Navigating the flurry of legal actions surrounding prediction markets in the U.S. can be quite dizzying. This week, Novig, which recently transitioned to a sports-focused prediction market, initiated a lawsuit against the state of New York in an effort to block the enforcement of gambling laws against their operations. This legal move follows New York’s own lawsuit against Kalshi, which seeks $36 billion for allegedly operating illegally in the state. Notably, this lawsuit came just days after Kalshi’s attempt to prevent New York from pursuing legal action against them was unsuccessful.
Amid this legal turmoil, a particular statement from Novig’s lawsuit stands out, shedding light on the broader landscape of prediction market regulations. Located toward the end of the filing, it notes: "Novig, Inc.’s founders were familiar with prediction markets from the company’s earliest days and came to view that model as the better fit for Novig’s product. Novig did not initially pursue federal designation because, in the regulatory environment then prevailing, it anticipated that federal approval could take years and offered no assurance that sports-related event contracts would be permitted. Novig therefore first pursued state-by-state licensing, securing a Colorado license in October 2023, before returning that license in April 2024 and later pursuing a federally regulated prediction-market model."
The statement highlights Novig’s understanding that gaining federal approval could be a protracted process. This suggests that prediction market companies may perceive the need to adapt their strategies in navigating regulatory frameworks, prioritizing a shift in operators rather than changes in the regulatory rules themselves.
The term "regulatory environment then prevailing" likely refers to the Commodity Futures Trading Commission (CFTC) landscape shaped by the Biden administration, which positioned itself against Kalshi. The timeline of Novig’s evolution from a betting exchange established in 2021 to a prediction market by 2026, with a brief interlude focusing on sweepstakes gaming, aligns with Kalshi’s September 2024 victory in court allowing election-related betting, and the anticipated return of Donald Trump to the presidency in January 2025.
The potential shift in the regulatory landscape coinciding with Trump’s return could favor prediction market companies, particularly given his son, Donald Trump Jr., holds significant stakes in both Kalshi and Polymarket. This week, Novig's relaunch has occurred under a much more favorable regulatory climate, indicating a quicker path to federal approval than previously anticipated.
Reasons behind Novig's legal action against New York include the state's vigorous prosecution against federally regulated event-contract trading. The lawsuit states, "New York has moved aggressively against federally regulated event-contract trading within its borders, suing both KalshiEX LLC and Coinbase Financial Markets, Inc. under Executive Law § 63(12) for offering the type of contracts at issue here. Novig, having just secured its status as a Designated Contract Market ('DCM') registered by the CFTC, brings this action to prevent Defendants from doing the same to Novig."
Earlier this year, a court in New York sided with the state against Kalshi in a separate legal confrontation. That ruling was issued nearly ten months after Kalshi attempted to block enforcement of a cease-and-desist order issued by state gaming regulators in October 2025. In contrast, Novig seeks preventative judicial relief, preemptively addressing potential threats before they materialize.
Currently based in New York, Novig's valuation has reached approximately $500 million following a $75 million Series B funding round completed earlier this year. CEO Jacob Fortinsky stated, "We chose to partner with the best crypto venture firms in the world to further accelerate our plans to make Novig the most efficient and liquid sports prediction market in the world. Others are using prediction market technology to financialize new markets with unproven demand. We leverage it to fix broken markets where demand already exists."
