Days after receiving a major cash infusion, sweepstakes prediction market app Novig pulled its product out of New Jersey, the second-ranked state in the U.S. for sports betting handle.
Novig had announced an $18 million raise on Aug. 11 despite a cease-and-desist order from the Arizona Department of Gaming for allegedly offering an unregistered sports betting product.
Last Friday, Novig emailed New Jersey users that it would depart the state—at least the fourth exit it has made since a 42-state launch in September 2024. Novig did not make a public statement about the pullback.
“We are reaching out to inform you of a change to your Novig account,” the firm’s email to New Jersey customers read. “Due to new legislation, Novig will be required to restrict platform usage for users located in the state of New Jersey starting August 15, 2025.”
Some New Jersey users also received emails about the possibility of a shutdown days earlier, right around the time the company publicly celebrated its raise with a media blitz.
On Monday, the “new legislation” Novig had warned New Jersey users about arrived. New Jersey Gov. Phil Murphy signed a bill explicitly banning most sweepstakes—defined for Novig’s purposes as “a contest or game” in which “something of value” is awarded in exchange for a digital currency.
At Novig, users can buy tokens with no real-world value called “Novig Coins” that come with a “gift” of “Novig Cash.” “Novig Cash” is then used to wager on the results of sports events, and those bets pay out in actual U.S. dollars. Under New Jersey law, this dual-currency process now amounts to an illegal exchange for “something of value.”
According to Novig, users can get small sums of “Novig Cash” for free by interacting with the platform regularly. They can also choose to solely enter bets on the prediction market exchange using the “Novig Coins” that cannot become real money and replenish without limit. Those options are not enough to escape the terms of New Jersey’s law.
Montana and Connecticut passed similar anti-sweepstakes legislation targeting this kind of behavior in May and June, respectively. A Louisiana bill along these lines passed through the state legislature but was vetoed by Gov. Jeff Landry in June. New York and California are among the states currently considering anti-sweepstakes laws.
A map on Novig’s website suggests it has left Connecticut, though it has not confirmed the move, and the app remains downloadable there as of Tuesday. It never launched in Montana. Novig did not respond to a request for comment.
The Social and Promotional Games Association, which advocates on behalf of sweepstakes platforms, continues to oppose legislation targeting sweepstakes companies.
“Governor Murphy’s signature on Assembly Bill 5447 is a win for lobbyists and a loss for consumers,” an SPGA spokesperson wrote in an email. “States simply shouldn’t be in the business of telling American adults what games they can and can’t play on their phones.”
The SPGA said California’s proposed bill “favors deeply entrenched political interests at the expense of consumers, small businesses and non-gaming tribes.”
In a year of big investments into upstarts that might one day rival DraftKings and FanDuel, Novig’s model raises different regulatory questions than those surrounding $2 billion venture capital darling Kalshi, another prediction market currently in a legal fight with New Jersey and other states. Still, Novig and Kalshi have several things in common, chief among them a desire to sidestep state-level registration, regulation and taxation.
Kalshi claims this right through federal Commodity Futures Trading Commission (CFTC) preemption, insisting it should be regulated nationally by the agency like a financial asset rather than state-by-state like a gambling hub.
Meanwhile, Novig’s approach is centered on its “dual currency” sweepstakes format, which has been widely trialed around the country for more than a decade, including in bars with in-person casino-style arcades that offer customers the possibility of walking away with cash.
Novig believes its free-or-not sweepstakes setup—which it refers to as a “promotion”—means it doesn’t need to secure gaming licenses in the states it operates, some of which have bans on all gambling operators outside tribal exceptions.
“Sweepstakes are promotional games with prizes for the winners,” the company writes in an FAQ sheet on its website. “They are used to promote the sale of products—in our case, Novig Coins—and have been legitimately used by businesses in the United States for decades.”
Novig debuted as a registered sports gambling entity in Colorado in January 2024 before pivoting to the sweepstakes model to gain national reach later last year. It no longer operates in Colorado.
While Novig does not do business through the CFTC, that could soon change, CEO Jacob Fortinsky told InGame. The company may look to bolster legal protections against the possible collapse of the sweepstakes framework.
Novig’s model builds upon the consumer benefits of prediction markets relative to traditional sportsbooks, operating without holds because of its exchange format. It doesn’t charge trading fees for retail users, either, which separates it from some other prediction market platforms. The firm makes money through monetizing data it collects and market making, though it says the latter accounts for a small amount of total activity on its app.
Both Kalshi and Novig have investments from Silicon Valley, including via Y Combinator. However, their response to regulators differs. Whereas Kalshi has taken the fight to states that have actively tried to shut it down, suing Maryland, New Jersey and Nevada after being hit by cease-and-desist orders, Novig has pulled out of several places it has been told to leave.
That said, Novig could be incentivized to take a more aggressive stance if its accessible markets dwindle. The company does project an appetite for a scrap in its promotional materials—with a defiant slogan on its website: “We play by a different set of rules.”
