Novig raises US$75 million to break into prediction markets

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2025/08/20: Novig pulls out of New Jersey amid sweepstakes legislation 2025/09/29: Novig sees interest from prediction platforms Kalshi, Polymarket 2025/11/25: What does the future hold for prediction markets after big players break from AGA? 2025/09/30: Sleeper Markets sues Commodity Futures Trading Commission over alleged license interference

The Backstory

A funding milestone amid a fast-shifting rulebook

Novig’s fresh capital raise lands as prediction markets straddle a regulatory gray zone and a crowded competitive field. The company’s bet is that a commission-free, order book model can translate from its core sports trading roots into federally regulated event contracts. Its path to scale, however, has been shaped by a year of legal whiplash and industry realignment that is redefining where and how prediction markets can operate in the United States.

In recent months Novig has tested multiple go-to-market models while navigating a patchwork of state and federal rules. The firm first launched as a licensed Colorado sportsbook, then pivoted to a sweepstakes-style dual-currency product to widen reach across dozens of states. That shift expanded access but also drew scrutiny from state regulators who view sweepstakes betting as an end run around gambling laws. The company’s new push to secure federal oversight as a Designated Contract Market with the Commodity Futures Trading Commission (CFTC) underscores a strategic recalibration: move from state-by-state permissions to a national framework that could support liquidity and product breadth at scale.

How far and how fast Novig can go will depend on whether it can convert that federal pathway into durable access while limiting exposure to renewed state pushback. The broader sector offers cautionary examples on both counts.

State pushback forces retreats and rewrites

Novig’s sweepstakes gambit ran into headwinds in key markets. The company withdrew from New Jersey after the state banned most sweepstakes contests, a direct hit to Novig’s dual-currency system. The exit capped a string of pullbacks since its nationwide sweepstakes launch in 2024 and showed the limits of growth via promotional workarounds. Novig confirmed the move in an email to users and cited the wave of bills targeting sweepstakes-style betting. The episode is detailed in coverage of Novig’s New Jersey exit and sweepstakes crackdown, which also notes a separate Arizona cease-and-desist and similar restrictions taking hold in Connecticut and Montana, with California and New York considering their own measures.

Unlike some rivals pressing courtroom fights to preserve market access, Novig has often opted to retreat and regroup. That posture reduces near-term legal risk but can slow customer acquisition and liquidity building. It also leaves Novig competing for attention in states where sweepstakes remain viable, while preparing for a more formal federal route through the CFTC that could eventually supersede state-by-state constraints for certain products.

Deal rumors spotlight consolidation pressures

As rules tighten, the sector has begun to consolidate around platforms with regulatory head starts or deep liquidity. Interest from established operators in Novig underscores the value of its tech stack and user base, even as the company signals it is not for sale. Front Office Sports reported that Kalshi and Polymarket explored potential bids, a development summarized in reporting on acquisition interest from Kalshi and Polymarket. While Kalshi said it had no plans to acquire, the attention reflects intensifying jockeying ahead of marquee sports and political calendars.

Both suitors have faced their own regulatory trials. Polymarket was sidelined in the U.S. until winning a path back under CFTC oversight. Kalshi continues to spar with regulators, including a recent Massachusetts challenge arguing sports contracts resemble unlicensed betting. Those episodes illustrate the core strategic question for Novig and peers: whether to grow primarily under federal commodities law, endure state gambling scrutiny, or stitch together a hybrid that can flex with shifting interpretations.

An industry rift widens over who regulates what

The rule-of-the-road fight is splitting traditional gaming allies. In a consequential break, DraftKings and FanDuel moved away from the American Gaming Association after signaling plans to offer CFTC-regulated prediction markets. That schism, first reported by InGame and analyzed in a look at how big players’ split from the AGA reshapes prediction markets, laid bare a strategic divide: state-licensed sportsbooks wary of federally regulated competitors vs. operators pursuing national liquidity and faster product iteration outside state gambling regimes.

The rift raises practical risks for companies straddling both worlds. Several states, including Massachusetts, have warned licensees about involvement in prediction markets, creating potential knock-on effects for sportsbook licenses elsewhere. Industry consultants caution that pushback could escalate, with “bad actor” narratives resurfacing if regulators view prediction markets as a way to evade state controls. For Novig, which no longer carries a multistate sportsbook footprint but seeks federal licensure for event contracts, the split signals both opportunity and exposure. If national liquidity proves compelling and compliant, the approach could open markets in holdout states like California and Texas. If state regulators punish crossover participation, the model could face a prolonged gauntlet.

Courts and the CFTC become the new choke points

As the market shifts federal, the CFTC and affiliated bodies are exerting more influence over who gets to operate and how. Legal action by startups suggests not all applicants view the process as evenhanded. In a lawsuit filed by Sleeper Markets, the company alleges the CFTC improperly stalled its futures commission merchant application after the National Futures Association deemed it complete, while a rival progressed. Sleeper seeks a court order preventing interference, arguing that delays tilt the playing field in a market where speed to license can determine survival.

Regardless of the outcome, such cases highlight a bottleneck effect: with federal permissions now central to prediction markets, the pace and transparency of CFTC processes can shape competitive dynamics. For Novig, which has applied to become a Designated Contract Market, the lesson is clear. Securing timely, durable approvals and maintaining constructive engagement with federal overseers could be as important as product differentiation and pricing.

College sports add political heat and reputational risk

The next regulatory flashpoint is collegiate athletics. NCAA President Charlie Baker urged the CFTC to suspend college sports prediction markets until stronger safeguards are in place, citing threats to student-athlete welfare and game integrity. The arguments and stakes are outlined in reporting on the NCAA’s call for a pause on college markets. Baker referenced proposed markets around the transfer portal to illustrate potential harm, amplifying a debate that blends gambling policy, athlete protection and federal jurisdiction.

For operators, college products are both high demand and high risk. Pullbacks or stricter guardrails could narrow addressable markets and complicate national launches aimed at states that lack legalized sports betting. At the same time, consumer advocates and some regulators argue prediction markets can deliver better pricing, fewer limits on sharp players and nationwide liquidity. Balancing those benefits with integrity concerns will define how broadly collegiate markets can be offered and at what cost.

Novig’s funding round sets it up to pursue a federally anchored strategy just as policy, litigation and industry alliances are in flux. The company’s ability to convert capital into approvals, liquidity and compliant growth—while navigating state sensitivities and collegiate rules—will determine whether the promise of national prediction markets becomes an enduring business or another regulatory detour.