US District Judge Colleen McMahon has denied Novig's request for a preliminary injunction that would have prevented New York from enforcing its gambling laws against the prediction-market platform. In an order signed on 10 November, the Southern District of New York concluded at this stage of the case that Novig's sports event contracts do not qualify as swaps under the Commodity Exchange Act.
State licensing remains in play
The decision means New York may require Novig to obtain a state gambling licence or stop listing and trading sports event contracts for customers in the state. Novig had argued that its designation as a CFTC-regulated contract market gave federal law priority over state gambling rules.
The ruling is not a final judgment on every issue in the dispute, but it adds to a series of decisions favouring state authority over sports-related event contracts. The court order sets out the judge's reasoning. Prediction-market operators and affiliates should monitor the parallel state and federal cases before treating a federal market designation as permission to offer sports contracts nationwide.