FlightAware claims Kalshi misused its data and trademark for betting on flight cancellations.
FlightAware, a prominent flight-tracking company, has initiated legal action against Kalshi, a prediction market platform, in a federal court located in New York. The lawsuit accuses Kalshi of using FlightAware’s data and trademark without authorization to facilitate bets related to airline cancellations.
According to the complaint, Kalshi allegedly breached the licensing agreement established with FlightAware, disregarded a cease-and-desist notice, and continued to utilize FlightAware data for determining contract outcomes, despite adding a disclaimer asserting that their markets were not endorsed by FlightAware.
This lawsuit arises amidst ongoing legal challenges Kalshi faces from states including New York, Wisconsin, and Nevada, concerning claims of operating unlicensed gambling activities. The outcome of FlightAware's case could establish important legal precedents regarding the extent to which prediction markets can utilize third-party data and branding without proper agreements.
Kalshi began offering bets on both local and national flight cancellations starting July 14, coinciding with its regulatory submission to the Commodity Futures Trading Commission (CFTC) to list such event contracts. These contracts enable users to wager on the percentage of scheduled flights expected to be canceled within a designated timeframe.
FlightAware contends that Kalshi had previously accepted terms prohibiting commercial exploitation of its data, which included a fee-based AeroApi account that a Kalshi representative registered in 2022.
In response to FlightAware’s cease-and-desist communication, Kalshi maintained that it had not infringed on FlightAware’s license or trademark and claimed that its mentions of FlightAware constituted nominative fair use. Although Kalshi added a disclaimer indicating that its markets were not backed by FlightAware, the latter argues that this does not mitigate the situation, as Kalshi continued to assert that its data would be used to determine the outcomes of the bets.
Additionally, FlightAware expressed concerns that allowing betting on flight cancellations could pose safety risks, as it might incentivize participants to influence flight delays or cancellations for financial gain. The complaint notes that Kalshi has identified flight data from the U.S. Department of Transportation as an alternative source for settling its contracts.
Last month, New York filed a lawsuit against Kalshi, alleging the platform was offering sports and event wagers within the state without the necessary gaming license. Kalshi, along with other companies engaged in prediction market trading, is facing similar legal challenges in Wisconsin and Nevada. FlightAware’s lawsuit differs as it examines the legality of a prediction market's use of third-party data and trademarks for contract settlements in the absence of a commercial agreement.
Kalshi has not yet provided a comment regarding the lawsuit.