Is Novig legal in New York?

The Southern District of New York denied Novig's motion for a preliminary injunction on November 10, 2026, in a 35-page Opinion and Order in Ludlow Exchange, LLC d/b/a Novig v. James, No. 1:26-cv-06676 (p.35). The court framed two questions: whether Novig's sports contracts are "swaps" under the Commodity Exchange Act, and if so whether New York can still require a state gambling license (p.2).

Its answer, in its own words: "At this preliminary injunction stage, the Court concludes that Novig's contracts are not 'swaps'" under the Act, "so New York can apply its gambling and sports-wagering laws to Novig's activity by requiring it either to obtain a state gambling license or to prohibit the listing and trading of those contracts" on its exchange (pp.2-3). The steps behind that holding, as the court gave them:

• Event, yes. The contracts do turn on an "event or contingency," the court found, siding with the Third and Sixth Circuits on that point (pp.18-19).
• Financial consequence, no. The events are not "associated with a potential financial, economic, or commercial consequence" as the swap definition requires, read in light of the statute's purpose of managing price risk (pp.19-25).
• Designation does not decide it. The CFTC's designation of Novig as a contract market "does not resolve whether the particular contracts before the Court are swaps" (p.16).

The court added an alternative holding "in the event that a higher court disagrees": even if the contracts were swaps, it read the Act to stop states regulating how contract markets are licensed or run, but not "the incidental application of state gambling regulations" (pp.25, 30). It rejected field and conflict preemption, saying Novig could seek a New York license or use geofencing (pp.31-34).

Novig "failed to establish a likelihood of success on the merits," so the court did not reach the other injunction factors (p.35). The order denies a request. It does not direct Novig to stop offering anything.

Ludlow Exchange, LLC, which does business as Novig, filed its complaint on August 5, 2026 (ECF 3). It named Attorney General Letitia James and the Gaming Commission's executive director, chair and commissioners, each in an official capacity (p.1). No state agency is a defendant.

Novig's stated reasons, in its complaint:

• Others had been pursued. It points to the Commission's October 2025 demand that Kalshi stop, and to the attorney general's 2026 proceedings against Coinbase Financial Markets and Kalshi (pp.3-4, ¶8).
• It expects to be next. "Novig expects that New York will imminently bring an enforcement action against it" (p.5, ¶12).
• A forced choice. Without relief, it says, it must risk "significant civil (and potentially even criminal) liability or refrain from offering event contracts to New Yorkers altogether" (p.6, ¶14).

Its core argument is that event contracts "are quintessential 'swaps'" within the CFTC's exclusive jurisdiction (p.2, ¶5). It asks for a preliminary and permanent injunction against enforcing the state constitution's gambling clause, Penal Law article 225, Racing Law §§ 1367 and 1367-a, Executive Law § 63(12) and related rules against it, plus a declaration that they are preempted (pp.43-44). The court says Novig is headquartered in New York and began offering sports contracts to New York customers in August 2026 (ECF 73, pp.2, 9).

The attorney general and the Commission officials answered in a brief opposing the injunction on September 10, 2026 (ECF 53). They call the suit a "pre-enforcement action" and argue that "unlicensed gambling by another name is still unlicensed gambling, and States retain the authority to enforce their gaming regulations against prediction markets" (ECF 53, pp.10-11). Those are New York's arguments.

The state laws at issue, as the opinion lists them, are the constitution's ban on unauthorized gambling, the Penal Law's definition of gambling, and the Racing Law rule that no entity may make a mobile sports wagering platform available to people in New York without a Commission license (ECF 73, pp.11-12). The court also accepted an amicus brief from 24 federally recognized tribes and tribal organizations supporting the state (p.12).

Not on what we could read. The court framed its conclusion as one reached "at this preliminary injunction stage" (ECF 73, p.2). On August 11, 2026, in an order signed by Judge McMahon, the court denied Novig a temporary restraining order and wrote, "I have not decided the case on the merits" (ECF 38, p.2). That order also said the judge was inclined to merge the preliminary and permanent injunction motions and enter a final judgment after one round of briefing (p.2).

The November 10 decision is styled as a denial of the preliminary injunction and directs the clerk to terminate that motion (p.35). It does not say a final judgment was entered. We could not read the docket after it, so we could not determine whether Novig has appealed, sought a stay, or whether a judgment has followed.

The CFTC designated Ludlow Exchange a contract market on June 16, 2026. The opinion describes two CFTC actions dated October 19, 2026: a proposed rule that would define the term swap to include sports-related event contracts, and an interim final rule that casino-style gambling products, including sportsbook sports wagers, are not swaps (ECF 73, p.8). The court gave the proposals no legal effect and declined to defer to the agency's reading (pp.23-24, 33).

Novig also pointed to an August 11, 2026 CFTC order directing Kalshi to keep operating its exchange. The court did not treat it as creating a conflict between federal and state law, and cited the CFTC rule on event contracts that involve gaming, 17 C.F.R. § 40.11 (pp.32-33). The CFTC's view of preemption is the agency's; this court did not adopt it.

The opinion recounts New York's actions against other venues: the Gaming Commission's October 2025 directive to KalshiEX, the attorney general's April 2026 proceedings against Coinbase Financial Markets and Gemini Titan, and its July 31, 2026 enforcement proceeding against Kalshi (ECF 73, p.12). None of those names Novig.

On November 5, 2026, New York told the court that a Second Circuit motions panel had denied an injunction pending appeal in three consolidated Kalshi and Coinbase cases; a merits panel will take up the issue, with no argument date set as of the opinion (p.13). Those appeals and Kalshi's own case are on Kalshi in New York. Novig's similar suit in another state is on Novig in Wisconsin.

No order we found stops it. Novig's Eligibility & Legality page, dated September 2, 2026 and read November 11, says Novig "is available nationwide, with the exception of Nevada, Arizona, and Michigan," judged by your physical location when you trade. It does not mention New York or the ruling.

The ruling says nothing about balances, deposits, withdrawals or open positions. There is no broker route: the complaint says no futures commission merchant may carry accounts on Novig's exchange (ECF 3, p.8, ¶20). Novig, Inc.'s separate sweepstakes product does not currently allow full redemption for people in New York, the complaint says (p.22, ¶70). Every state where Novig faces an action is on the Novig legal page.

The November 10 ruling decides whether New York's gambling laws can reach Novig's contracts, which is a state licensing question and not a ruling on federal income tax. How a Novig year comes out under the three ways we most often see people file is on Novig taxes, since the IRS has issued no guidance on event contracts.