Place 1-1/4 cup of the champagne and sugar in a sauce pan and then sprinkle gelatin on top. Let gelatin soften for about 2 minutes.
Place saucepan over low heat and stir until gelatin has completely dissolved, about 2-3 minutes. Remove from heat and add in remaining 1/2 cup of champagne and stir to combine.
Pour mixture into a loaf pan (or a square tupperware container) and chill for at least an hour.
To release jello, dip the pan into warm water and use a knife along the sides to gently release. Use a sharp knife to cut squares.
Before serving, dip the tops in granulated sugar and serve with a festive toothpick.