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Washington’s attorney general and gambling regulators have asked a federal court to dismiss Novig’s lawsuit challenging their authority to enforce state gambling laws against its sports prediction market.
The Oct. 19 motion argues that an August appeals court decision resolves the central legal issue against Novig, according to RG.org’s report. Officials are seeking dismissal without permission to amend the complaint. No West Virginia-specific change was reported.
Novig seeks protection from state enforcement
Novig, operated by Ludlow Exchange LLC, filed its lawsuit Aug. 6 in the U.S. District Court for the Western District of Washington. Its complaint says the Commodity Futures Trading Commission designated the company as a contract market on June 16, 2026, and that it began offering sports-based event contracts in Washington the same week it sued.
The company sought to prevent enforcement similar to Washington’s action against Kalshi. Washington filed that civil enforcement case in March, and a court granted a preliminary injunction in July.
Novig asked the federal court to block enforcement of Washington’s Gambling Act, Consumer Protection Act and Recovery of Money Lost at Gambling Act, among other laws, against the company.
Washington relies on Ninth Circuit precedent
Attorney General Nick Brown and Washington State Gambling Commission officials argue that the Ninth Circuit’s Aug. 28 decision in KalshiEX v. Assad defeats Novig’s claim that federal commodities law overrides state gambling restrictions.
According to the motion, the appeals court found that sports event contracts are not swaps and that the Commodity Exchange Act therefore does not expressly preempt state gambling law. Washington argues Novig’s contracts are not meaningfully different from those considered in that case.
The state also argues that Novig’s implied-preemption theories fail because Congress has not occupied the field of gambling regulation. It acknowledges contrary court decisions, but says the weight of authority supports state enforcement.
Dismissal request remains pending
The motion is noted for consideration Nov. 16 before Judge Michelle L. Peterson. Washington argues that amending the complaint would be futile because Novig’s case rests entirely on preemption.
Kalshi has requested a rehearing before the full Ninth Circuit in Assad. Separately, Washington’s motion does not address the CFTC’s October rulemaking, including a sportsbook carve-out that took effect Oct. 19. How that rulemaking may affect future litigation remains unresolved.
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Source: As reported by RG.
