A federal lawsuit that FlightAware filed against prediction market operator Kalshi on Monday did not survive 24 hours. Lawyers for FlightAware wrote in a Tuesday filing in the U.S. District Court for the Southern District of New York that the case had been "voluntarily dismissed, without prejudice, against all defendants," according to Reuters. Neither company offered further comment after the withdrawal.
The flight cancellation contract that sparked the dispute was still live on Kalshi's website after the suit was dropped, but its attribution had changed. The platform replaced the name "FlightAware" with "Primary Source Agency," and the link behind those words pointed to FlightAware's site. Kalshi's updated disclaimer read:
"This market and these products have not been endorsed by the Primary Source Agency or its affiliates. Any references to the Primary Source Agency's delay and cancellation page, or any associated marks are descriptive only and do not indicate an endorsement of this product or any affiliation between the Primary Source Agency or its affiliates and Kalshi."
How a free account became a legal claim
The complaint, filed Monday in the same court, alleged that a Kalshi employee created a free AeroAPI account in 2022 under terms that barred commercial use. Kalshi built flight cancellation markets on that data feed. Those markets launched on July 14, the same day the company submitted a regulatory filing to the Commodity Futures Trading Commission to list the contracts. Users could bet on the percentage of scheduled flights canceled within specific windows, with the platform stating that outcomes would be "verified from FlightAware."
"Kalshi never informed FlightAware that it would rely on FlightAware's data to determine the outcome of these betting markets," the company wrote in its filing.
FlightAware, the aviation tracking company owned by RTX Corporation, argued the reference to its name falsely implied a commercial partnership. After FlightAware sent a cease-and-desist letter, Kalshi denied violating the license and said its references constituted nominative fair use. A disclaimer was then added stating the markets were not endorsed by FlightAware, but the company argued that step was meaningless because Kalshi continued to cite it as the settlement source.
FlightAware brought trademark infringement claims under the Lanham Act against four Kalshi entities, with breach of contract and unfair competition allegations also named in the same suit. The company sought a temporary restraining order and permanent injunctions, along with unspecified monetary damages, and requested a jury trial.
Safety concerns the company put front and center
The complaint went beyond trademark protection. FlightAware introduced a public safety argument and said it sought to stop Kalshi's markets before any harm to aviation could occur.
"A market that allows the public to wager on whether flights will be delayed or cancelled creates an incentive for participants to interfere with air travel—including by causing or contributing to flight cancellations—to profit from their wagers," the lawsuit stated. "Worse, wagers on flights being timely may incentivize airline, airport, or other aviation workers to cut corners to keep a flight on time."
The filing cited "widespread outrage and concern" after the markets launched in July, noting that major airlines condemned the contracts. It also referenced past manipulation cases on prediction markets. A teleprompter operator reportedly earned approximately $100,000 on Kalshi bets tied to words in President Donald Trump's speeches, and a U.S. soldier allegedly placed bets connected to the removal of Venezuelan President Nicolas Maduro after receiving nonpublic information about a military operation.
Kalshi excludes payouts for cancellations caused by malicious acts or security events from its contract rules. The company had also identified U.S. Department of Transportation flight data as an alternative settlement source, per the complaint.
A platform under pressure across multiple jurisdictions
The FlightAware suit arrived while Kalshi already faced a widening legal campaign from state authorities. New York Attorney General Letitia James and Governor Kathy Hochul filed suit on July 31, alleging the platform operated an unlicensed gambling business and permitted users between the ages of 18 and 20 to access markets that require a minimum age of 21 under state law. New York sought at least $36 billion in damages and penalties.
Similar suits emerged in Wisconsin and Nevada. In Washington state, a judge granted a preliminary injunction on July 21 restricting Kalshi's sports event contracts after rejecting the company's argument that its CFTC registration preempts state gambling law. Michigan also moved to block sports event contracts on the platform.
The CFTC has responded with its own suits against multiple states, including New York and Wisconsin, asserting that federal law governs CFTC-registered prediction markets. A Minnesota federal judge blocked that state's enforcement action against CFTC-registered exchanges in July, a partial reprieve while broader litigation remained active.
FlightAware's claim followed a distinct legal track from the state actions. It did not rest on whether Kalshi's contracts constitute gambling under state law. Instead, it tested whether a prediction market can use a third party's proprietary data and registered trademark to settle contracts without a formal commercial agreement.
A $40 billion platform and an unresolved question
Kalshi and Polymarket together held more than 90% of all prediction market volume in the second quarter, with combined notional volume exceeding $90 billion, according to Predicted's State of Prediction Markets report for Q2 2026. Kalshi has been linked to a potential initial public offering and carries a private-market valuation of around $40 billion.
The dismissal was filed without prejudice, which preserves FlightAware's option to refile. The trademark and data licensing questions the suit raised have not been resolved by a court. Kalshi did not respond to requests for comment on either the original complaint or the withdrawal.
Abimbola Adu
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