Novig Sues Four States In First Week Offering Prediction Markets

• During its first week offering predictions markets, Novig has sued four states to prohibit them from enforcing state gambling laws
• Novig has sued New York, New Mexico, Massachusetts, and Washington
• All four states have taken preemptive legal action against prediction market operators within the last year

Less than a week after it began offering sports event contracts, Novig has filed four lawsuits against states that have taken legal action against prediction market operators within the last year.

One day after launching its new prediction market offerings, Novig filed a lawsuit in federal court to potentially prohibit New York from enforcing its gambling laws against its markets. Since then, Novig has filed three other lawsuits in Massachusetts, New Mexico, and Washington.

All four of these states have either filed for temporary restraining orders or preliminary injunctions against prediction market operators in 2026.

Preliminary Action Against State Gambling Laws

Each of the four Novig lawsuits are centered around the same premise. The now prediction market operator believes its sports event contracts can only be regulated by the federal government and the Commodity Futures Trading Commission (CFTC), which precludes its markets from being enforced by state gambling laws.

In its lawsuits, Novig requests preliminary injunctions to prohibit the states from enforcing their gambling laws and regulations against its prediction market offerings. Each of these states, Novig counsel notes, will likely take legal action against the company to threaten the CFTC’s exclusive jurisdiction over event contracts.

“Despite the CFTC’s exclusive jurisdiction over event contracts, Novig expects that New York will imminently bring an enforcement action against it along the same lines as the other lawsuits that Defendants have already brought against similarly situated parties. New York’s threatened enforcement of its laws is preempted several times over,” counsel wrote in its New York lawsuit.

According to Daniel Wallach, a gaming law attorney, Founder of Wallach Legal and UNHLaw Sports Wagering, Novig’s prospects for its lawsuits may not be great, but allows the company to operate for up to 90 days without legal action in these four states, plus potential extensions for appellate reversals.

Four States Take Action

Massachusetts, New Mexico, New York, and Washington have all shown aggressiveness in state and federal courts when it comes to defending their perceived rights to enforce state gambling laws against what they view as illegal forms of gaming.

In late July, the State of Washington secured a preliminary injunction against prediction market operator Kalshi after Washington Attorney General Nick Brown filed a lawsuit against the company in March.

State of Washington King County Superior Court Judge John McHale declared the state has shown a “likelihood of success on the merits” of its claims that portions of Kalshi’s event contract offerings, including sports event contracts, violates aspects of the Washington Gambling Act. When issued, the preliminary injunction will temporarily bar Kalshi from offering its sports event contracts in Washington.

New York has also vied with DCMs over the past year for regulatory control, most recently filing a lawsuit against Kalshi seeking $36 billion from the company for alleged illegal gambling.

After courts denied Kalshi emergency relief in July, New York Gov. Kathy Hochul (D) and Attorney General Letitia James announced a lawsuit against the company, alleging the platform runs an illegal gambling operation in the Empire State.

“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” Hochul said in a released statement. “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”

Massachusetts also filed a lawsuit last September against Kalshi for promoting and accepting online sports bets in the commonwealth without following state sports betting laws or having a license to do so.

The lawsuit alleges Kalshi’s sports event contracts bypass key consumer protections that are required of licensed sports betting operators. Kalshi has not undergone the necessary comprehensive processes required by the MGC to ensure its operations are in alignment with state regulations. Kalshi also allows users between the ages of 18 and 21 to trade contracts on its platforms, when the legal age for sports betting in the state is 21.

New Mexico has also become a crowded legal battleground for prediction markets. Attorney General Raúl Torrez announced in June the New Mexico Department of Justice (DOJ) filed a lawsuit against Kalshi, Inc., and KalshiEX LLC, alleging the prediction market company operates illegal sports betting in the state.

“New Mexico has a longstanding and carefully balanced system for regulating gaming that protects consumers, ensures accountability, and respects tribal sovereignty,” Attorney General Torrez said in a released statement. “The only lawful gaming in New Mexico operates either under tribal-state gaming compacts, or under strict state regulations to ensure honest gaming free from corruption, and licenses gaming operators only after they explain how they plan to address compulsive gambling. Kalshi has ignored that framework entirely while offering online sports betting within the state. We are filing this lawsuit to protect the integrity of our laws, our regulatory system, and most importantly, consumers.”

In response, Polymarket officials sued several New Mexico Gaming Control Board members, as well as Attorney General Torrez, in direct response to the state’s lawsuit against Kalshi. Polymarket filed its lawsuit in U.S. District Court for the District of New Mexico.

“This action seeks to prevent imminent and irreparable harm arising from New Mexico’s enforcement of state gambling laws against federally regulated derivatives exchanges—enforcement Congress has expressly prohibited. Plaintiff QCX LLC d/b/a Polymarket US operates a lawful, nationwide designated contract market subject to the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC),” counsel for Polymarket wrote in the lawsuit.

The CFTC also filed a lawsuit in federal court against the state of New Mexico after its legal action against Kalshi.