FlightAware Drops Kalshi Lawsuit as Data Shows the Market Never Gained Traction

FlightAware has voluntarily withdrawn its lawsuit against prediction-market platform Kalshi, ending the legal challenge just one day after filing it in a New York federal court. The company dismissed the case without prejudice and did not explain its reasoning, meaning it could potentially bring the claims again later.

The decision came as Kalshi’s flight-cancellation markets showed limited user activity, suggesting the aviation betting niche had failed to gain significant traction.

In a filing with the U.S. District Court for the Southern District of New York, FlightAware, the world’s largest flight-tracking service, formally requested that the lawsuit be dismissed. Because the dismissal was made “without prejudice,” FlightAware retains the option to pursue the case again.

One possible factor behind the withdrawal could be a combination of public criticism and weak retail demand for flight-related prediction contracts.

Kalshi’s Flight Markets Struggle for Traction

Fortune reported in July that Kalshi had paused its flight-cancellation contracts following social media concerns that bad actors could intentionally cause cancellations and profit from the resulting payouts.

Trading data also points to limited interest in the aviation market. The U.S. flight-cancellation contract currently available through Aug. 14 had recorded just 31,412 contracts traded, representing approximately $1,842 in total dollar volume. Open interest stood at only 1,120 contracts.

That activity is extremely small compared with Kalshi’s broader trading business. The platform’s data shows it has processed roughly $148 billion in trading volume this year.

FlightAware’s dismissal does not indicate whether the two companies reached an agreement or whether Kalshi made changes to its flight-related markets or the data source used to settle them.

Neither Kalshi nor FlightAware immediately responded to requests for comment.

FlightAware Accused Kalshi of Unauthorized Data Use

FlightAware had alleged that Kalshi used its flight data and trademark without authorization to operate prediction contracts tied to airline cancellations.

The flight-tracking company sought damages and an injunction against contracts that allowed users to speculate on the percentage of flights canceled nationwide or at individual airports.

Kalshi rejected the allegations, arguing that it had not violated FlightAware’s licensing terms or trademark rights. According to the original complaint, Kalshi maintained that references to FlightAware qualified as nominative fair use.

FlightAware’s lawsuit also stated that Kalshi had identified flight information from the U.S. Department of Transportation as an alternative data source for settling its contracts.

Lawsuit Ended Before Kalshi Responded

FlightAware withdrew the case before Kalshi had filed an answer or sought summary judgment. That allowed FlightAware to dismiss the action unilaterally under Federal Rule of Civil Procedure 41.

Kalshi introduced its nationwide and local flight-cancellation contracts on July 14, the same day it filed a regulatory submission with the Commodity Futures Trading Commission seeking to list the event contracts.

The products allowed traders to speculate on what percentage of scheduled flights would be canceled during a specified period.

FlightAware’s decision to drop the lawsuit also came a day after the CFTC announced that Kalshi had been ordered to continue operating in New York following a dispute with the state.

Kalshi and other prediction-market operators are facing similar legal challenges in Wisconsin and Nevada. FlightAware’s lawsuit was distinct because it raised a different question: whether a prediction market can use a third party’s data and trademark to settle contracts without having a commercial licensing agreement.

For now, FlightAware has ended that particular legal challenge, although the “without prejudice” dismissal leaves the door open for the company to revisit its claims in the future.

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