OG, the exchange backed by Crypto.com, filed a lawsuit against Washington state officials this week, pushing to head off an expected enforcement action against its prediction markets. The suit argues federal commodities law protects OG from state gambling rules, drawing on the same logic Washington used to shut down rival Kalshi last year. The move sets up a direct clash between state prosecutors and a firm that says the CFTC — not local regulators — has the final say over these contracts.
Why OG struck first
OG didn't wait for the state to act. The complaint explicitly cites Washington's successful injunction against Kalshi as an imminent threat, warning that the same legal playbook could be used to halt OG's markets. By suing first, the exchange forces the question in federal court rather than defending itself after a cease-and-desist or a court order. The timing isn't accidental: the company wants a ruling before Washington's attorney general can line up a similar case.
The Kalshi precedent
Washington's win over Kalshi proved that state gambling laws can reach prediction-market operators — at least in the Ninth Circuit. That case gave the state a template: argue the contracts are unregistered gambling, not regulated futures. OG's lawsuit directly challenges that view, insisting that prediction markets tied to commodities fall under the Commodity Exchange Act. The company is betting that a federal judge will see things differently than the Kalshi court did.
CFTC's Michigan move
OG's legal team also points to the CFTC's recent intervention in Michigan involving North American Derivatives Exchange Inc. The agency stepped into that dispute to assert federal authority over similar products. OG argues that the Michigan case reinforces the principle that the CFTC, not state attorneys general, handles derivatives regulation. It's a strategic reference: if the CFTC itself claims primacy, the exchange reasons, Washington can't step in with its own enforcement.
What comes next
Washington's attorney general hasn't responded publicly to the suit. The case will likely be assigned to a federal judge in the Western District of Washington. A hearing on OG's request for a declaratory judgment — or a potential preliminary injunction — could come within weeks. The outcome will ripple beyond OG: it'll test whether prediction markets can rely on federal preemption to operate in states that see them as gambling.
