North American Derivatives Exchange Inc., operating as OG Prediction Markets and Crypto.com | Derivatives North America, filed a federal lawsuit Wednesday in the Western District of Washington seeking to prevent state officials from applying gambling laws to its event contracts. The CFTC-regulated exchange named Attorney General Nick Brown and members of the Washington State Gambling Commission as defendants. The lawsuit does not follow any enforcement action against OG, but the exchange says Washington's public position and its July 20 injunction against competitor Kalshi create a concrete and imminent threat of enforcement. OG invokes the CFTC's July 14 order protecting completed Michigan event contracts as precedent. The case extends the federal-state jurisdictional conflict over prediction markets to Crypto.com's expanding derivatives business, which launched its OG platform on Feb. 3.
OG Seeks Federal Protection Without Prior Enforcement Action
OG asks the federal court to declare Washington's gambling laws unconstitutional and preempted as applied to its exchange. The company seeks a permanent injunction barring Brown and gambling commissioners from enforcing wagering laws against OG. The complaint does not show that the company has obtained temporary or preliminary protection. The exchange argues that Congress gave the CFTC exclusive jurisdiction over transactions on designated contract markets, creating a uniform national derivatives system that states cannot override. OG says withdrawing from Washington would produce unrecoverable revenue losses, weaken its position against competing exchanges, and create a state-by-state regulatory patchwork incompatible with its federal obligations. Washington has maintained since December 2025 that offering or participating in event-contract markets is unauthorized within the state.
CFTC Michigan Intervention Forms Legal Foundation
OG's complaint relies heavily on the CFTC's July 14 intervention in Michigan. The agency blocked Kalshi from cancelling previously executed sports contracts after a state court ordered them voided and refunded, directing the exchange to fulfill the trades normally. The CFTC said forced unwinding could distort prices and weaken confidence that completed derivatives transactions will remain enforceable. OG also advances a commercial defense of sports contracts, arguing that broadcasters, merchandise retailers, hospitality businesses, restaurants and fantasy operators may use them to hedge revenue tied to sporting outcomes. The complaint offers hypothetical use cases and does not identify businesses currently using OG contracts for those purposes.
Washington Enforcement Record Shows State Success Rate
OG is the second operator to sue Washington on imminent-threat grounds, after Robinhood. The exchange previously sued Nevada regulators in September 2025 after receiving a cease-and-desist, and a federal judge denied its preliminary injunction the following month, prompting Crypto.com to pause Nevada sports contracts and appeal to the Ninth Circuit. In June, OG filed a near-identical complaint against New York Attorney General Letitia James and the New York State Gaming Commission. Washington's state court reached the opposite conclusion in Kalshi's case, finding that the Commodity Exchange Act does not prevent states from defining and enforcing illegal gambling. Federal courts remain divided: the Third Circuit shielded Kalshi in New Jersey, while courts in several other states have allowed local restrictions to proceed. Gambling attorney Daniel Wallach counts states winning 19 of 23 decisions on preliminary injunctions and restraining orders in prediction-market cases.
FAQ
Why did OG Prediction Markets file a lawsuit against Washington State?
OG filed the federal lawsuit to prevent Washington officials from applying state gambling laws to its event contracts. The exchange says Washington's July 20 injunction against Kalshi and the state's public position since December 2025 create a concrete and imminent threat of enforcement, even though OG has not received a cease-and-desist order or faced an enforcement case.
What is OG's legal argument in the Washington lawsuit?
OG argues that Congress gave the CFTC exclusive jurisdiction over transactions on designated contract markets, creating a uniform national derivatives system that states cannot override. The exchange invokes the CFTC's July 14 Michigan intervention, where the agency blocked Kalshi from cancelling completed sports contracts after a state court ordered them voided, as precedent for federal protection of its derivatives operations.
How many prediction market cases have states won against exchanges?
Gambling attorney Daniel Wallach counts states winning 19 of 23 decisions on preliminary injunctions and restraining orders in prediction-market cases. Federal courts remain divided, with the Third Circuit shielding Kalshi in New Jersey while courts in several other states have allowed local restrictions to proceed.
