Crypto.com’s OG sues Washington following Kalshi injunction
Crypto.com’s prediction market platform OG has filed a lawsuit against the State of Washington, seeking to block potential enforcement actions against its event contract offerings.
The lawsuit follows Washington’s preliminary injunction against prediction market platform Kalshi and argues that the state’s public statements and legal actions have created a credible threat of similar enforcement against OG.
The company maintains that its prediction markets are federally regulated financial products, while Washington considers many sports-related contracts to be illegal gambling under state law.
OG’s lawsuit
The recent ruling of a Washington court against Kalshi was viewed as a watershed moment in the subject of prediction markets. A local judge ruled that Kalshi’s sports contracts violate gambling regulations, and that the federal regulatory statute does not pre-empt state laws in this aspect. It presented regulators with evidence that sports prediction markets functioned similarly to traditional gambling, regardless of whether they were federally licensed or not.
Crypto.com’s operator, OG, responded quickly, filing a federal lawsuit just two days after the ruling. The company argued that Washington’s prior guidance and public statements already posed an immediate threat, making judicial intervention necessary.
According to OG’s assertion, it is more than simply an example of a potential risk generated by Washington’s activities; it is proof of the evident purpose to enforce gambling legislation with regard to prediction markets supplying sports contracts. In fact, OG noted the state’s involvement in filing multi-state amici filings supporting state regulation of prediction markets as proof of such an enforcement strategy.
CFTC’s role
According to OG, once the CFTC supervises the exchange, states should not regulate it in a way that prohibits federally authorised trading. OG maintains that allowing states to prohibit transactions under gambling laws would undermine Congress’s goal of establishing consistency in the formation of a national commodities market.
The company emphasises that federally authorised exchanges adhere to rules for integrity, risk management, and disclosure. This means that enabling each state to set its own regulations will result in inconsistencies.
CEA and federal authority
OG’s case also cites the Commodity Exchange Act (CEA), which established the federal framework for futures, derivatives, and contract markets. OG claims that Congress created the framework to prevent fragmentation caused by competing state laws. According to OG, once the CFTC supervises and licenses the contract market, governments cannot interfere with the process by labelling it gambling.
The complaint warns that if states independently decide legality, platforms could face lawsuits in one jurisdiction while operating legally in another. This would raise compliance costs, reduce efficiency, and discourage innovation. OG argues that federally regulated exchanges depend on predictable national standards to ensure liquidity, fair pricing, and equal access.
CFTC’s Michigan order
OG’s lawsuit draws heavily on the CFTC’s emergency order issued in July 2026 involving Michigan. In that case, a state court directed Kalshi to unwind positions held by Michigan customers after regulators challenged its event contracts.
The CFTC stepped in and requested that Kalshi continue to honour its trades since there was a risk that the state’s rapid intervention would disrupt the smooth operation of the federal markets. This statement, cited by OG using this example, demonstrates the problem with state regulation, as even the federal regulator recognises the risks.
If states force firms to decline or limit their involvement in trading, the result will be market distortion, inefficient pricing, and unfair treatment of traders. Using the CFTC intervention as an example, OG demonstrates that federal government regulation is intended to keep businesses running smoothly across the country.
Federal pre-emption and constitutional concerns
OG’s argument focuses on the concept of pre-emption, which holds that federal law takes precedence over state law in the event of a conflict between the two. OG claims that the CEA gives the CFTC entire authority over contract markets, therefore limiting the scope of state laws. Allowing Washington to classify federally regulated contracts as gambling, OG contends, would open the door for every state to adopt different standards, creating uncertainty for exchanges and market participants.
OG also points to the CFTC’s emergency intervention in Michigan, where the regulator ordered trades to continue despite a state court ruling. The company argues this shows the federal agency itself recognises that inconsistent state enforcement threatens market integrity. OG further suggests that an exchange cannot function effectively if any trade must be cancelled or restricted due to a state’s gambling laws. This will not only increase costs but also limit market innovation and liquidity.
In addition to pre-emption difficulties, there are also constitutional issues linked to interstate trade under OG. According to the complaint, fragmented state regulation will impose burdens on interstate exchanges. OG warns that exchanges will have operational hurdles, including tracking consumer whereabouts, controlling access, and reversing trades that have previously been cleared under federal supervision. The corporation claims that these charges would damage the financial markets in the United States.
OG’s maintenance of a single federal framework is consistent with Congress’ aim and encourages justice, openness, and innovation in prediction markets. The courts will decide whether to expand or limit prediction markets based on their notion of justice, transparency, and innovation.
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