Novig Loses Emergency Bid to Block New York Gambling Law

Judge Colleen McMahon denied Novig's application for a temporary restraining order against New York on August 11, and did it without even asking the Attorney General to file a response. Oral argument on the wider injunction is set for September 11 in Manhattan federal court.

The three-page order is the first substantive ruling in the case, and it went against the operator on every practical measure. Novig asked for emergency protection so it could keep serving New York while the case ran. It got none.

What did the judge actually decide?

Judge Colleen McMahon of the Southern District of New York denied the TRO application outright. The order does four things:

1. Denies Novig's application for a temporary restraining order.
2. Excuses the New York Attorney General from responding to it at all.
3. Declines to decide the merits, in terms, twice.
4. Sets a briefing schedule that ends in oral argument on September 11.

Her reasoning was procedural rather than a verdict on the law, and she said so twice. "I do not intend to prejudge the merits of this case," she writes, and again at the end: "I emphasize that, while I am denying the TRO application, I have not decided the case on the merits."

What she would not do is grant relief on a thin record. "I will not issue any order in this case without the benefit of full briefing, and I will not undermine Judge Torres' decision by entering any order granting emergency relief without full briefing from both sides," the order reads. "Therefore, there is no need for the Attorney General to respond to the application for a TRO. That application is DENIED."

New York never had to argue. That is unusual, and it tells you how far the application was from succeeding.

Why does the Kalshi ruling matter here?

Because the judge treated this case as a second run at a question another judge in the same courthouse had already answered.

The case landed with McMahon on August 10 after Judge Analisa Torres declined to accept it as related to KalshiEX LLC v. Williams, the prediction-market case she is already handling. McMahon agreed that was correct under the local rules, since a shared legal question between different parties does not make two cases related. Then she said what she thought was going on:

"It is obvious that the plaintiff in this case is impacted by the Kalshi decision and hopes, by filing this action, to get around that decision by convincing another judge in this district to reach a different conclusion."

She added that she may or may not reach the same conclusion Torres did. But the argument at the centre of all of this, that a federal commodities licence displaces a state's gambling law, has now failed to produce emergency relief in this district twice. It also failed in Connecticut on August 10, and before that in Utah on August 4 and Michigan on August 6.

Novig is a genuine CFTC registrant, not a bystander borrowing the theory: it won its exchange designation before it sued New York. The docket shows that designation order as an exhibit, dated June 16, 2026, filed in support of the emergency injunction motion it lodged on August 6.

What happens next, and when?

McMahon set a schedule on August 11 and signalled she wanted the whole case resolved in one pass rather than in stages. Both halves of that have since moved, and the table below is the schedule as it now stands.

The extension is the change that matters. On August 12, the day after this schedule was set, the Attorney General's office filed a letter motion at docket entry 39 asking for more time to oppose Novig's preliminary injunction motion and for leave to file an over-length brief. McMahon granted it the same evening at entry 40, and the docket records the new deadline as September 10, 2026 - three weeks later than the date she had set the day before, and the day before the argument. Novig filed a notice of supplemental authority at entry 41. The August 31 reply date she had set for Novig does not survive that extension in any form we can read, so we have removed it rather than print a date the record no longer supports. Nothing on the docket has touched the September 11 argument date.

The merger point resolved the other way. "Because this case raises only legal issues, I am inclined to merge the motions for preliminary and permanent injunctive relief and enter a final judgment after one round of briefing," the August 11 order said. The Attorney General objected, and on August 14 McMahon endorsed the point: "Since the Attorney General objects to merging the preliminary and permanent injunction motions, the Court will not do so. I will decide the motion for a preliminary injunction and we will adhere to the present briefing schedule." So September 11 is a preliminary-injunction argument, not the argument that decides the case. She added that the Attorney General "is of course welcome to move to dismiss the complaint, but will have to be on its own schedule."

The same operator's parallel suits against Massachusetts and Washington, filed on August 6, have produced nothing but summonses and attorney appearances so far. We checked both dockets on August 12. No ruling in either.

What does this mean if you played Novig's sweepstakes tier?

Nothing directly, because that tier no longer exists. Novig retired Novig Cash and Novig Coins when it relaunched on August 4 and now requires a deposit to trade. If you held a balance, the conversion already happened without your input.

The reason this case still belongs on your radar is what it says about the exit route. Several operators have looked at trading a sweepstakes model for a federally licensed one, on the theory that the licence buys immunity from state gambling law. This ruling does not kill that theory. It does show that a court will not hand you a fast injunction to keep trading while you test it, even when you hold the licence.

Does this change anything for other sweepstakes casinos?

Not their legal position, no. A sweepstakes casino runs under sweepstakes and promotions law and holds no commodities registration, so none of the preemption argument here is available to it. What changed on August 11 is the speed you should expect from courts on this question, and the answer is slow.

That matters most in New York, where S5935A banned sweepstakes-casino operation outright on December 5, 2025, and the statute's liability language reaches marketing affiliates, which is why our New York page carries no operator links at all. If you want the current position everywhere else, our state-by-state legality matrix is kept to the operator documents rather than press releases, and how sweepstakes law differs from gambling law explains why the distinction carries so much weight in cases like this one.

One more thing happened on August 11, and it cut the other way: the CFTC used its emergency powers to order Kalshi to keep trading in the face of New York's own lawsuit. A federal court declined to protect one exchange from New York on the same day a federal agency protected another.

Sources & documents

• Order denying the TRO application, Ludlow Exchange, LLC v. James, No. 26-cv-6676 (CM), Dkt. 38 (S.D.N.Y. Aug. 11, 2026)
• Full docket, Ludlow Exchange, LLC v. James (S.D.N.Y.)
• CFTC press release 9281-26, August 11, 2026
• CFTC order directing Kalshi to continue exercising DCM functions, August 11, 2026

Every quotation above is verbatim from the August 11 order, which we downloaded and read in full on August 12, 2026. The docket entries, the June 16, 2026 designation exhibit and the status of the parallel Massachusetts and Washington cases were read the same day from the courts' own records. All four dockets were re-read on August 13: the three New York entries of August 12 described above are the only movement in the case, and neither the Massachusetts nor the Washington file has produced a ruling. Novig's plaintiff entity is Ludlow Exchange, LLC, whose corporate parent is listed on the docket as Novig, Inc. We asked for no comment from either party and none is quoted here beyond the filings.

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