As the prediction markets Kalshi and Polymarket dominate the attention of investors and regulators, a sports-focused challenger called Novig is announcing $75 million in fresh funding to compete with the twin giants. Led by the blockchain venture firm Pantera Capital, Novig’s Series B round values the startup at $500 million.
Once a highly restricted pastime, sports betting has in recent years seeped into every corner of the U.S. economy. First came a 2018 Supreme Court decision that paved a path for states to legalize gambling on leagues such as football, basketball, and baseball. Then, a 2024 court victory by Kalshi broadened the types of contracts that prediction markets could offer, leading platforms to move beyond offering bets on weather and award show outcomes, and into fields like elections and sports.
Today, the vast majority of Kalshi’s volume comes from sports contracts, even as some state governments are seeking to limit or shut down sports-based prediction markets. Novig, though, is focusing less on the legal dimensions and taking up a different argument when it comes to sports betting: that the existing options rip off their users.
“We started the company because we felt sports betting was broken,” cofounder Jacob Fortinsky told Fortune. “Our mission from day one was to build a platform really built for modern sports bettors in the most consumer-friendly, the most engaging, and the most profitable way possible.”
Gambling on the future
Fortinsky started working on Novig in 2021 during his senior year at Harvard with his cofounder Kelechi Ukah, entering the tech incubator Y Combinator the following year. During this time, however, the regulatory outlook for prediction markets was cloudy at best. (Polymarket would be banned from the U.S. in 2022 for offering unlicensed betting.)
Novig initially registered as a regulated sports betting operator in Colorado before switching to a sweepstakes model. Still, neither approach allowed Novig to operate nationally, and the latter led to legal challenges from state regulators. Now, Novig is applying to operate under the Commodity Futures Trading Commission, which Fortinsky hopes will be completed within six months.
His argument for why Novig’s prediction market is superior to traditional sportsbooks like FanDuel is simple: Because Novig is peer-to-peer, users aren’t trading against the house, and theoretically are getting better odds. Why Novig is better than Kalshi, which boasts significantly more volume, is less clear, but Novig makes the case that the fees on the platform makes it prohibitively expensive.
Novig, in contrast, is commission-free for retail traders, hence its name—a play on the term “vig,” or the rake that sportsbooks take. Instead, the platform charges fees to institutional participants on the platform. That means that users are often betting against so-called “smart money,” though Fortinsky says that a (still-depressing) 20% of Novig bettors are likely to be profitable, which he claims is much higher than other platforms.
On a more fundamental level, Fortinsky says that Novig was built for sports, as opposed to Kalshi and Polymarket, which originally emphasized other types of contracts. “Our basic bet as a company is that the median sports fan is far more likely to use an app whose brand and whose product is really built with sports in mind, rather than with crypto or war in South America,” Fortinsky said.
Whether the proliferation of sports betting through prediction markets is healthy for sports fans is a separate question. While critics—and states—have argued that prediction markets are just another form of gambling, Fortinsky pushed back. “Ultimately financial trading and betting are sort of converging,” he said. “In a colloquial sense, we certainly don’t view what we’re doing as gambling.”
Though the distinction may seem thin, even CFTC chair Michael Selig seems to agree, arguing in a Wall Street Journal op-ed last weekend that event-contract markets squarely fit under the remit of his agency and “serve legitimate economic functions.”
For Fortinsky, sports betting is just part of the fandom experience, despite the blurred ethical lines regarding athlete and league participation. “For many sports fans, it deepens their engagement, deepens their enjoyment and their fan experience,” he said. “A lot of the frustration with sports betting is really that it’s a commoditized product that is basically dominated by these casinos that are trying to make as much money as possible at the expense of sports fans.”
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