On Nov. 10, a federal judge denied sports event‑contract exchange Novig a preliminary injunction against New York’s gambling laws, ruling that the contracts remain subject to state regulation even though the CFTC has designated Novig as a contract market.
The decision addresses more than whether the contracts qualify as swaps under the Commodity Exchange Act. Judge McMahon held that even if they were swaps, New York’s gambling statutes could still apply to the betting activity conducted on the exchange.
Novig filed an immediate appeal with the U.S. Court of Appeals for the Second Circuit, challenging the denial of its preliminary‑injunction request.
The case highlights the distinction between federal authority to operate a designated contract market and state authority to enforce sports‑betting regulations.
According to the opinion, the Commodity Futures Trading Commission (CFTC) designated Novig as a contract market on June 16, and the firm began offering New York sports contracts on Aug. 4.
The court’s preliminary swaps finding and its alternative assumed‑swaps analysis converge on application of New York gambling rules.
CFTC‑DESIGNED EXCHANGE: Novig’s sports contracts
COURT’S PRELIMINARY FINDING: Outside the swaps definition; Federal exclusivity claim falls away for the contracts at issue.
ALTERNATIVE ASSUMPTION: Assume the contracts are swaps; NY gambling rules can still apply; Direct exchange licensing and operation stay federal.
New York gambling rules can apply; Novig’s preliminary‑injunction request denied; NOV. 10, 2026 · INTERIM RELIEF · FEDERAL DESIGNATION RETAINED
Both legal routes lead to denial of interim protection; Solid paths show the preliminary finding; dashed paths show the alternative assumed‑swaps analysis.
At the preliminary stage, Judge McMahon first concluded that the contracts fall outside the CEA’s definition of swaps. She reasoned that the contracts lacked the requisite financial, economic or commercial connection, even though sporting outcomes could be considered events or contingencies.
Assuming the contracts were swaps, the court found that the CFTC’s exclusive jurisdiction over designated contract markets does not preclude New York from applying its gambling rules to the betting activity. This second rationale also defeats Novig’s claim for federal protection.
The judge also rejected Novig’s argument that complying with both federal and state requirements was impossible. She noted that the exchange could obtain state licensing and use geographic controls to satisfy New York’s gambling regime.
A comparable line of reasoning was employed in the Sixth Circuit’s Kalshi litigation, and the court applied it to Novig’s request for relief against New York officials.
The Nov. 10 order denies interim relief while leaving Novig’s federal exchange designation intact. The ruling is limited to the preliminary‑injunction motion and does not address any broader shutdown or final merits determination.
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