Judge Denies Novig Injunction, Says New York May Apply Gambling Laws

U.S. District Judge Colleen McMahon denied Novig’s request for a preliminary injunction to block New York from applying state gambling laws to its sports contracts, rejecting the company’s claim that federal commodities law preempts state oversight.

McMahon found the sports event contracts are not swaps under the Commodity Exchange Act. Novig had argued federal law overrides state oversight and gives the Commodity Futures Trading Commission (CFTC) exclusive authority over event contracts.

New York may require Novig to obtain a gambling license or bar it from listing and trading sports event contracts.

The ruling comes amid separate state challenges to sports contracts on prediction markets. On Monday, Nov. 9, Missouri filed a federal counterclaim against Novig under the 2006 Unlawful Internet Gambling Enforcement Act. Missouri says wagers made without Gaming Commission approval violate state law and seeks an order preventing Novig from taking residents’ payments for unlawful online gambling. Missouri’s counterclaim against Novig is a separate legal challenge.