Sports prediction market platform Novig sued Missouri’s AG and gaming officials on Friday, one day before a 30-day window for compliance with state gambling laws was set to expire. The suit, filed in federal court, seeks injunctive relief to protect its products from the state’s intended enforcement of its sports wagering laws against Novig and five other prediction exchanges.
“Novig brings this action to enjoin Defendants from enforcing Missouri’s preempted gambling and sports-wagering laws against federally regulated transactions that Congress placed within the exclusive jurisdiction of the [CFTC],” states a copy of the lawsuit shared by expert gaming attorney Daniel Wallach.
Novig’s federal lawsuit is in reaction to a September 16th cease-and-desist letter issued by Missouri Attorney General Catherine L. Hanaway to six separate prediction market platforms. In the letter, the Missouri AG requested a confirmation of “Novig’s compliance with Missouri law or its cessation of sports wagering activities in the State of Missouri within thirty days of the date of this letter.”
By seeking to enjoin Missouri officials from enforcement, Novig ensures that it remains temporarily immune to the state’s legal actions against its sports contracts until the Eastern District of Missouri federal court grants or denies injunctive relief.
According to the CFTC, prediction market sports contracts are legal in all 50 states due to the “exclusive jurisdiction” that the agency claims over prediction exchanges. However, that claim is being challenged by multiple state and tribal entities across the country that claim that sports contracts are actually sports bets “in disguise.”
Currently, there is a circuit split between the Third Circuit Court of Appeals and the Sixth and Ninth Circuit Courts of Appeals on whether sports contracts are “swaps” that fall under federal jurisdiction or “sports bets” that must be authorized by state gaming officials.
The legal battle over the categorization of sports contracts is particularly acute for Novig given that the platform doesn’t offer event contracts for outcomes linked to politics, culture, entertainment, or global affairs. Novig is also the only CFTC-regulated prediction market that prohibits any individual under the age of 21 from trading on its platform.
Missouri is geographically located within the Eighth Circuit Court of Appeals’ jurisdiction, which includes Arkansas, Iowa, Minnesota, Nebraska, North Dakota, and South Dakota. Once a federal court issues a ruling that grants or denies Novig injunctive relief against Missouri gaming officials, the losing party will have the right to automatically appeal the decision.
This puts Novig and Missouri on a clear course for an Eighth Circuit Court of Appeals showdown that could take place midway through the 2027 calendar year. The Eighth Circuit is already slated to hear a separate case involving Kalshi versus Iowa, with that timeline likewise falling within the spring to fall months of next year.
Since a circuit split on the legal classification of prediction markets already exists, the Supreme Court remains the most likely venue for a final decision on whether sports contracts are subject to state or federal regulatory jurisdiction.
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