FlightAware has voluntarily withdrawn its lawsuit against Kalshi, which accused the prediction market platform of improperly using its flight data and trademark. The dismissal came just one day after the lawsuit was filed in a federal court in New York, and it leaves open the possibility of refiling.
FlightAware's abrupt decision not to pursue the case follows concerns over the viability of Kalshi's flight cancellation market.
FlightAware, the leading flight-tracking service, filed the lawsuit claiming that Kalshi misused its data and trademark for betting on flight cancellations. However, the flight cancellation market has reportedly garnered little interest from users, leading to speculation about the motivations behind the lawsuit's withdrawal.
The notice of dismissal, filed in the U.S. District Court for the Southern District of New York, did not outline any reasons for the retraction. The case was dropped “without prejudice,” which means FlightAware retains the right to bring the case back to court in the future.
Concerns over the potential for malicious activity, where individuals might intentionally disrupt flights to profit from bets, have been a significant issue. Kalshi had previously paused its flight cancellation contracts in response to these worries, as highlighted in a July article by Fortune.
Data from Kalshi indicates that retail participation in its aviation contracts has been minimal. For instance, the current U.S. flight cancellation bet, which is open until August 14, has seen only 31,412 contracts traded, totaling a mere $1,842.48 in volume. This is notably low compared to Kalshi's overall volume of $148 billion this year.
The lawsuit raised important questions regarding the rights of prediction markets to use third-party data and trademarks without formal agreements. Kalshi had argued that its references to FlightAware constituted fair use and had identified alternative data sources for settling bets.
The dismissal occurred before Kalshi could file a response or motion for summary judgment, allowing FlightAware to withdraw the lawsuit unilaterally under Federal Rule of Civil Procedure 41.
Kalshi had begun offering betting on flight cancellations on July 14, coinciding with its filing for regulatory approval with the Commodity Futures Trading Commission (CFTC) to list such contracts. The CFTC has since mandated that Kalshi continue its operations in New York, despite facing legal challenges from the state.
FlightAware's lawsuit is distinct from other legal issues Kalshi faces in states like Wisconsin and Nevada, as it specifically tests the boundaries of using a third party's data and trademark in prediction markets.
As of now, neither FlightAware nor Kalshi has commented publicly on the dismissal or the current state of their respective markets.