FlightAware has withdrawn its lawsuit against Kalshi regarding the misuse of flight data, following low interest in Kalshi's flight cancellation market.
FlightAware has decided to withdraw its lawsuit against Kalshi, which alleged that the prediction market platform misused its flight data and trademark. This withdrawal occurred just a day after the lawsuit was initiated in a New York federal court, leaving the door open for a possible refiling in the future.
Concerns Over Kalshi's Flight Cancellation Market Prompted the Withdrawal
The lawsuit stemmed from FlightAware's claims that Kalshi improperly utilized its data for betting purposes related to flight cancellations. However, the market for flight cancellations has reportedly seen minimal user interest, raising questions about the rationale behind the lawsuit's sudden dismissal.
Filed in the U.S. District Court for the Southern District of New York, the notice of dismissal did not provide specific reasons for the decision. The case was withdrawn “without prejudice,” allowing FlightAware to potentially revive the lawsuit later.
Significant concerns regarding the potential for abuse, such as individuals intentionally causing flight disruptions to take advantage of betting opportunities, have been prominent. In response to these risks, Kalshi had previously halted its flight cancellation contracts, as noted in a July report by Fortune.
Current data from Kalshi indicates that participation in its aviation contracts has been low. For example, a flight cancellation bet available until August 14 has recorded only 31,412 contracts traded, amounting to just $1,842.48 in total volume, a stark contrast to Kalshi's overall trading volume of $148 billion this year.
The lawsuit raised critical issues regarding the rights of prediction markets to utilize third-party data and trademarks without formal agreements. Kalshi maintained that its use of FlightAware's references fell under fair use, and it had pointed to alternative data sources for settling bets.
The dismissal took place before Kalshi could respond or file for summary judgment, allowing FlightAware to withdraw the case unilaterally under Federal Rule of Civil Procedure 41.
Kalshi launched its flight cancellation betting on July 14, coinciding with its request for regulatory approval from the Commodity Futures Trading Commission (CFTC) to list such contracts, which the CFTC has allowed to continue in New York despite ongoing legal challenges.
This lawsuit is separate from other legal issues Kalshi faces in states like Wisconsin and Nevada, as it specifically addresses the use of a third party's data and trademark in prediction markets.
As of now, FlightAware and Kalshi have not publicly commented on the lawsuit's dismissal or the state of their respective markets.
