Novig Completes Sweepstakes-to-Prediction Market Transition With ‘Sports Trading App’
One-time sweepstakes sportsbook Novig has completed its transition into a prediction market. Novig launched its prediction market nearly nationwide on Tuesday, eschewing a select few states that have been particularly unfriendly to the burgeoning vertical.
Novig founder and CEO Jacob Fortinsky posted on social media and called it “the beginning of a new chapter.”
“We believed sports betting should work like any real financial market: a true order book where traders set the prices, with no house,” he wrote. “Federal regulation was always the destination, even when it was the longer, harder road. It’s surreal to actually be here.
“We’re launching with instant live trading, a full portfolio view, new payment methods, parlays, and Novig Ranks — our new leaderboard for trading PNL, Novig Points, and volume.”
Ironically, Novig began with an exchange-style sportsbook before switching to the sweepstakes model. Now, it has come almost full circle with its new reinvention as a prediction market. The prediction market model may actually make for a better fit with Novig’s original vision, matching bettors with a peer who will take the other side of the bet. This so-called exchange model is more popular in Europe, where operators like Betfair have sustained success, but failed to gain traction in regulated U.S. markets before the arrival of prediction markets.
Competing against sports betting giants DraftKings and FanDuel, Novig faced a tough path to profitability. The prediction market race appears more wide open. While Kalshi has a big early lead, upstarts like Underdog have gained traction, as bigger names like DraftKings and FanDuel have struggled with the vertical.
Sweepstakes Model Burned Brightly, Faded Away
Novig’s abandonment of sweepstakes marks a continuation of the industry’s trend away from that particular model. The sweepstakes model revolved around the purchase of in-game “free play” currency, followed by the operator awarding the player with matching site credit. That credit could then be exchanged back for real money when the player wanted to cash out.
As the legislative expansion of regulated iGaming stalled out in the early 2020s, sweepstakes gambling swept the nation. Many companies saw it as an easy way to gain access to states that were off-limits for real-money gaming. Its status in a legal gray area offered clear advantages in taxes and speed — there was no need to wait for state-by-state regulatory approval. Sweepstakes operators could also serve key states like Texas and California, ones with massive populations but no legal online gambling framework.
Of course, when state regulators began catching wind of what was going on, the crackdown began. Some states quickly outlawed sweepstakes gambling, while others sent cease-and-desist letters. The bans are still coming down the pike, with Minnesota the latest state to boot the sweepstakes sites.
As the addressable market for sweepstakes shrank, operators like Novig saw prediction markets as the next frontier.
Novig Aggressive Right Away on the Litigation Front
Novig’s marketing materials on its website claim that it’s available nationwide. However, outside reporting indicates that Michigan, Nevada, and Arizona are all geofenced. Each has been among the most aggressive states in pushing back against prediction markets.
A federal judge already ordered another prediction market, Kalshi, to geoblock Michigan customers by Aug. 12. Arizona broke new legal ground by filing criminal charges against Kalshi. And Nevada was the first state to win a court victory with a geofencing order against prediction markets.
Still, that by no means indicates Novig is entering the prediction market game cautiously. It’s actually come out guns blazing in the legal sense. Novig has already filed lawsuits against both New York and Massachusetts, asking for injunctive relief. The lawsuits are similarly worded and argue that Novig would suffer irreparable harm without the relief sought, and that state law is preempted by federal regulations, thereby allowing Novig to operate in these states.
Novig and Underdog Skip ‘Financial Instruments’ Cover Story
What’s perhaps most fascinating about Novig’s entry into the prediction game is its lack of pretense. Prediction frontrunners Kalshi and Polymarket are insistent on their utility as financial hedging platforms. To that end, they offer a robust selection of markets revolving around weather, culture, politics, and business, even if most of their trading volume is on sports.
By contrast, Novig is unambiguously a sportsbook. Here’s a look at some of its marketing material:
- “America’s #1 sports trading app”
- “Where America predicts sports”
- “The leading sports prediction market in the U.S.”
Kalshi frequently points to its non-sports markets as proof that it isn’t a sportsbook dressed up as a financial instrument. It works hard to promote its non-sports volume as a growing part of its business.
Novig follows the Underdog model. Both offer sports and only sports.
One wonders whether executives at Kalshi are giving these upstart competitors a withering side-eye, more so in a public relations sense than a financial one. Will regulators and lawmakers draw any distinction between sports-only prediction markets and operators like Kalshi and Polymarket?
Products like Novig seem likely to generate nothing but bad PR for the industry, the rest of which is trying (mostly in vain) to distinguish itself from sports betting.
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