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FlightAware, the widely used flight-tracking data provider, has filed a federal lawsuit against prediction market platform Kalshi, alleging the company misused its proprietary data and branding to power controversial flight cancellation contracts. The suit, filed in the US District Court for the Southern District of New York, adds another layer of legal trouble to a platform already facing an aggressive crackdown from New York State.
The complaint centers on claims of breach of contract, trademark infringement, and unfair competition. FlightAware says Kalshi violated a prior agreement that explicitly prohibited the use of its data for gambling purposes, then went ahead and used FlightAware’s name and data anyway to settle event contracts tied to whether specific flights would be cancelled.
How Kalshi’s flight cancellation markets fell apart
Kalshi, a CFTC-regulated event-contract platform, launched flight cancellation markets in July 2026. The idea was straightforward: let users trade on whether a given flight would be cancelled. In theory, it could serve as a hedge for frequent travelers or airlines. In practice, it became a lightning rod for criticism almost immediately.
The backlash was swift and pointed. Critics raised concerns about potential market manipulation, arguing that participants could have incentives to interfere with actual flights. Others questioned the ethics of turning travel disruptions into tradeable bets. The data sourcing issue proved just as problematic: FlightAware, whose data Kalshi was apparently using to determine contract outcomes, declined to authorize that use.
Without a willing data partner, the contracts became unsustainable. Kalshi withdrew the flight cancellation markets shortly after launching them. But the damage, at least from FlightAware’s perspective, was already done.
FlightAware is now seeking unspecified damages and injunctive relief to prevent any further use of its data and name by Kalshi. The company has also requested a jury trial.
The data rights question at the heart of the case
FlightAware’s complaint specifically alleges that a prior agreement between the two companies included restrictions against using the data for gambling-related purposes. If that claim holds up in court, it could set a meaningful precedent for how prediction market platforms negotiate and maintain data partnerships going forward.
The trademark infringement angle adds another dimension. By associating FlightAware’s brand with flight cancellation betting markets, Kalshi may have created the impression that FlightAware endorsed or participated in the product. For a company whose reputation depends on being a neutral, trusted data source for the aviation industry, that kind of association could be genuinely damaging.
New York’s $36B hammer and the gambling question
The FlightAware suit lands at a particularly bad time for Kalshi. On July 31, 2026, New York State filed its own lawsuit against the platform, alleging it operates as an unlicensed gambling business. That case seeks up to $36B in penalties and restitution.
The state’s argument cuts to the core of prediction markets’ regulatory identity crisis. Kalshi has positioned itself as a regulated financial platform, holding a designation from the Commodity Futures Trading Commission that allows it to offer event contracts. The CFTC framework treats these contracts as derivatives, not wagers. New York disagrees, at least when it comes to certain contract types.
FlightAware’s lawsuit leans into this tension as well. The complaint cites state authorities who have compared Kalshi’s contracts to gambling, reinforcing the narrative that the platform’s products may not fit neatly into the regulated-derivatives box the company has built for itself.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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