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State of Play’s TL;DR
- Novig has sued Wisconsin in an attempt keep operating in the state.
- The company utilizes the argument that its sports-based contracts are federally regulated.
Novig and its parent company, Ludlow Exchange LLC, have sued Wisconsin in an effort to keep operating in the state.
The company claims its sports-based event contracts are federally regulated derivatives, not gambling under Wisconsin law.
The lawsuit adds another front to the growing fight over whether prediction market platforms should be treated like sportsbooks or like federally regulated exchanges.
Novig asks court to block Wisconsin enforcement
Ludlow Exchange filed the complaint against the Wisconsin Department of Justice after Novig entered the Wisconsin market in the first week of August. According to the suit, the company filed pre-emptively because the DOJ “could bring an enforcement action premised on the false notion that Novig is violating state gambling laws, exposing Novig to criminal liability for a Class I felony.”
The company’s core argument is that Novig does not offer gambling products. In the complaint, Ludlow said, “The field here is not gambling” and describes the business instead as “the regulation of trading on federally designated contract markets – the discrete activity over which Congress conferred exclusive jurisdiction.”
That position mirrors the broader industry argument made by other prediction market firms: that sports event contracts are derivatives overseen by the Commodity Futures Trading Commission, not bets governed by state gambling law.
Wisconsin has already sued other prediction market firms
The filing comes after Wisconsin DOJ sued three other prediction market platforms in April over alleged violations of the state’s online sports betting law. Attorney General Josh Kaul said at the time that “thinly disguising unlawful conduct doesn’t make it lawful” and added, “These companies’ alleged facilitation of sports betting in Wisconsin should be shut down.”
Those earlier lawsuits argued that transactions on prediction market platforms are indistinguishable from ordinary sports bets under Wisconsin law. Defendants in those cases, including Kalshi, Polymarket, and Coinbase, have argued they are subject only to federal CFTC regulation.
Wisconsin’s online sports betting framework is central to the dispute. Under the state’s newer law, online sports betting is legal only if required computer servers are housed on tribal land. Before that change, sports betting in Wisconsin had been legal since 2021 only in person at tribal casinos.
Based on reporting by WJFW News12.
