New York has asked a court to stop prediction market platform Kalshi from doing business without a state gambling license and is seeking at least $36 billion in damages, subject to a final calculation.

Attorney General Letitia James filed the case July 31, alleging that Kalshi’s event contracts amount to unlicensed gambling. Kalshi enables users to buy yes-or-no positions tied to sports, elections, entertainment and other events. New York argues that the structure is still wagering, regardless of the terminology used to describe it.

New York also objects to Kalshi allowing customers ages 18 to 20 to open accounts because the state limits mobile sports betting to people 21 and older. The complaint alleges that Kalshi does not comply with age restrictions and other consumer protections required of licensed gambling businesses.

The petition asks the court to halt Kalshi’s alleged gambling operations in New York, require an accounting of its customers and transactions, repay customers, surrender its gains and pay penalties that could include three times those gains plus $100,000 for each unauthorized sports bet offered.

Kalshi moved the lawsuit from state court to federal court soon after New York filed it. Because the case was now in federal court, on Aug. 3 the state judge declined to consider New York’s request for immediate limits on Kalshi’s business. New York can renew that request if the lawsuit is sent back to state court. The decision did not resolve whether the company’s contracts are legal or require it to shut down.

The parties disagree over what Kalshi’s federal regulatory status allows it to do. Kalshi is a designated contract market overseen by the Commodity Futures Trading Commission. It argues that the Commodity Exchange Act gives the CFTC exclusive authority over contracts traded on registered exchanges and prevents states from treating them as gambling. New York says its gambling laws still apply. The CFTC has backed Kalshi’s position and sued the state in April to block such enforcement.

Kalshi’s argument has already faced an early, limited ruling in a separate case it brought against New York officials. On July 7, a federal judge refused to block enforcement against its sports event contracts, finding that Kalshi had not shown federal law was likely to override New York’s gambling rules. She also said self-certification allows Kalshi to list a contract without prior CFTC approval but does not establish that the contract is lawful. Kalshi appealed. The ruling is relevant because the new lawsuit raises the same basic conflict, but it extends beyond sports contracts into Kalshi’s larger range of event markets.

For CxOs, the dispute reveals the risks of building a national platform around an unsettled regulatory category. Federal oversight may address one set of rules without overriding state requirements involving licensing, age checks, location controls, advertising and consumer protection. Those overlapping requirements can shape where a company offers its services, how its platform is built and whether expanding into an adjacent product category brings new compliance demands.

The Kalshi case is still unresolved, as is the larger question of how far federal oversight shields prediction markets from state gambling laws. But New York’s $36 billion damages estimate shows how quickly a dispute over which regulatory framework governs a platform can become a threat to the business itself.