FlightAware sues Kalshi over flight-cancellation markets as 8 states tighten rules

Flight-tracking service FlightAware sued Kalshi in federal court Monday, accusing the prediction-market platform of running flight-cancellation betting markets on its data and trademark without authorization, adding to Kalshi's legal setbacks.

"Kalshi is using FlightAware's data and name to run gambling markets on flight cancellations," FlightAware said in the complaint filed in the U.S. District Court for the Southern District of New York.

The lawsuit, which also alleges breach of contract, trademark infringement, and unfair competition, seeks damages and court orders barring Kalshi from using FlightAware's data and name. Kalshi self-certified flight-cancellation contracts with the Commodity Futures Trading Commission in July, naming FlightAware as the "Primary Source Agency" for settling outcomes, according to the complaint. FlightAware said it first learned of the markets when national media contacted it for comment, then cancelled Kalshi's data account and sent a cease-and-desist letter on July 15.

The case adds to mounting legal challenges for Kalshi, which generated $1.07 billion in volume on Aug. 9, with sports and parlays accounting for 79.2 percent. Eight states now have authority to restrict the platform after recent rulings, and the CFTC has proposed rules targeting conflicts of interest among prediction-market exchanges.

FlightAware said Kalshi's use of its name created "irreparable harm" to its reputation, as commenters assumed the flight-tracking company was sponsoring the betting markets. The firm also raised safety concerns, arguing the markets could incentivize bad actors to cause cancellations to profit from bets. Kalshi's contracts exclude payouts for malicious and security-related disruptions, but FlightAware said the markets "can strand travelers, disrupt airline operations, and threaten safety."

Kalshi has not yet filed a formal response. The platform has kept the flight-cancellation markets live, adding a disclaimer stating the products "have not been endorsed by FlightAware" and that references to the company "are descriptive only." FlightAware noted that Kalshi could use U.S. Department of Transportation Bureau of Transportation Statistics data as an alternative settlement source, questioning why the platform needed its data at all.

Legal Pressure Mounts Across Eight States

The lawsuit is the latest in a series of setbacks for Kalshi. A federal court in Connecticut ruled this month that the state can enforce its sports-betting laws against the platform, rejecting Kalshi's arguments that the Commodity Exchange Act preempts state gambling laws and that sports contracts qualify as swaps. Utah joined seven other states last week in gaining authority to restrict Kalshi, according to the Associated Press.

The last time a state won a similar ruling, in Michigan in June, the state secured a temporary restraining order blocking Kalshi from offering sports-related contracts. The CFTC has separately sued Wisconsin, Illinois, Arizona, Connecticut, New York, New Mexico, Minnesota, and Rhode Island to assert federal oversight of the prediction-markets sector.

CFTC Rulemaking Looms

The CFTC proposed rules last week to address conflicts of interest among prediction-market exchanges, noting that roughly eight designated contract markets have affiliated market makers trading on their own exchanges. The agency said the existing framework of voluntary practices is "uneven" and not uniformly subject to examination. The CFTC's Innovation Advisory Committee, which includes Kalshi CEO Tarek Mansour, Polymarket CEO Shayne Coplan, and DraftKings CEO Jason Robins, holds its inaugural meeting Aug. 20.

Kalshi, meanwhile, announced a multi-year partnership with Nasdaq Market Surveillance to strengthen monitoring of trading activity, part of its broader effort to improve market oversight as regulators scrutinize the sector.

This article is for informational purposes only and does not constitute investment advice.