Novig-Linked Ludlow Exchange Enters CFTC Portal With DCM Application

A brand new derivatives change affiliated with sports-focused platform Novig has entered the federal regulatory pipeline.

Ludlow Exchange, LLC not too long ago appeared within the Commodity Futures Trading Commission’s (CFTC) trade filings portal as a pending Designated Contract Market (DCM) applicant, in accordance with the company’s public listings. 

The submitting is notable as a result of Ludlow’s utility supplies record Novig as its holding firm, linking the proposed change to a platform that has operated a peer-to-peer sports activities prediction product utilizing a sweepstakes-style mannequin. In August, after Novig introduced the shut of an $18 million Series A funding spherical, the corporate’s co-founder and CEO Jacob Fortinsky, who signed the Ludlow Exchange’s “Form DCM” and is listed as its founder and CEO, informed InGame that CFTC approval and Novig’s present sweepstakes operations wouldn’t essentially be “mutually unique.”

Novig officers haven’t publicly commented on what the brand new change might provide or how intently it will be built-in with Novig’s present enterprise. DeFi Rate has reached out to Fortinsky for remark.

What Ludlow Exchange filings reveal

While the CFTC filings don’t describe Ludlow’s proposed markets, the change’s rulebook and “compliance with core rules” submitting define a construction that intently resembles different event-contract exchanges which have sought or obtained CFTC approval.

Among the main points disclosed within the filings:

• Contracts sized at $1, with costs quoted in {dollars} and cents
• Intends to supply binary contracts (i.e. with Yes/No positions) and “mixture contracts” that depend upon a number of outcomes (like parlays or “combos”)
• A totally collateralized buying and selling mannequin, with no margin or leverage
• An inner Outcome Review Committee empowered to find out closing market outcomes for settlement
• Ludlow says it doesn’t intend to supply intermediated buying and selling, like by means of third-party FCMs 

The paperwork reference clearing contracts by means of a clearinghouse, however Ludlow just isn’t pursuing Derivatives Clearing Organization (DCO) registration and doesn’t determine a clearing companion. That construction mirrors different latest DCM candidates that depend on third-party clearing operators. DraftKings’ in-the-works DCM, Railbird Exchange, for instance, disclosed in its filings plans to depend on third-party clearing, with Polymarket Clearing (previously QC Clearing) designated as its clearinghouse.

In the Ludlow Exchange DCM submitting, preliminary contract classes are usually not outlined and there are not any express references to sports activities occasion contracts. But given Novig’s expertise and established person base, it appears seemingly that sports activities will at the least be part of any potential new platform. 

The filings reference ludlowexchange.com as a doable vacation spot for the DCM-approved platform. There is minimal data at the moment obtainable on the positioning. 

Novig’s shrinking sweepstakes footprint

The look of a Novig-linked DCM submitting comes as the corporate’s state-by-state availability has narrowed. Novig initially pursued a totally licensed sportsbook mannequin, launching a real-money betting app in Colorado in 2024 earlier than exiting the state after regulators declined to approve its deliberate change construction. 

Later in 2024, Novig pivoted to the sweepstakes mannequin and launched in 42 states. Novig operates utilizing a dual-currency system through which customers can purchase free “sweepstakes” forex (Novig Cash) alongside a separate, non-redeemable forex (Novig Coins). Novig Cash will be obtained by means of promotions, with the acquisition of Novig Coins, or through mail-in requests, and will be redeemed for money prizes. 

By structuring its platform as sweepstakes gaming, Novig positioned itself exterior of conventional playing frameworks. But the mannequin has more and more drawn scrutiny from state regulators, with a number of states transferring to ban sweepstakes-based gaming platforms. Those enforcement efforts, which additionally goal on-line sweepstakes casinos, have narrowed the variety of jurisdictions through which Novig and comparable operators are keen or in a position to provide their merchandise.

In gentle of state efforts to limit sweepstakes gaming, together with full-on bans signed into legislation in New York and California in 2025, Novig has pulled entry in a handful of states. It is at the moment obtainable in 36 states, in addition to Washington D.C. 

Sports platforms eyeing CFTC approval to supply prediction markets

Ludlow Exchange’s DCM utility is listed as “pending” within the CFTC portal alongside two different sports-focused corporations searching for DCM designation.

ProphetX, an identical sports activities betting change platform that makes use of the sweepstakes mannequin, is pursuing approval to function as each a DCM and a DCO, signaling its intention to launch a full-service prediction market platform.

Another pending applicant, RSBIX, has been described by its founder, gaming lawyer Jeff Ifrah, as a deliberate sports-focused change. RSBIX has been linked to Matchbook, which operates a sports activities betting change within the U.Okay. Matchbook has mentioned it plans to use a new prediction-market platform within the U.Okay. as a “street take a look at” forward of a possible U.S. enlargement.

While that U.Okay. platform has but to launch, Matchbook has unveiled a B2B-facing “Matchbook Predictions” web site advertising the know-how to operators. 

Novig’s submitting follows a broader push by some main sports activities gaming corporations into prediction markets. DraftKings, FanDuel, Fanatics, Underdog, and PrizePicks have every rolled out prediction merchandise, which embody sports activities occasion contracts in some states, by means of partnerships with CFTC-regulated platforms.

Sports occasion contract buying and selling stays underneath fireplace in some states

Novig’s filings for Ludlow Exchange arrive at a second of heightened regulatory scrutiny for sports activities occasion contracts. State regulators have more and more argued that markets tied to sporting occasion outcomes are unapproved sports activities wagering and subsequently fall inside state playing legal guidelines. The rigidity has prompted a number of platforms, together with Crypto.com and the brand new prediction merchandise from FanDuel and DraftKings, to restrict or take away entry to sports activities markets in sure states as enforcement actions and authorized challenges proceed to play out.

At the identical time, Kalshi and different prediction market platforms have been on the middle of a rising wave of litigation aimed toward preserving the suitable to record sports activities occasion contracts underneath CFTC oversight. Those court battles, which hinge on federal preemption, the scope of the Commodity Exchange Act, and the road between derivatives and playing, are more likely to form whether or not platforms like Ludlow Exchange and Novig can in the end provide sports activities prediction markets nationwide, or face fragmented, state-by-state constraints.

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