Novig sues Missouri to shield sports event contracts

The Novig Missouri lawsuit opens a new front in the fight over sports prediction markets. Ludlow Exchange, the Novig subsidiary that runs its exchange, went to federal court in the Eastern District of Missouri on Oct. 16, suing Attorney General Catherine Hanaway and the two top officials of the Missouri Gaming Commission, a day before the state's deadline to stop serving residents or get a gaming license.

What happened

Novig is asking for preliminary and permanent injunctions and a declaration that Missouri's gambling and sports-wagering laws are pre-empted when applied to its contracts, Predictable reported. Its central claim is that its contracts count as swaps under federal commodities law, which would put trading on its exchange under the Commodity Futures Trading Commission's exclusive jurisdiction.

The deadline came from a Sept. 17 cease-and-desist letter that gave Novig 30 days to comply. The Missouri attorney general's office sent similar letters to Polymarket, Kalshi, Crypto.com, Underdog and Robinhood, saying event contracts do not qualify as swaps. "Companies cannot repackage sports bets as 'event contracts' to avoid Missouri law," Hanaway said.

Crypto.com sued the same day but chose the Western District, so the two cases cannot land with the same judge, gaming lawyer Daniel Wallach said, according to Covers.

Missouri voters approved sports betting through Amendment 2 in 2024, placing oversight with the Gaming Commission and allowing wagers through licensed mobile platforms and in person. Hanaway's office argues that federal courts have already found such platforms subject to state gambling law and that federal law does not pre-empt it.

Why it matters

Novig does not dispute that Missouri can regulate gambling generally. Its point is narrower: contracts listed on an exchange the CFTC has designated cannot be treated by the state as unlawful sports bets, and warns that continued operation could expose it to criminal liability and civil penalties. The CFTC designated Ludlow Exchange as a contract market on June 16.

Novig formed Ludlow Exchange in October 2025 and says it is bound by the CFTC's 23 core principles. Sports betting lawyer Daniel Wallach highlighted that the complaint calls the contracts "quintessential swaps" under federal law, a question the court has not yet decided.

The company also argues that state licensing would shrink the pool of buyers and sellers on its peer-to-peer model, since users trade against each other and Novig does not take the other side, Crypto Times reported. The attorney general flagged age-verification gaps at five of the six platforms but not at Novig, whose rules limit trading to users 21 and older.

Missouri's licensed market launched on Dec. 1, 2025, taxing operators at 10% of gross sports betting receipts. Novig drew $125 million of volume in its first week in August, Covers said. The case lands after Kalshi's earlier talks with Missouri and while the industry presses the Supreme Court to settle the question.

What's next

Appeals courts are split. The Sixth and Ninth circuits have sided with states and the Third Circuit with prediction markets, Covers noted. Any appeal from the Novig Missouri lawsuit would go to the Eighth Circuit, which has yet to rule on a prediction market case.

The immediate question is whether a judge grants preliminary relief before Missouri moves to enforce. Polymarket, Kalshi, Underdog and Robinhood had not filed similar suits in the reports reviewed, and their next steps will shape how the Novig Missouri lawsuit plays out.