Judge Colleen McMahon Rules Novig Sports Contracts Are Betting, Not Swaps
Decision allows New York regulators to enforce state gambling law after CFTC criticism.
Key Takeaways
- Judge Colleen McMahon ruled on November 10 that Novig's sports event contracts do not qualify as financial swaps.
- Novig received CFTC approval as a designated contract market in June 2026 and began offering sports contracts in New York in August.
- The court rejected Novig's request to block New York gambling regulators and left state enforcement available.
- McMahon criticised the Commodity Futures Trading Commission and said a CFTC order "smacks of a collusive effort."
- Novig has appealed the decision.
A New York federal judge has ruled that Novig's sports event contracts do not qualify as financial swaps, allowing New York gambling regulators to pursue enforcement against the prediction market operator. US District Judge Colleen McMahon issued the decision on November 10 and rejected Novig's request to block state regulators from acting. McMahon also criticised the Commodity Futures Trading Commission for its handling of prediction market cases.
Court finds Novig contracts fall outside federal swaps definition
The court concluded Novig's sports event contracts lack the required financial or commercial connection to meet the federal definition of swaps under the Commodity Exchange Act. Novig received CFTC approval to operate a designated contract market in June 2026 and began offering sports prediction contracts in New York in August. The company had argued the Commodity Exchange Act granted the CFTC exclusive authority over its products; McMahon disagreed.
"The Court is not required to disregard common sense – Novig's sports event contracts are sports betting," McMahon wrote.
McMahon compared the customer experience on Novig with traditional sportsbooks such as FanDuel, noting that although prediction markets match buyers and sellers rather than taking bets directly, customers still wager on sports outcomes. The ruling leaves New York able to require Novig to obtain a sports betting licence or to stop offering the contracts to state residents.
Criticism of the CFTC and related agency action
McMahon criticised the Commodity Futures Trading Commission for taking conflicting positions on sports event contracts and questioned an agency order that directed rival platform Kalshi to continue operating while New York pursued legal action. The judge wrote that the CFTC order "smacks of a collusive effort" between the regulator and a regulated company to create an argument that federal law overrides state gambling rules.
The decision adds to a wider legal conflict between state gambling regulators and federally registered prediction market operators, including Kalshi and Polymarket. Courts across several states have reached different conclusions about whether federal commodities law displaces state sports betting restrictions. The ruling itself is the subject of appeal: Novig has appealed McMahon's decision.
Market and regulatory implications
The ruling specifically enables New York regulators to enforce state gambling statutes against Novig rather than treating the contracts as federally pre-empted swaps. The court did not issue an immediate statewide shutdown order in the decision; enforcement tools and licensing requirements remain available to state authorities. For coverage of regulatory responses and industry reaction see the regulation and sports sections.
Frequently Asked Questions
Why did the New York court rule Novig's contracts are not swaps?
The court found Novig's sports event contracts lack the financial or commercial connection required to qualify as swaps under the Commodity Exchange Act. US District Judge Colleen McMahon wrote on November 10 that the contracts are effectively sports betting and therefore subject to state gambling law.
When did Novig start offering sports prediction contracts in New York?
Novig began offering sports prediction contracts in New York in August 2026 after receiving CFTC approval to operate a designated contract market in June 2026.
What did the judge say about the CFTC's conduct?
Judge McMahon criticised the Commodity Futures Trading Commission for taking conflicting positions and questioned an agency order involving Kalshi, writing that the order "smacks of a collusive effort" between the regulator and a regulated company.
Does the ruling immediately shut Novig down in New York?
The decision allows New York regulators to enforce gambling laws against Novig but did not itself constitute a final statewide shutdown order. The court left state enforcement and licensing options available while Novig has appealed the ruling.
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About the author
Tessa Coleman
Betting Markets Correspondent
Tessa Coleman covers betting products and markets — sportsbook launches, odds and trading technology, and the fast-growing prediction-market space from regulated exchanges to event contracts. The stories lead with the product or the ruling, name the operators and platforms precisely, and translate trading jargon into what bettors can actually do. When a book reworks its pricing or a prediction market wins a license fight, Tessa Coleman explains the mechanics and the stakes.
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