New York Judge Refuses Novig Injunction and Rules Its Contracts Are Not Swaps

Judge Colleen McMahon went a step further than the court in Kalshi's New York case, deciding that Novig's sports contracts fall outside the federal definition of a swap altogether. New York may now require the exchange to hold a state licence or stop listing them, and the CFTC's own carve-out for sportsbooks became part of the case against it.

• Judge Colleen McMahon of the US District Court for the Southern District of New York denied Novig a preliminary injunction on 10 November, three months after the exchange sued the Attorney General and the New York State Gaming Commission
• She held that Novig's sports event contracts are not swaps under the Commodity Exchange Act, so the CFTC's exclusive jurisdiction does not reach them
• In the alternative, she found that even swaps would not be shielded from New York's gambling and sports wagering laws
• The judge gave the CFTC no deference, calling its sportsbook carve-out and its swap proposal "inherently contradictory"
• The ruling follows the Second Circuit's refusal of injunctions to Kalshi and Coinbase on 3 November, while Novig presses the same argument in Missouri and four other states

A Manhattan Court Finds Novig's Contracts Fall Outside Federal Swap Law

Ludlow Exchange, LLC, which trades as Novig, sued in August, naming Attorney General Letitia James, Gaming Commission executive director Robert Williams, chair Brian O'Dwyer and six other commissioners. Judge McMahon refused it a temporary restraining order on 11 August. Her 35-page opinion and order in case No. 1:26-cv-06676 was filed on 10 November.

Novig, a CFTC-designated contract market since 16 June 2026, began offering sports contracts in New York in August. Listing its markets on the Giants and Eagles game of 8 November, from spreads to parlays and player props, the judge found the contracts "bear more than a passing resemblance to sports betting", available equally on FanDuel and BetMGM.

She accepted that the contracts depend on an "event or contingency", as the Third and Sixth Circuits have held, but found they fail the second requirement. Read alongside the rest of the swap definition, which deals with rates, currencies and commodities, "associated with" must mean events inherently tied to financial consequences, following the Sixth and Ninth Circuits. Novig offered hotel hedging only as a hypothetical, she noted, and a broader reading would make betting off federal exchanges a federal crime and cut across the Indian Gaming Regulatory Act, a point pressed by 24 tribes and tribal organisations as amici.

Even as Swaps, the Contracts Would Not Escape State Law

In case "a higher court disagrees", the judge read the grant of "exclusive jurisdiction", with its savings clause, as covering the licensing and operation of contract markets, not the incidental application of state gambling law. Field preemption failed because Congress expressly preempted state gaming law elsewhere in the Act, for a narrow class of swaps, and not here. Conflict preemption failed because Novig could seek a New York licence, having held and returned one in Colorado, and geofence. FanDuel offers its sportsbook in 24 states, she noted, and "there is no reason that Novig could not follow that same model".

She said the CFTC's 11 August order telling Kalshi to keep operating "smacks of a collusive effort between a regulator and regulatee", and noted that the CFTC's current rule bars listing gaming contracts. Novig had not said publicly by 11 November whether it would appeal; an injunction denial can go straight to the Second Circuit, the route Kalshi took after Judge Analisa Torres refused its New York injunction.

The Threshold Ruling Is the Heavier Blow

Judge Torres assumed without deciding that Kalshi's contracts were swaps. Judge McMahon decided the threshold question against the exchange and kept the preemption analysis as a fallback. That gives the Second Circuit merits panel, which has yet to set argument in the Kalshi and Coinbase appeals, two routes to the same result, and adds a Manhattan court to the Sixth and Ninth Circuits' narrow reading against the Third Circuit's broad one.

The CFTC's Sportsbook Carve-Out Was Turned Against the Exchanges

The interim rule that took sportsbook wagers out of the swap definition was meant to separate licensed betting from exchange contracts. The judge turned it around: if a FanDuel wager is not a swap and the customer sees no difference, a Novig contract cannot be one either, because "who is on the other side of the bet is simply not a difference that makes a difference". Declining to defer, she called the carve-out and the swap proposal "inherently contradictory" and said the agency's change of position "appears calculated to influence the outcome of the ongoing litigation".

Novig's Own Words Did Much of the Work

The opinion quotes Novig and its chief executive saying the company's "north star is to be the largest sports betting platform in the world" and that its mission is "to democratize and financialize sports betting". With the Colorado licence and a New York Mets partnership, those statements let the judge conclude that "Novig's sports event contracts are sports betting". Novig is making the same case in Missouri, where the state has counter-sued under the Unlawful Internet Gambling Enforcement Act, and has sued officials in Massachusetts, Washington, New Mexico and Wisconsin, according to federal court records.

New York has a federal ruling that lets it treat Novig as an unlicensed sportsbook, and the exchange's choice is now between an appeal and a licence. The CFTC's attempt to settle the question by rulemaking carried no weight in this court, which leaves it to the Second Circuit and probably the Supreme Court.