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U.S. District Judge Colleen McMahon denied Novig’s request for a preliminary injunction against New York on Nov. 10, finding its sports event contracts likely are not swaps and that the state can apply its gambling laws to them. The ruling rejected Novig’s bid for preliminary protection from state enforcement, according to Bitcoin News.
Judge rejects Novig’s federal-jurisdiction argument
Novig sued in August, arguing that the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive jurisdiction over its contracts.
In the 35-page opinion filed Nov. 10, McMahon said sporting events are not associated with a potential financial, economic or commercial consequence in the way Congress intended.
“The Court is not required to disregard common sense—Novig’s sports event contracts are sports betting,” McMahon wrote.
The judge also concluded that, even if the contracts were swaps, federal law bars states only from regulating the licensing and operation of exchanges, not from applying gambling laws to them.
McMahon criticizes CFTC’s Kalshi emergency order
McMahon also criticized the CFTC’s August emergency order shielding Kalshi, writing that it “smacks of a collusive effort” between the regulator and the company it regulates. That language was judicial criticism, not a finding that collusion occurred.
Kalshi had warned on Aug. 1 of a market emergency if New York won a restraining order. The CFTC said the threat of a sudden shutdown posed an existential threat to its registrants, marketplaces and regulatory jurisdiction.
The Novig ruling adds to a split among federal courts over whether sports event contracts are swaps. According to Bitcoin News, the Third Circuit sided with Kalshi in April, while the Ninth Circuit reached the opposite conclusion in August and the Sixth Circuit followed the Ninth Circuit in September.
Novig filed a notice of appeal to the Second Circuit hours after McMahon’s ruling.
More from playnj.com – Better Markets Urges 2nd Circuit to Side With New York in Kalshi Appeal – CFTC Seeks Prediction Market Clarity as New Jersey Presses Kalshi Appeal – Kalshi, Polymarket Increase Lobbying Against State Gambling Rules
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Source: As reported by Bitcoin News.
