Novig asks federal court to block Wisconsin gambling case

Novig and its parent, Ludlow Exchange, have filed a federal lawsuit seeking to stop Wisconsin Attorney General Josh Kaul from enforcing the state’s gambling laws against Novig’s prediction-market business. The company wants a judge to bar Kaul from acting against its transactions in Wisconsin and to declare the state law pre-empted by federal rules.

According to the Wisconsin Law Journal, the suit was brought by Ludlow Exchange LLC and Novig. The complaint says the risk of enforcement is severe enough to be existential and could expose the company to criminal liability under Wisconsin law.

Novig’s core argument is that its sports-based event contracts are traded on federally regulated marketplaces, so Wisconsin cannot treat them as ordinary gambling. It says Congress gave the Commodity Futures Trading Commission exclusive jurisdiction over trading on federally designated contract markets, while the state remains free to license and police sportsbooks, casinos and other gambling outside that federal system.

Kaul has taken the opposite view. In April, he sued other prediction-market companies, arguing that they were skirting Wisconsin’s gambling laws and allowing people to place illegal bets. He has said that thinly disguising unlawful conduct does not make it lawful, and that the companies’ platforms are effectively facilitating sports betting in Wisconsin.

The dispute also turns on Wisconsin’s own gambling rules. Kaul has argued that sports betting can happen only in state-regulated sportsbooks run by Wisconsin’s tribes, and that, except in limited circumstances, commercial gambling has long been illegal in the state. The Wisconsin Department of Justice has also said online sports betting is illegal unless the required computer servers are located on tribal land.

Wisconsin’s law on online sports betting was signed in April and legalized the practice only on that condition. Before that, sports betting had been legal in the state since 2021 only in person at tribal casinos.

Novig entered the Wisconsin market in the first week of August. The company says it filed suit because the threat of an enforcement action was large enough to justify going to federal court before the state moved against it.

The case arrives amid a wider national fight over prediction markets such as Kalshi and Polymarket. Wisconsin’s Justice Department has already sued Kalshi, Robinhood, Coinbase, Polymarket and Crypto.com, and Novig has also filed similar cases against attorneys general in Massachusetts and New York.