TLDR A federal judge denied Novig’s request to block New York from applying its gambling laws. Judge Colleen McMahon said Novig’s sports contracts “are sports betting.” She said the CFTC’s emergency order for Kalshi “smacks of a collusive effort.” Novig appealed to the Second Circuit within hours of the Nov. 10 ruling. Kalshi’s response to New Jersey’s Supreme Court petition is due Dec. 7.
A federal judge in Manhattan has sharply criticized the Commodity Futures Trading Commission over an emergency order it issued to protect Kalshi. The comments came in a ruling against Novig, another prediction market.
U.S. District Judge Colleen McMahon denied Novig’s request for a preliminary injunction against New York on Nov. 10. The decision lets the state keep applying its gambling laws to Novig’s sports contracts.
Novig filed a notice of appeal to the Second Circuit just hours after the ruling. The case joins a growing list of legal fights over who regulates sports event contracts.
Judge Takes Aim at the CFTC
In August, after New York sued Kalshi, the CFTC used its emergency powers to order the company to keep operating. That order followed an Aug. 1 notice from Kalshi itself warning of a “market emergency” if New York won a restraining order.
The CFTC said a sudden shutdown posed “an existential threat to the Commission’s registrants, marketplaces, and regulatory jurisdiction.” Novig pointed to the order as proof that state and federal law were in direct conflict.
McMahon rejected that argument. She wrote that the order “smacks of a collusive effort between a regulator and regulatee to generate a claim for conflict preemption.” She added that the CFTC’s own rules bar gaming-related event contracts, making the conflict “a mirage.”
The judge also questioned two CFTC rulemakings published on Oct. 19. One proposed defining