Novig loses court shield, and New York gambling laws strike back

Novig appealed after a federal judge denied protection from New York gambling laws for sports contracts on its CFTC-designated exchange.

Sports event-contract exchange Novig was denied preliminary protection from New York's gambling laws on Nov. 10, with a federal judge concluding that the sports contracts at issue remained subject to state rules despite its federal exchange designation.

The opinion goes beyond whether those contracts qualify as swaps under federal commodities law. The judge reasoned that even assuming they do, New York could still apply its gambling rules to the betting activity.

Novig filed a notice of appeal to the US Court of Appeals for the Second Circuit that same day, challenging the denial of its preliminary-injunction request.