4
Wisconsin is the fifth state whose officials Novig has sued since Aug. 4, following complaints in New York, New Mexico, Massachusetts, and Washington. The rapid sequence of cases shows that Novig is pursuing litigation as a core part of its expansion strategy rather than waiting for individual state enforcement actions to reach a final outcome.
According to its Wisconsin complaint, Novig previously operated under a Colorado sports-betting license before withdrawing from that market in 2024 and pursuing federal designation. That history gives the company experience in the state-licensed betting model, while its current approach seeks to operate through a federal commodities framework.
Novig has also sought visibility within conventional sports media. The company recently announced an exclusive multiyear partnership with the New York Mets that includes advertising at Citi Field and during broadcasts, along with access to official Major League Baseball data. The commercial agreement does not determine the legal status of its contracts, but it illustrates the industry’s push to establish sports-event trading as a recognizable product category.
Wisconsin officials had not filed a court response when the report was published. Their answer will show whether the state seeks to dismiss Novig’s case on procedural grounds, contests the company’s federal preemption argument, or moves quickly toward its own enforcement measures.
For now, Ludlow Exchange is asking the court to act before Wisconsin brings a case against it. The request turns the dispute from a potential enforcement fight into an immediate test of whether CFTC designation can shield a sports-contract platform from one of the country’s stricter state gambling regimes.
Curious how regulated markets handle event-based trading? Explore Toobit’s event contracts and compare structures, risks, and rewards.
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