Kalshi is a U.S.-regulated prediction market exchange. It allows users to trade on the outcome of various real-world events, ranging from economic data releases to political elections and, in this case, flight statistics. Kalshi aims to provide a platform for hedging and speculation on future events.

What are prediction markets?

Prediction markets are exchange-traded markets where participants buy and sell contracts whose value is tied to the outcome of a future event. The price of a contract at any given time reflects the market's collective probability of that event occurring. They are designed to aggregate information and forecast outcomes.

What are FlightAware's main allegations against Kalshi?

FlightAware alleges that Kalshi used its proprietary flight data and explicitly referenced FlightAware as the source for settling flight cancellation prediction markets without obtaining permission or a license. It also claims trademark infringement due to the unauthorized use of its name and branding, and that Kalshi ignored a cease-and-desist letter before the lawsuit was filed.

What does FlightAware mean by 'unsafe incentives'?

FlightAware's complaint suggests that allowing individuals to profit from accurate predictions of flight cancellations could, theoretically, create an incentive for malicious actors to attempt to influence or cause those cancellations. This raises ethical and public safety concerns about the potential for market manipulation or interference with critical infrastructure.

What is an injunction in this context?

An injunction is a court order that requires a party to do or refrain from doing a specific act. In this lawsuit, FlightAware is seeking an injunction to stop Kalshi from continuing to operate the flight cancellation prediction markets and from using FlightAware's data and branding. If granted, it could halt those specific markets either temporarily or permanently.

Image: courtesy of TechCrunch

techAugust 12, 2026By Veridact EditorialUpdated Aug 12

The Fight Over Flight Data: FlightAware Sues Kalshi, Raising Questions About Prediction Market Incentives

FlightAware, a major provider of real-time flight tracking data, has sued prediction market platform Kalshi in New York federal court. The lawsuit, filed on August 11, 2026, alleges that Kalshi used FlightAware's proprietary data and trademark without authorization to power its flight cancellation prediction markets. FlightAware is seeking damages and an injunction to halt Kalshi's operation of these markets, citing concerns that they could create incentives for individuals to attempt to influence flight cancellations for financial gain.

Outlook

The initial phase of the lawsuit will likely involve Kalshi filing its response to FlightAware's complaint in the U.S. District Court for the Southern District of New York. This will be followed by a discovery period, where both parties exchange information, documents, and depositions to build their respective cases. Given the nature of intellectual property disputes and the stakes involved in data licensing, a lengthy legal battle is possible. However, many such cases ultimately resolve through settlement negotiations before reaching a full trial. The court will also consider FlightAware's request for an injunction, which, if granted, would temporarily or permanently stop Kalshi from operating the disputed flight cancellation markets while the lawsuit proceeds.

Background

At its core, this lawsuit centers on the unauthorized commercial use of data and intellectual property. FlightAware is a well-established name in aviation data, offering real-time flight tracking and status updates that are critical for airlines, airports, and the traveling public. Their data is a valuable asset, often licensed under strict terms.

Kalshi, on the other hand, operates a regulated prediction market platform where users can "trade on events." These events range from economic indicators to political outcomes, and, in this specific case, the number of flight cancellations in the U.S. or at particular airports. Kalshi launched these flight cancellation markets roughly a month before the lawsuit was filed, in July 2026.

FlightAware's complaint makes several specific allegations. First, it claims that Kalshi used FlightAware's raw flight data without securing the necessary licenses or permissions. Second, FlightAware alleges that Kalshi explicitly named FlightAware as the primary source for settling these prediction markets, effectively leveraging FlightAware's brand and credibility without authorization. This use of FlightAware's name and branding, the complaint argues, constitutes trademark infringement.

Before filing the lawsuit, FlightAware reportedly sent a cease-and-desist letter to Kalshi, instructing the prediction market platform to stop using its data and branding. Kalshi allegedly ignored this warning, prompting FlightAware to escalate the matter to federal court.

Perhaps the most significant and ethically charged aspect of FlightAware's complaint is the assertion that these flight cancellation markets could create "incentives for unsafe attempts to influence flight cancellations." This goes beyond a standard data licensing disagreement, introducing a public safety and ethical dimension to the legal battle. It suggests that the very existence of such markets could encourage malicious actors or desperate individuals to interfere with flight operations to profit from a predicted outcome. This argument could attract broader regulatory attention beyond just intellectual property law.

This isn't Kalshi's first encounter with legal scrutiny. The platform has been involved in other legal disputes, particularly concerning the regulatory classification of its markets and the scope of permissible prediction market activities under U.S. law. These ongoing legal challenges indicate a broader pattern of navigating, and at times pushing the boundaries of, existing regulatory frameworks for novel financial instruments.

Precedents

The dispute between FlightAware and Kalshi is not an isolated incident but rather a recurring theme in the digital economy: the struggle for control and monetization of data. Historically, companies that aggregate and process large volumes of real-time data, like news agencies, financial data providers, or sports statistics firms, have fiercely protected their intellectual property. Unauthorized scraping or commercial use of such data often leads to legal action, with outcomes varying widely based on the specifics of licensing agreements, terms of service, and the interpretation of intellectual property law.

For example, news organizations have frequently sued aggregators for using their content without permission, and financial data providers have long-standing, complex licensing structures that dictate how their information can be used. The core principle is that significant investment goes into collecting, verifying, and distributing this data, and companies expect to control its commercial exploitation.

In the realm of prediction markets, the regulatory landscape remains fluid and often contentious. In the United States, the Commodity Futures Trading Commission (CFTC) oversees these markets, generally requiring them to be approved as 'event contracts' that serve a legitimate economic purpose and are not against the public interest. Kalshi itself has previously faced scrutiny and sought approvals for various markets, highlighting the ongoing tension between innovation in financial products and the need for regulatory oversight to prevent manipulation, fraud, or markets deemed to be akin to unregulated gambling.

The 'unsafe incentives' argument by FlightAware echoes historical concerns about markets that could incentivize harmful behavior. For instance, 'death pools' or similar morbid markets are generally prohibited due to obvious ethical and public safety concerns. While flight cancellations are not directly comparable, the core argument about incentivizing adverse events taps into a similar vein of regulatory caution.

This lawsuit carries implications far beyond the immediate financial interests of FlightAware and Kalshi. It forces a critical examination of data ownership in an increasingly interconnected world, the boundaries of legitimate prediction markets, and the ethical responsibilities of platforms that facilitate trading on real-world events.

For data providers, the outcome could set a precedent for how extensively their public-facing data can be repurposed for commercial ventures, particularly those involving financial markets. If Kalshi is found to have used FlightAware's data without authorization, it would reinforce the need for strict licensing and protection of proprietary information. Conversely, if Kalshi prevails, it could open the door for broader use of publicly accessible data in novel applications, potentially challenging existing business models for data aggregation.

For the burgeoning prediction market industry, FlightAware's 'unsafe incentives' argument is particularly consequential. Regulators, including the CFTC, constantly weigh the innovative potential of these markets against the risks they pose. A court ruling that acknowledges or validates the potential for these markets to incentivize harmful acts could lead to increased regulatory scrutiny, stricter approval processes, or even outright bans on certain categories of event contracts. This could stifle innovation in prediction markets by limiting the types of events that can be traded.

Furthermore, the case highlights the reputational risks for companies whose data or brand is associated with activities they do not endorse. FlightAware's concern about being named as the source for 'gambling markets' speaks to a desire to control its public image and avoid association with activities it deems ethically questionable or potentially harmful. For consumers, the outcome could influence the reliability and integrity of public data sources, particularly in critical sectors like aviation.

Ultimately, this legal battle is a microcosm of a larger societal debate: how do we balance the free flow of information and entrepreneurial innovation with the need to protect intellectual property, ensure public safety, and maintain ethical standards in financial markets?

Scenarios

Analysis

The legal dispute between FlightAware and Kalshi could unfold in several ways:

1. FlightAware Prevails, Kalshi's Markets Halted: If the court sides with FlightAware, it could issue a permanent injunction, forcing Kalshi to cease its flight cancellation prediction markets. FlightAware could also be awarded substantial damages for unauthorized data use and trademark infringement. This outcome would strongly affirm the rights of data providers to control the commercial use of their information and could deter other platforms from similar practices.

2. Settlement and Licensing Agreement: A common resolution in intellectual property disputes is a confidential settlement. Under this scenario, Kalshi might agree to pay FlightAware for a license to use its data, possibly with new terms or restrictions. This would allow Kalshi to continue its markets, albeit with higher operational costs, and FlightAware would gain a new revenue stream while retaining control over its intellectual property.

3. Kalshi Wins, Continues Markets Unimpeded: If Kalshi successfully argues that FlightAware's data is not proprietary in the context it was used, or that the use falls within fair use provisions, or that FlightAware's trademark was not infringed, the lawsuit could be dismissed. This would be a significant victory for Kalshi and could embolden other platforms to use publicly available data more freely, potentially reducing the leverage of data providers.

4. Regulatory Intervention: Regardless of the lawsuit's outcome, FlightAware's argument about "unsafe incentives" could attract the attention of the Commodity Futures Trading Commission (CFTC) or other financial regulators. Even if the court does not directly rule on the ethical implications, regulators might initiate their own investigations into the potential for manipulation or public harm stemming from flight cancellation prediction markets, potentially leading to new rules or restrictions for Kalshi and the broader prediction market industry.

Timeline

2026-07

Kalshi Launches Flight Cancellation Markets

Prediction market platform Kalshi begins offering contracts that allow users to trade on the number of flight cancellations in the U.S. and at specific airports.

2026-08-11

FlightAware Files Lawsuit Against Kalshi

FlightAware files a complaint in the U.S. District Court for the Southern District of New York, alleging unauthorized use of its data and trademark by Kalshi for flight cancellation prediction markets. The lawsuit seeks damages and an injunction.

Frequently Asked Questions

FlightAware is a global aviation data and intelligence company. It provides real-time flight tracking, flight status, and predictive analytics for commercial, private, and general aviation. Its services are used by airlines, airports, aircraft operators, and individual travelers.

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