Kalshi sued by FlightAware over use of flight data in betting markets

Flight tracking company FlightAware has sued Kalshi over flight-cancellation prediction markets that rely on its data, seeking court orders to stop the platform from using its information and brand in connection with the contracts.

FlightAware, in a complaint filed Monday, accused Kalshi of using its flight-tracking data without permission to settle prediction markets while giving users the impression that the two companies had a close commercial relationship.

The dispute centers on markets Kalshi introduced last month that allow users to trade on whether individual flights will be canceled. Kalshi tells users that the outcomes of the contracts are “verified from FlightAware,” according to the filing.

FlightAware said it had not agreed to have its data used for that purpose and was not told beforehand that its information would determine whether traders received payouts.

“Kalshi never informed FlightAware that it would rely on FlightAware’s data to determine the outcome of these betting markets,” the company said in its complaint.

The lawsuit accuses Kalshi of breach of contract, trademark infringement and unfair competition. FlightAware is seeking a temporary restraining order as well as preliminary and permanent injunctions that would stop Kalshi from using the flight-tracking company’s services and brand for the disputed markets.

FlightAware says Kalshi created an impression of partnership

FlightAware’s objection extends beyond Kalshi’s use of flight data to determine contract outcomes.

By naming FlightAware in the verification process, Kalshi allegedly gave customers the impression that the tracking company had approved or participated in the markets, according to the complaint.

FlightAware said customers began assuming it had become involved with Kalshi after the cancellation markets went live, creating reputational concerns for a company whose services are used to track commercial and private aviation.

The filing also argues that the markets could expose FlightAware to criticism over the types of events traders are being allowed to speculate on, even though FlightAware itself does not operate or administer the contracts.

For the flight contracts, traders effectively take positions on whether a specified flight will be canceled. Kalshi then relies on the stated verification source to determine the final result and settle the corresponding positions.

FlightAware alleges that Kalshi obtained the benefit of its data and reputation while making that information part of a commercial betting product without securing permission for such use.

Flight cancellation markets raised safety concerns

Beyond the contractual and trademark claims, FlightAware raised concerns about incentives created by allowing traders to profit from flight cancellations.

Kalshi excludes payouts for cancellations caused by malicious acts or security-related disruptions, according to the lawsuit, but FlightAware argued that the contracts still created safety risks connected with attempts to influence aviation operations.

The company said there was “widespread outrage and concern” that the contracts could encourage unsafe efforts to affect whether flights operate as scheduled.

Such conduct could “strand travelers, disrupt airline operations, and threaten safety,” FlightAware said.

The complaint does not allege that a trader has successfully interfered with a flight to win one of the contracts. Instead, FlightAware’s argument focuses on the incentive it says is created when financial payouts depend on whether a real-world flight is canceled.

The concern adds another type of challenge for Kalshi as its event contracts expand beyond traditional financial or political outcomes into sports and other real-world events.

Kalshi operates as a Commodity Futures Trading Commission-regulated prediction market and has argued in several state disputes that its event contracts fall under federal derivatives oversight rather than state gambling laws.

Kalshi faces separate fights over prediction markets

The FlightAware lawsuit comes as Kalshi is already fighting several cases over whether some of its contracts amount to gambling under state law.

On July 31, New York Attorney General Letitia James and Governor Kathy Hochul sued Kalshi, accusing the company of operating an unlicensed gambling business in the state. As crypto.news previously reported, New York is seeking at least $36 billion in damages, penalties and related relief while also asking a court to halt the disputed contracts.

The New York complaint alleges that Kalshi offered event contracts without a state gaming license and allowed users between 18 and 20 to participate even though New York requires customers to be at least 21 for mobile sports betting. State investigators also said they opened accounts and completed transactions on Kalshi as part of their investigation.

Court rulings have not produced a uniform answer on how prediction markets should be treated.

In Washington, a judge on July 21 granted a preliminary injunction restricting Kalshi’s sports event contracts after finding that state gambling laws could apply despite the company’s federal registration. The Washington court ruling rejected Kalshi’s argument at that stage of the case that the Commodity Exchange Act prevented the state from enforcing its gambling rules.

Michigan has produced another setback for prediction-market operators. On Aug. 6, U.S. District Judge Shalina Kumar denied Coinbase Financial Markets’ request for preliminary relief that would have stopped Michigan officials from applying state sports-betting laws to the company’s event contracts, according to a recent Michigan ruling.

Kalshi itself had already become caught between Michigan authorities and the CFTC in July. A Michigan court ordered restrictions on its sports contracts, while the federal regulator later directed the company not to unwind trades in response to the state order. Kalshi said at the time that the conflicting instructions left it trying to comply with competing state and federal requirements.

Minnesota court has favored Kalshi and Polymarket

Minnesota has produced a different result.

A federal judge on July 27 blocked enforcement of Minnesota’s prediction-market ban against CFTC-registered designated contract markets while litigation continues. As previously covered by crypto.news, the Minnesota injunction protected Kalshi, Polymarket US and other federally registered markets from enforcement of the new law at the preliminary stage.

Judge Katherine Menendez found that the plaintiffs were likely to succeed on at least part of their federal preemption argument, although she did not rule that every event contract offered by the platforms qualified for federal protection.

The court specifically questioned whether registration as a designated contract market automatically determines the legal status of every individual contract. The judge noted that different types of event contracts could require separate analysis as the cases move toward final decisions.

At the federal level, the CFTC has taken the position that derivatives traded on registered prediction-market exchanges fall within its jurisdiction under the Commodity Exchange Act. That position has put the regulator in direct conflict with states seeking to apply gambling rules to sports-related contracts.

According to the FlightAware report, the CFTC has pursued complaints involving Wisconsin, Illinois, Arizona, Connecticut, New York, New Mexico, Minnesota and Rhode Island as part of the jurisdiction fight.

FlightAware’s case follows a different legal route because it concerns the use of the company’s data and trademarks rather than whether Kalshi’s contracts violate state gambling laws. The company is asking the court to stop Kalshi from using FlightAware information and branding in connection with its flight-cancellation markets while its breach-of-contract, trademark and unfair-competition claims proceed.