New York judge rejects Novig contracts and questions the CFTC
McMahon ruled Novig’s sports contracts are betting; regulators can require a sportsbook licence.
Key Takeaways
- Judge Colleen McMahon ruled on 10 November that Novig’s sports-event contracts are not swaps and denied Novig’s request to block New York regulators.
- Novig received CFTC approval in June 2026 as a designated contract market and began offering sports prediction contracts in New York in August 2026.
- McMahon criticised the Commodity Futures Trading Commission for inconsistent positions and for an order involving Kalshi.
- The decision allows New York regulators to require a sports-betting licence or to prohibit Novig from offering contracts to state residents; Novig has appealed.
The federal court in New York ruled against Novig and authorized state regulators to pursue action against the prediction-market operator for offering sports-event contracts in the state. U.S. District Judge Colleen McMahon issued the ruling on 10 November and denied Novig’s request to block action by New York gaming regulators [regulators](/regulation).
The decision and its reasoning
McMahon found that the sports contracts Novig offered do not fit the federal definition of swaps under the Commodity Exchange Act. The company had received approval from the Commodity Futures Trading Commission in June 2026 to operate as a designated contract market and began offering sports prediction contracts in New York in August 2026; nevertheless, the court concluded that sports outcomes lack the necessary financial or commercial connection to qualify as swaps.
"The Court is not required to disregard common sense – Novig’s sports event contracts are sports betting," McMahon wrote.
The judge also denied Novig’s request to enjoin state regulatory action, leaving New York able to require the company to obtain a sports-betting licence or to cease offering these contracts to state residents.
CFTC and the Kalshi conflict
McMahon criticized the role of the Commodity Futures Trading Commission (CFTC) for taking inconsistent positions on prediction markets. In her 10 November opinion she questioned an agency order that instructed rival platform Kalshi to continue operating while New York litigated.
McMahon said the CFTC order "smacks of a collusive effort" between the regulator and a regulated company to construct an argument of federal preeminence.
The court rejected the notion that federal approval of a prediction market automatically shields its sports contracts from state enforcement.
Consequences for Novig and the sector
Novig has filed an appeal of the decision. The ruling adds to the legal conflict between state regulators and federally registered operators, naming Kalshi and Polymarket among other firms facing similar disputes; courts in multiple states have reached differing conclusions on whether the federal commodities law preempts state sports-betting restrictions. The evolving litigation is being tracked in industry coverage [news](/news) and will affect how operators market similar products in regulated sports markets [sports](/sports).
The judgment did not issue an immediate statewide shutdown order, but it authorizes New York regulators to impose licensing requirements or to stop marketing Novig’s sports contracts. Novig, the CFTC, Kalshi and Polymarket now sit at the centre of a legal axis that will continue to develop through appeals and new lawsuits.
Frequently Asked Questions
Why did the court say Novig’s contracts are not swaps?
The court found that the sports contracts lack the financial or commercial connection required to be classified as swaps under the Commodity Exchange Act. Judge Colleen McMahon wrote on 10 November that, as a matter of common sense, the contracts function as sports betting.
What role did the CFTC play in the case?
The Commodity Futures Trading Commission approved Novig as a designated contract market in June 2026 and was criticised by McMahon for taking contradictory positions. The judge questioned a CFTC order that allowed Kalshi to continue operating while New York’s litigation proceeded.
Can Novig keep operating in New York after the ruling?
The ruling did not immediately shut Novig down statewide, but it allows New York regulators to require Novig to obtain a sports-betting licence or to stop offering the contracts to residents. Novig has filed an appeal against the decision.
Which other platforms are facing similar disputes?
The decision places Kalshi and Polymarket among federally registered operators that have faced litigation with state regulators. Courts across different states have issued mixed rulings on whether federal commodities law preempts state sports-betting restrictions.
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About the author
Renata Quiroga
Betting Markets Correspondent
Renata Quiroga covers sports betting and prediction markets — sportsbook launches, odds technology, event contracts, and the regulatory calls that decide what can be bet on and where. The reports open with the product or the ruling, name operators and platforms precisely, and explain the mechanics without needless jargon. When a book enters a Latin American market or a prediction exchange lists a contested contract, Renata Quiroga reports what changes for the bettor.
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