Crypto.com’s OG Challenges Washington Enforcement Over Prediction Contracts

Crypto.com’s prediction market operator OG has filed a lawsuit against the State of Washington to prevent regulators from enforcing against its event contract offerings.

The case follows a preliminary injunction against Kalshi, where a Washington court found that the platform’s offerings violated state laws. The ruling also rejected Kalshi’s argument that federal commodities regulation prevented Washington from applying its gambling statutes.

OG filed its complaint two days later, arguing that Washington’s statements and legal actions created a credible threat to its business. The company maintains that its prediction markets are federally regulated products supervised by the Commodity Futures Trading Commission. Washington authorities have treated many sports-related contracts as illegal gambling products when offered to residents.

OG argues that the Kalshi decision moved the issue beyond a theoretical dispute. It also cited Washington’s participation in multi-state amici filings supporting state oversight of prediction markets as evidence that enforcement could follow.

CFTC oversight sits at the centre of OG’s challenge

OG claims CFTC supervision should prevent individual states from blocking trades permitted under federal law. The company argues that allowing states to ban federally authorised event contracts under gambling legislation would undermine Congress’s aim of creating a consistent national commodities market.

Federally regulated exchanges must follow rules on market integrity, risk management and disclosures. Subjecting them to separate state gambling rules would create a fragmented system in which products could be legal in one jurisdiction but prohibited in another.

OG says this would increase costs, complicate access and weaken consistency across national trading markets. It also maintains that state restrictions could affect liquidity and pricing. Prediction markets depend on broad participation to establish efficient prices, and removing traders from particular states could distort activity across the exchange.

Commodity Exchange Act supports federal pre-emption argument

The complaint relies heavily on the Commodity Exchange Act, which provides the federal framework for futures, derivatives and designated contract markets. OG argues that Congress created this structure to prevent competing state rules from disrupting national markets. 

Once an exchange and its contracts fall under CFTC supervision, the company says states should not interfere by reclassifying those products as gambling. Without federal pre-emption, platforms could face litigation in one state while operating legally elsewhere. OG claims that uncertainty would discourage investment and innovation while forcing exchanges to build different compliance systems for each jurisdiction.

The company argues that a national market requires predictable rules for equal access, orderly trading and fair pricing. Washington’s position tests whether sports event contracts are financial instruments or gambling products as prediction markets expand into sportsbook territory.

Michigan order highlights risks from conflicting state action

OG’s filing also draws on a July 2026 emergency order involving Michigan, where a state court directed Kalshi to unwind positions held by customers after regulators challenged its event contracts.

The CFTC intervened and asked Kalshi to keep honouring the trades, warning that immediate state action could disrupt the orderly operation of federally regulated markets. OG argues that the intervention shows the federal regulator recognises the risks created when states independently restrict event contracts.

If platforms must cancel trades, exclude users or reverse cleared positions, the company says markets could face distorted pricing, reduced participation and unequal customer treatment.

Exchanges may need to track customer locations, block access in certain states and reverse transactions accepted under federal supervision. OG says these obligations would burden interstate commerce and weaken the efficiency of national financial markets.

Court must determine the limits of state gambling authority

OG wants the federal court to confirm that the Commodity Exchange Act pre-empts Washington’s efforts to regulate its event contracts as gambling. The company argues that the CFTC holds exclusive authority over federally registered contract markets and that separate state standards would create legal uncertainty across the industry.

Furthermore, it raises constitutional concerns linked to interstate commerce, claiming fragmented enforcement would impose operational burdens on exchanges serving customers nationwide.

OG maintains that a single federal framework better reflects congressional intent while supporting transparency, market access and innovation. The Washington case will test whether federal commodities approval can shield sports prediction contracts from state gambling laws.

Expert Opinion

OG, the prediction market arm of Crypto.com, has sued the State of Washington for recent enforcement actions against event contracts. The company seeks a clear distinction between federal and state laws regarding the sector, to avoid over-regulation and confusion. Hence, the federal court must confirm whether the Commodity Exchange Act pre-empts the state’s efforts.

Source: https://sigma.world/news/crypto-coms-og-sues-washington-over-event-contracts/