New York has filed a sweeping lawsuit against prediction market platform Kalshi, accusing the company of operating an illegal gambling business and seeking penalties that could total at least $36 billion. The lawsuit, filed on July 31 by New York Attorney General Letitia James and backed by Governor Kathy Hochul, argues that Kalshi has been offering event contracts that violate the state’s gambling laws. Officials are asking the court to permanently block the company from operating in New York, require it to return funds to users, surrender alleged unlawful profits, and pay billions of dollars in civil penalties.