What to know:
- FlightAware sues Kalshi over alleged misuse of its data in flight cancellation markets.
- Flight contracts could encourage wider travel disruption and threaten passenger safety.
- Kalshi and Polymarket control over 90% of prediction market volume, a Q2 report shows.
FlightAware has sued Kalshi in a New York federal court over flight cancellation markets. The aviation tracking company alleges the platform used its name and data without permission. It also raised concerns about trademark rights, reputation, and passenger safety.
FlightAware filed the complaint on Monday in the U.S. District Court for the Southern District of New York. It said Kalshi ignored repeated requests to stop using its registered mark. The demands also covered the company’s flight information.
Why FlightAware Challenged Kalshi’s Flight Contracts
According to the lawsuit, the platform was continuing to offer contracts that were allegedly verified with FlightAware’s data. Those contracts enabled users to bet on the probability of commercial flights being delayed or cancelled.
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Trademark infringement, breach of contract, unfair competition, and reputation harm are among the allegations listed in the complaint. FlightAware claims that the listings were creating a misleading notion that the company endorses the markets. FlightAware denies any affiliation.
According to FlightAware, the products appeared following Kalshi’s entry into the commercial flight trading in July. The company claims that such affiliation may negatively affect its relations with airlines, travelers, and other clients.
Safety issues became one of the major elements of the complaint. FlightAware says that cancellation contracts are likely to incentivize malicious individuals who can earn money from the disruption of the air traffic. Such actions may result in flight delays and endanger passengers.
The complaint contains an issue related to the contracts favoring on-time arrivals. FlightAware warns that such a market may put pressure on airline, airport, or aviation workers to compromise. The company associates this risk with passenger safety.
Airlines condemned the products. Also, the complaint says that clients immediately associated FlightAware with the management and verification of the markets. FlightAware asked the court to prohibit the actions before any public safety damage happens.
What Drives Prediction Market Risks
This case is one of many in which legal action was brought against prediction market operators in the US. In such lawsuits, state gaming agencies seek court orders preventing event contracts from being deemed illegal wagers.
Most of these lawsuits arise from sports-related prediction markets available to citizens within the state. Such cases have led to conflicts between federal regulators and state officials over treatment of event contracts.
While this case does not solely revolve around gambling law issues, it brings up predictions as wagers as per state regulations.
The complaint by FlightAware brings up concerns over traders exploiting data prior to an event. In this case, the filing mentions cases where traders had access to information related to presidential speeches and military operations in Venezuela.
One of the cases involves the teleprompter operator for then-president Donald Trump. It was reported that the operator had $100,000 worth of contracts on words used by President Trump in his speeches.
The other case involves a U.S. soldier betting on whether the president of Venezuela would be removed from office. This happened after he got nonpublic information concerning the military operation.
The second-quarter report by Predicted showed Kalshi and Polymarket as dominant providers of prediction market services. Together, the two platforms controlled more than 90% of total prediction market volume. Their combined notional volume exceeded $90 billion during the second quarter, according to the report.
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