CoinDesk
FlightAware voluntarily dropped its trademark and data-misuse lawsuit against Kalshi on Tuesday, one day after filing in the U.S. District Court for the Southern District of New York. The dismissal was filed without prejudice, leaving FlightAware free to refile but giving no stated reason for the withdrawal. The flight-cancellation market the suit had targeted had generated just 31,412 contracts, $1,842 in aggregate volume and 1,120 contracts in open interest, against Kalshi's $148 billion in volume year to date.
Why it matters
The suit tested a question the prediction-market industry has not seen answered in court: can an event contract settle using a third party's data and trademarks without a commercial agreement? Kalshi's answer in the original complaint was nominative fair use, plus a fallback to U.S. Department of Transportation flight data. With the case dropped at the courthouse under Federal Rule of Civil Procedure 41, no ruling settles the question, and any prediction-market operator leaning on a licensed external feed sits in the same legal gray zone.
Market impact
Kalshi had paused flight cancellation contracts in July after social media backlash over alleged incentives for malicious flight disruptions, and the volume figures suggest the niche never found retail traction. The dismissal lands one day after the CFTC ordered Kalshi to keep operating in New York, which sued the platform late last month. Kalshi still faces parallel state suits in Wisconsin and Nevada. The data-and-trademark question survives for whichever plaintiff is willing to take the next case to judgment.
Frequently asked questions
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Why did FlightAware drop its lawsuit against Kalshi so quickly?
The dismissal was filed without prejudice under Federal Rule of Civil Procedure 41 and gives no stated reason. The likely contributors were social media backlash over the flight-cancellation markets and the very thin retail volume the niche had actually attracted before the suit.
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How much trading volume did Kalshi's flight-cancellation contracts generate?
Just $1,842.48 in aggregate dollar volume across 31,412 contracts traded, with only 1,120 contracts in open interest. That sits against Kalshi's broader $148 billion in 2024 volume year to date.
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What was Kalshi's defense to FlightAware's trademark and data claims?
Kalshi denied infringing FlightAware's license or trademark and argued its references to FlightAware were nominative fair use. It also identified U.S. Department of Transportation flight data as an alternative source for settling the contracts.
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Why did Kalshi pause its flight-cancellation contracts in July?
Kalshi paused the markets after social media users raised concerns that the contracts could incentivize malicious actors to cause flight cancellations in order to collect payouts. The product never returned at scale after the pause.
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Where else is Kalshi facing legal or regulatory challenges?
New York sued Kalshi late last month, and the CFTC ordered Kalshi to keep operating there. Kalshi also faces parallel state suits in Wisconsin and Nevada, separate from the now-dismissed FlightAware trademark case.
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