A US federal court in Nevada has ruled that state governments can pursue enforcement actions against Kalshi, the decentralized prediction market platform, Bloomberg reports. This ruling allows states to potentially impose sanctions, marking a significant shift in the regulatory landscape for prediction markets. In March, the Nevada state government issued a cease-and-desist letter to Kalshi, citing potential criminal and civil penalties for alleged violations. Kalshi responded by filing a lawsuit and initially secured a temporary restraining order. However, the recent court decision lifts that order, giving Nevada the green light to proceed with enforcement. The court specifically stated that contracts tied to sporting event outcomes, where financial gains or losses are determined by the results, do not qualify as swaps under the Commodity Exchange Act. This distinction is crucial, as prediction market platforms previously sought exemption from state-level regulation by registering as Designated Contract Markets (DCMs) under federal oversight. This ruling could pave the way for increased state scrutiny and regulation of prediction markets nationwide. ```