Crypto.com and Washington officials are requesting a pause in their court case over event contracts as they await the Ninth Circuit's decision on federal preemption.
Crypto.com and Washington State in Legal Limbo
Crypto.com, which operates under North American Derivatives Exchange Inc. (commonly referred to as OG), along with Washington state officials, has requested a temporary halt to their ongoing legal conflict regarding event contracts. This request, made on August 18, 2023, is now in the hands of the Ninth Circuit Court of Appeals, which is currently reviewing appeals that could clarify pivotal legal principles at stake.
The joint request involves Washington Attorney General Nicholas W. Brown, alongside representatives from the Washington State Gambling Commission. If granted, this motion would mean a temporary suspension of specific civil and criminal measures against Crypto.com related to the event contracts traded on federally regulated Designated Contract Markets (DCMs). The emphasis here is on a stopping point—not a resolution.
Both parties contend that moving forward with the litigation in Washington would be inefficient. They argue that resources could be squandered, particularly considering that the appeals court is deliberating on comparable issues. The parties asserted a “good cause” exists to pause the process, which they believe will conserve judicial resources, making it clear that both sides may recognize the potential for overlap in the legal questions posed to the courts.
Crypto.com Takes on Washington's Gambling Laws
On July 22, Crypto.com filed a case challenging the enforcement of Washington’s gambling and consumer laws as these pertain to its event contract activities. The company's legal positioning argues that federal law, predominantly the Commodity Exchange Act, should take precedence over Washington state laws concerning contracts traded on DCMs. In essence, Crypto.com is contending that state regulations governing such transactions should be deemed invalid.
This isn't just a matter of corporate maneuvering; it speaks to larger questions about the balance of power between state and federal authorities. The Commodity Exchange Act was designed to provide a uniform framework for derivatives trading, which Crypto.com argues benefits the integrity of the market. In contrast, the state’s enforcement of local laws aims to safeguard consumers in a more regionally tailored manner. This sets up a complex legal tug-of-war.
Ninth Circuit Ruling: Federal vs. State Authority at a Crossroads
The legal implications extend beyond just Crypto.com. Three additional cases are simultaneously pending before the Ninth Circuit that involve the North American Derivatives Exchange, Kalshi, and Robinhood Derivatives LLC. Essentially, these cases raise similar federal preemption questions, particularly around whether federal law can indeed supersede state laws in scenarios involving gambling-like transactions.
If the Ninth Circuit ultimately affirms that federal law takes precedence, it could establish a significant precedent that reshapes the regulatory environment for future event contracts. During the proposed pause in enforcement, Washington would refrain from enforcing any of its state laws, including the Consumer Protection Act and the Gambling Act, against Crypto.com’s transactions on DCMs. What's at stake is about more than legal outcomes; it shapes the regulatory landscape for companies operating in similar spaces nationwide.
After the Ninth Circuit finishes its review, both parties plan to convene within ten days to discuss their next steps. If an agreement can't be reached, they will submit a status report detailing how the appellate ruling affects the Washington case within 20 days. What happens next is anybody's guess.
The Broader Regulatory Picture
This legal battle is also part of a more extensive conversation on the regulation of prediction markets across the United States. For context, Washington's Gambling Commission stated in December 2025 that event-based prediction markets were unauthorized within the state. Following this, in July, a coalition of 44 attorneys general appealed to the Commodity Futures Trading Commission to revisit proposed rules related to prediction markets. This highlights a growing consensus that sports betting and similar activities largely belong in state jurisdictions.
The proposed agreement between Crypto.com and Washington state includes a considerable 18-month contingency. If the court doesn’t issue any further orders during this period, Washington officials can choose to withdraw from the arrangement after giving Crypto.com a two-week notice. This aspect suggests that both parties are preparing for potential roadblocks ahead, reflecting the uncertainty that seems to pervade this legal landscape.
The stipulated motion and proposed order have been submitted to U.S. Magistrate Judge Brian A. Tsuchida. What this means for you, particularly if you're involved in this industry, is that the outcome of these cases could affect your operational strategies and compliance requirements.
Featured image: Crypto.com / Canva
The post Crypto.com and Washington officials seek pause as Ninth Circuit weighs event-contract appeals appeared first on ReadWrite.
Implications and Future Outlook
This ongoing legal dispute sheds light on the broader conflict between state and federal laws regarding innovative business practices. If the Ninth Circuit rules in favor of Crypto.com, it could embolden other companies in the prediction market space to challenge state-level regulations, potentially leading to a more uniform application of federal laws governing these markets. But if Washington prevails, it may reinforce state oversight over emerging financial technologies, leading to patchwork regulations that can stifle innovation. The stakes are high, and the outcome could reshape how these financial markets operate and are regulated in the future.
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