NEW YORK (CNN/Money) - A federal judge ruled Thursday that the trial against former New York Stock Exchange Chairman Richard Grasso will be heard in New York state court, not federal court, according to a spokeswoman for New York Attorney General Elliot Spitzer.

The ruling is a blow for Grasso, who argued that since the NYSE is governed by the Securities and Exchange Commission the matter was more of a federal affair and should be heard in federal court.

The ruling is seen as a victory for Spitzer, who will use state law governing not-for-profit entities to argue his case. Spitzer's staff is also familiar with New York courts and is now seen to have the home field advantage.

"We're certainly pleased because we believed all along the case belonged in New York State court," said Spitzer's spokeswoman. "The violations are against state not-for-profit laws, and we look forward to our day in court."

A Grasso spokesperson was not immediately available to comment.

The former NYSE chief is being sued by Spitzer for some $100 million in an attempt to deflate an almost $200 million compensation package that Spitzer feels was excessive.