Prediction Market Firm Sues Kaul to Prevent Enforcing Wisconsin Gambling Law
Novig lawsuit claims state's gambling regulations are preempted by federal law.
The federal courthouse for the Western District of Wisconsin in Madison. John K. Wilson/WPR
The prediction market company Novig is preemptively suing Wisconsin Attorney General Josh Kaul in hopes of keeping him from taking legal action to enforce state gambling laws.
Novig, valued at $500 billion, claims Congress gave “exclusive” regulatory authority to a federal agency to regulate companies like it.
Novig’s lawsuit was filed Friday in federal court. It followed Kaul’s lawsuits in state court against fellow prediction market companies Kalshi, Robinhood, Coinbase, Polymarket and Crypto.com.
The Wisconsin Department of Justice, which Kaul leads, claims the companies are facilitating online sports betting, which is illegal in Wisconsin unless computer servers are located on tribal land.
That kind of legal risk is untenable, the Novig suit claims.
“Exposure of that magnitude is existential, and Wisconsin’s sovereign immunity would place it beyond recovery even after litigation exposes the fatal flaws in Defendants’ legal position,” the lawsuit argues. “Yet Novig is no better off if it stays out of this intensely competitive market while litigation unfolds, because it would forfeit market share and revenue it could never recoup.”
Novig argues its “event contracts” are a financial instrument traded on federally regulated marketplaces, and Congress gave “exclusive jurisdiction” to the U.S. Commodity Futures Trading Commission. In other words, Novig claims, “Wisconsin’s enforcement of its laws is preempted several times over.”
The company is asking a federal judge to issue an injunction blocking Kaul from enforcing state gambling laws against its transactions in Wisconsin. Novig also wants a declaration that those laws are preempted by federal regulations.
When asked for comment on Novig’s claims, a spokesperson for the Wisconsin Department of Justice referred WPR to an April press release from Kaul after he sued the other companies including Kalshi. At the time, he said the prediction market companies “thinly disguising unlawful conduct doesn’t make it lawful.”
Novig has filed two similar suits against attorneys general in Massachusetts and New York, who have taken legal action against Kalshi.
Prediction market firm sues Kaul to prevent enforcement of Wisconsin gambling law was originally published by Wisconsin Public Radio.
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