A recent analysis by CNN showed so far this year users between the ages of 18 and 21 traded an estimated $5.4 billion on Kalshi, the largest prediction market in the U.S. Of that amount, $3.9 billion was in sports-related events.

Sports gambling in most states is off limits for anyone under 21. And yet Kalshi allows anyone 18 years old and older to put money into it because it is regulated as a financial market under the jurisdiction of the Commodity Futures Trading Commission.

This differs from sports gambling organizations, which are regulated at the state level. In fact, New York State is suing to shut down Kalshi, alleging it’s operating an unlicensed gambling platform. 

Kalshi did not immediately respond to a request for comment. A spokesperson for Kalshi told CNN that users between the ages of 18 and 21 make up just 3.14% of its overall trading volume.

On Kalshi, users can buy an event contract with a yes or no outcome based on a real world event. Kalshi’s exchange will then match the user to another user taking the opposite position, and would pay only the person who chose the correct outcome.

For sports, this means contracts can be made on anything from whether a certain team will win a game or whether a team will make it to the championship. Kalshi also includes predictions on other events outside of sports such as midterm election results or whether 2026 will be the hottest year ever.

Kalshi has previously denied that its prediction markets constitute gambling, because users taking a position with an event contract are always countered by another user, not the platform itself, as would be the case with a sportsbook. 

But the contracts resemble bets. Users can also build “combos” that act similarly to a “parlay” bet where users can wager on the outcome of multiple events and will get paid only if all parts of the bet come true.

Les Bernal, the national director of Stop Predatory Gambling, told Fortune it’s worrying that young people are able to access this kind of platform at such a young age, when they are highly impressionable. 

“They try to create this experience, it’s like a video game type experience, in pushing this on young people,” Bernal said of prediction markets like Kalshi. “Meanwhile, we know from the science that this is an extremely addictive product that causes incredible harm.”

A peer-reviewed paper published in Science in April warned that the design of commercial prediction markets could create risks of behavioral addiction.

“Continuous novelty and infinite event streams eliminate stopping points, possibly weakening prefrontal inhibitory control. This architecture maximizes trading volume rather than forecasting accuracy, potentially driving neuroadaptation toward compulsive use in vulnerable individuals as rewards fade…” the research journal said.

Kalshi, for its part, has previously argued that it should not be regulated in the same way as sports betting or online casinos because it merely connects users on opposite sides of a financial transaction. 

“Kalshi does not set odds, does not act as a counterparty, and does not profit from customer losses. It operates a neutral, two-sided marketplace where standardized, fully collateralized contracts are traded at prices determined by supply and demand,” the company wrote in testimony earlier this year when it opposed a Connecticut bill that would have raised the minimum age for using prediction markets to 21. The bill did not pass.

So far, Kalshi and other prediction markets have been able to avoid some state rules that apply to sports gambling operations, yet that might be changing. 

A coalition of 44 state attorneys general argued in a letter last month that the CFTC’s proposed prediction-market rules exceed its authority and intrude on states’ traditional power to regulate sports gambling.

And on Friday, a ruling by the 9th U.S. Circuit Court of Appeals allowed Nevada’s government to impose state law against Kalshi’s sports-related event contracts, effectively blocking Kalshi from offering them in Nevada unless it complies with state gaming law.