- Novig filed Aug. 14 in the Western District of Wisconsin, its fifth suit against a state in 10 days.
- The complaint asks that Wisconsin’s commercial gambling statute, a Class I felony, be declared preempted as applied.
- A federal judge in Wisconsin denied the CFTC that same relief on July 29, finding preemption unlikely.
- Wisconsin licenses no non-tribal sports wagering, leaving exclusion as Novig’s only route to avoid felony exposure.
MADISON, Wisc. – Ludlow Exchange LLC, which operates the sports prediction market Novig, sued Wisconsin Attorney General Josh Kaul on Aug. 14 in its fifth suit against a state in 10 days, asking a federal judge to declare Wisconsin’s gambling statutes preempted by federal commodities law.
Novig Went Live In Wisconsin, Then Sued Before Enforcement Arrived
Novig began offering contracts to customers in Wisconsin in the week before it sued. The 45-page complaint names Kaul and John Dillett, administrator of the state Department of Administration’s Division of Gaming, in their official capacities, and pleads a single claim under the Supremacy Clause.
It asks for a preliminary and permanent injunction barring enforcement of Wis. Stat. 945.01, 945.03(1m)(b), (c) and (g) and the public nuisance provisions at 823.01 and 823.02, plus a declaration that all of them are preempted as applied to contracts traded on a designated contract market. Section 945.03(1m) makes commercial gambling a Class I felony. Novig asked the court to take up the injunction on an expedited basis.
The theory is that event contracts are “swaps” under 7 U.S.C. 1a(47)(A)(ii) and that Congress gave the Commodity Futures Trading Commission exclusive jurisdiction over swaps traded on a designated contract market under 7 U.S.C. 2(a)(1)(A). The CFTC designated Ludlow Exchange a contract market on June 16.
A Wisconsin Judge Already Refused The CFTC On Preemption
On July 29, U.S. District Judge William C. Griesbach of the Eastern District of Wisconsin denied the CFTC a preliminary injunction against the same state, finding the agency unlikely to show either that sports event contracts are swaps or that the Commodity Exchange Act preempts Wisconsin’s gambling statutes.
The complaint cites the Third Circuit’s ruling in KalshiEX LLC v. Flaherty and district decisions from Minnesota, Arizona and Tennessee. It does not cite that Wisconsin decision.
Griesbach also refused to let Kalshi and Crypto.com’s derivatives arm intervene as plaintiffs. Weighing the equities, he wrote that the regulated entities, not the agency, stood to lose the most if no injunction issued, which would make them “as opposed to the CFTC, the proper parties to challenge the State’s enforcement of its statutes.” Novig’s filing is that challenge, brought by an exchange rather than the agency, and in the Western District rather than the Eastern, where Griesbach’s decision does not bind.
Kaul brought Wisconsin’s own cases on April 23 in Dane County Circuit Court, when Wisconsin sued prediction markets for illegal betting under the same statute Novig now challenges. Kalshi, Polymarket and Crypto.com removed all three to the Western District the next day, and motions to send them back to state court for lack of federal jurisdiction are still pending there.
No Non-Tribal License Exists For Novig To Take Instead
Wisconsin runs no state sports wagering licensing regime and has licensed no non-tribal mobile operator. Act 247, signed April 9, removed from the statutory definition of a bet only those electronic wagers conducted on servers sited on tribal lands under a compact originally entered before April 1, 1993. Legal Wisconsin sports betting therefore exists only under tribal compacts, at the books the tribes operate.
The Division of Gaming licenses casino operators, management and holding companies, key and casino gaming employees, and gaming-related vendors, and nothing else, according to the complaint. Prediction markets are not sportsbooks, and Novig holds none of the state approvals behind legal sports betting in licensed markets, so on Wisconsin’s reading of its law the only way to avoid felony exposure is to shut the state’s residents out.
The Other Four Suits, Filed Aug. 5 And Aug. 6
Novig relaunched nationwide on Aug. 4, sued New York the next day, then Massachusetts, New Mexico and Washington on Aug. 6, according to the federal dockets in each district.
The case is Ludlow Exchange LLC v. Kaul, No. 3:26-cv-00761, in the Western District of Wisconsin.
