Novig sues Wisconsin, the state where the CFTC has already lost

What happened

Ludlow Exchange, LLC, trading as Novig, filed a 45 page complaint for declaratory and injunctive relief in the United States District Court for the Western District of Wisconsin on 14 August 2026, case 3:26-cv-00761, against Joshua L. Kaul in his official capacity as Attorney General of Wisconsin and John Dillett in his official capacity as Administrator of the Wisconsin Department of Administration Division of Gaming. The docket carries two entries, the complaint and a corporate disclosure statement, both filed on the 14th; no judge is assigned, no preliminary injunction motion has been filed and no defendant has responded. The nature of suit is recorded as securities and commodities and the cause as federal commodity exchange regulation. The complaint asks the court to declare that the Commodity Exchange Act preempts Wisconsin's commercial gambling and public nuisance statutes as applied to event contracts traded on a designated contract market, to enjoin the two officials from enforcing them against Novig under Ex parte Young, and it seeks 'expedited consideration of its request for a preliminary injunction' because the threat of enforcement is, in its words, 'imminent and existential to Novig's business operations'. The premise is set out at paragraph 4: Novig, Inc. was founded in 2021, formed Ludlow Exchange on 14 October 2025 for the single purpose of operating a designated contract market, and 'began offering these event contracts to customers located in Wisconsin last week'. The CFTC designated it on 16 June 2026. Nothing has been brought against it in Wisconsin; what the complaint pleads is imminence, from what the state did to others. On 23 April 2026 the Wisconsin Department of Justice filed three civil actions in Dane County Circuit Court, against Kalshi, against Blockratize, which is Polymarket, and against Foris DAX Markets, which is Crypto.com, and its own press release of that day says it is suing 'Kalshi, Robinhood, Coinbase, Polymarket, Crypto.com, and their affiliates, to halt their alleged facilitation of illegal sports betting'. The attorney general is quoted in it saying that 'Thinly disguising unlawful conduct doesn't make it lawful' and that 'These companies' alleged facilitation of sports betting in Wisconsin should be shut down'. This is the fifth suit Novig has brought against a state officer since 4 August: the Southern District of New York against Letitia James on the 4th, then the District of New Mexico against Raul Torrez, the Western District of Washington against Nick Brown and the District of Massachusetts against Andrea Campbell, all three on the 6th, and Wisconsin on the 14th. The Block, which reported the filing on 16 August, notes that Novig lists only sports contracts and declines news events, that it requires participants to be at least 21, and quotes its chief executive and co-founder Jacob Fortinsky telling WIRED that 'There's a broader reckoning coming with the younger traders', whom he describes as particularly susceptible to acting irresponsibly. Wisconsin officials had not responded to the complaint or to requests for comment.

Why it matters

The court in this state has already said who should be bringing this case. On 28 July 2026, in United States of America and Commodity Futures Trading Commission v. State of Wisconsin, case 26-C-749 in the Eastern District, Judge William Griesbach denied the federal government a preliminary injunction against exactly the enforcement Novig now fears, and denied it on every element. He held the CFTC unlikely to prevail even on the threshold question of whether sports event contracts are swaps, declining to follow the divided Third Circuit panel in Flaherty; he held that Wisconsin's 'gambling statutes do not conflict with federal commodities regulations and are not preempted by them'; and on irreparable harm he wrote that 'the regulated entities, rather than the CFTC, would be the proper plaintiffs to challenge the State's enforcement of its statutes and to allege irreparable harm from the risk of enforcement'. The Commission filed a notice of appeal on 7 August. Seven days after that, a regulated entity filed the suit the order described, in the other district of the same state, before judges bound by the same Seventh Circuit. That is not a coincidence to be pointed out later; it is the reason this particular filing is worth reading. The second thing is the licence, and it settles a question the last month of coverage has been circling. The CFTC's Order of Designation of 16 June 2026 approves Novig subject to three conditions, and the third is that Novig 'may not permit any futures commission merchant to intermediate any transactions or carry accounts for customers executing trades on or pursuant to the rules of the Exchange unless this Order of Designation has been amended'. The complaint restates it at paragraph 21: the model is non-intermediated, contracts trade on an anonymous electronic central limit order book, and they are cleared on a fully collateralized basis by a clearing house. So the distribution layer the City of Baltimore attacked on 13 August, pleading that Webull, Robinhood and Coinbase each take a fee alongside Kalshi on contracts sold through their hubs, and the layer Wisconsin attacked four months earlier, does not exist at this venue because the regulator forbade it in the instrument that created the venue. A condition in a designation order has done more to shape a new entrant's market structure than any rule the Commission has proposed. That cuts two ways for the industry: it makes the newest exchange immune to the theory that is currently the most dangerous one to the largest, and it also means the newest exchange has no distribution and must acquire its users one at a time. A correction is owed here, and it belongs in current copy rather than in a silent edit of a published page. On 14 August this corpus wrote of the Baltimore complaints that every previous action on this beat had gone at the venue and that this one went at the layer selling to retail. Wisconsin got there on 23 April. Its Kalshi complaint names Robinhood Markets, Robinhood Derivatives, Robinhood Securities, Coinbase Global and Coinbase Financial Markets as defendants alongside five Kalshi entities, and pleads at paragraph 73 that 'Both Robinhood and Coinbase, like Kalshi, charge per-transaction fees on the event contract trades that they facilitate' and at paragraphs 74 and 75 that both take custody of the customer's money and pay the winner out of it net of their own fees. Baltimore's contribution was to plead the arrangement as joint participation with figures attached, not to notice it first. The third thing is the house, and it is one fact read two ways by two pleadings a day apart. Novig tells this court at paragraph 128 that it 'administers a market-maker function that supplies baseline depth and liquidity so that participants can enter and exit positions efficiently' and that the function 'is a standard feature of exchange design rather than a departure from it'. Baltimore told a Maryland court on 13 August that Polymarket 'has recently created an in-house team to serve as market makers', that it has 'taken opposing positions, absorbed imbalances in bettor demand, and profited from price movements', and that in consequence 'users effectively trade against the house rather than other bettors'. Neither document disputes what the other describes. What they disagree about is whether an operator supplying its own liquidity is running a market or running a book, and that is a question about market structure rather than about labels, which makes it the one a court or the Commission can actually test.

What is not settled

The complaint's authorities do not include the decision from its own state. Paragraph 13 strings together the Third Circuit in Flaherty, the District of Minnesota's order of 27 July, the District of Arizona, the Middle District of Tennessee, the District of New Jersey and the Northern District of California, and stops there. The Eastern District of Wisconsin decided the other way on 28 July, the day after the Minnesota order it does cite, in a case against the same attorney general over the same statutes. It is not binding on the Western District and a plaintiff is not obliged to plead the cases against it, but a reader comparing the two filings should know that the nearest adverse authority is one district away and is on appeal. Novig's own economics are asserted rather than disclosed. Paragraph 128 says its revenue 'does not generally depend on whether any participant's position resolves favorably' and paragraph 130 says prices are set by participants matching on price and time priority, but nothing in 45 pages says what the revenue is. The company's public site still advertises the sweepstakes product, in two virtual currencies, under the line that there are no fees; the complaint records at paragraph 70 that Novig Cash cannot currently be redeemed in full by participants located in Wisconsin. A venue that charges no vigorish, takes no position and states no fee schedule has not explained how it is paid, and the answer matters to the argument it is making. Two dates do not line up and both are checkable. Paragraph 20 says Novig filed its application for designation on 16 December 2025; the Order of Designation says the application 'includes submissions dated January 1, 2026, through June 10, 2026' and the Commission's own filing record dates the exhibits 22 January 2026. Nothing turns on it, and the claim made in the trade press that this was among the fastest designations in the Commission's history depends on which of those dates is the start. The state's own numbers are second hand. Its press release says Kalshi 'reportedly generates more than $1 billion in annual revenue from its sports contracts, representing around 90% of its total estimated annualized revenue', and attributes it to nobody. The condition that shapes this venue may not be permanent: the order says it applies unless amended, so the Commission can let brokers in later without a rulemaking, and nothing on the record says what would persuade it to. And the case itself has barely started. There is no judge, no motion, no hearing and no answer; three of Wisconsin's own state court actions are sitting in the same district on motions to remand; and the Seventh Circuit will hear the government's appeal before any of it is resolved. The chief executive's quotation reaches this page through The Block, which took it from WIRED; the interview itself was not read here.