The CFTC and DOJ sued Arizona, Connecticut, and Illinois over state actions against CFTC-registered prediction markets. A 2-1 Third Circuit ruling then upheld an injunction blocking New Jersey from enforcing gambling laws against Kalshi. The court said Kalshi’s sports-related event contracts are swaps under the Commodity Exchange Act and fall under the CFTC’s exclusive jurisdiction. The dispute could shape the regulatory path for decentralized prediction markets and crypto-native derivatives nationwide.