FlightAware drops Kalshi lawsuit over a market niche that data shows it never took off

FlightAware voluntarily dismissed its lawsuit accusing prediction markets platform Kalshi of using its flight data and trademark without permission on Tuesday, one day after filing the case in a New York federal court.

In its dismissal notice filed in the U.S. District Court for the Southern District of New York, by FlightAware, the world’s largest flight-tracking platform, does not state the reasons why it decided to withdraw the lawsuit. It dismisses the action “without prejudice,” allowing the company to refile its claims.

However the motives could be social media backlash combined with very low retail interest in the aviation niche.

According to a Fortune article in July, Kalshi decided to pause flight cancellation contracts, after social media users expressed concerns over malicious actors causing flight cancellations to collect payouts. And according to Kalshi data, retail participation in the niche aviation series has been modest. For the U.S. flight cancellation bet currently open until Aug. 14, the data reveals only 31,412 total contracts traded, representing $1,842.48 in aggregate dollar volume and only 1,120 contracts held in open interest. The low liquidity here stands in stark contrast with Kalshi’s $148 billion in volume this year alone, that same data shows.

The filing does not state whether the companies reached an agreement or whether Kalshi changed its markets or their settlement source.

Kalshi and FlightAware were contacted via email for comment but neither responded immediately.

FlightAware had accused Kalshi of using its flight data and a trademark without permission to run bets on airline cancellations. The flight tracking firm was seeking damages and an injunction over contracts that allowed users to trade on the percentage of flights canceled nationally or at specific airports.

Kalshi had denied violating FlightAware’s license or infringing its trademark, according to the original complaint. It said its references to FlightAware constituted nominative fair use. The platform had also identified U.S. Department of Transportation flight data as an alternative source for settling the contracts, according to FlightAware’s complaint.

The voluntary dismissal came before Kalshi filed an answer or a motion for summary judgment, allowing FlightAware to withdraw the case unilaterally under Federal Rule of Civil Procedure 41.

Kalshi started offering bets on nationwide and local flight cancellations on July 14, the same day it submitted its regulatory filing to the Commodity Futures Trading Commission (CFTC) to list such event contracts. The contracts allow users to bet on the percentage of scheduled flights that would be canceled during a specific period.

FlightAware’s dismissal also comes one day after the U.S. Commodity Futures Trading Commission (CFTC) announced it had ordered Kalshi to continue operating in New York, which sued the prediction market operator late last month.

The betting platform and other firms offering prediction market trades face similar lawsuits in at least two other states, Wisconsin and Nevada. FlightAware’s case is different as it tests whether a prediction market may use a third party’s data and trademark to settle contracts without a commercial agreement.

Kalshi did not respond immediately to a request for comment.