Kalshi has another lawsuit on its hands, but this one is pretty different from the state regulatory fights it has been dealing with lately. FlightAware, the flight-tracking company used by travelers and aviation businesses, has sued Kalshi in federal court in New York. The company says Kalshi used its data, name, and trademark to help settle flight cancellation markets without permission, creating the impression that FlightAware had some kind of relationship with the product.
FlightAware Says It Was Pulled In Without Approval
According to the complaint, Kalshi introduced markets tied to U.S. flight cancellations in July and named FlightAware as the primary source for settlement. FlightAware says it never agreed to that setup and didn't know Kalshi planned to use its data until media outlets started calling for comment.
The timeline laid out by FlightAware is fairly direct. Kalshi allegedly created a free AeroAPI account on July 14, filed its CFTC self-certification the same day, and identified FlightAware as the source that would determine how the markets settled.
FlightAware responded quickly. The company says it shut down the account on July 15 and sent Kalshi a cease-and-desist letter. Kalshi later disputed the claims and argued that its references to FlightAware qualified as fair use, while also adding a disclaimer saying FlightAware did not endorse the markets.
The Bigger Fight is Over Data and Reputation
This case isn't really about whether Kalshi can legally offer prediction markets in the first place. FlightAware is focused on something more basic: whether Kalshi had the right to use its data and branding for a commercial product. The company is asking the court for damages and wants Kalshi blocked from continuing to use its name and information.
FlightAware also says the association has created reputational problems because people may assume it supports or helped build the markets. The complaint points to several issues:
- Unauthorized use of FlightAware data
- Trademark infringement claims
- Alleged breach of FlightAware's terms of use
- Concerns that users may think FlightAware endorsed the product
- Requests for injunctions and unspecified damages
That makes this a very different legal problem from Kalshi's ongoing fights with state regulators.
Flight Cancellation Markets Raise Safety Questions Too
FlightAware also raises a more unusual concern. The company argues that allowing people to profit from flight cancellations could create bad incentives for someone trying to influence an airport closure or disrupt travel. There is no allegation that anyone has actually done that, so this remains a concern about the structure of the market rather than proven misconduct.
FlightAware also notes that Kalshi already identified U.S. Department of Transportation data as a backup settlement source. Its argument is essentially that Kalshi doesn't need FlightAware to keep the market running.
Another Legal Headache at a Busy Time
The lawsuit arrives as Kalshi is already facing several court battles over state authority and federal regulation. Connecticut recently became another state where a federal judge rejected Kalshi's attempt to block enforcement of local laws, although Kalshi has appealed.
That broader fight is about who gets to regulate event contracts. The FlightAware case is much narrower, but it could still matter because prediction markets rely heavily on external data to settle contracts accurately.
The Trade Handle Prediction Markets Take
This is a good reminder that prediction markets face more than just regulatory questions as they expand. Every new category needs a trusted source to determine how a contract is resolved. Weather markets need weather data. Sports markets need official results. Transportation markets need reliable flight information.
As prediction markets move into more specialized areas, the companies providing that information may want a bigger say in how their data is used. Kalshi's dispute with FlightAware could be an early example of a much broader issue the industry will have to work through as it continues to grow.