The real-time flight tracker FlightAware is suing the prediction market Kalshi because Kalshi used FlightAware's brand and data to settle bets on flight cancellations without asking for permission. according to TechCrunch. FlightAware says it found out Kalshi was running these flight cancellation prediction markets when journalists called for a comment. The lawsuit is a direct shot across the bow, challenging whether prediction markets can freely harness another company's proprietary data to power their own commercial products.
FlightAware’s legal complaint reads like a real-world case study in how data economies are colliding. As we reported earlier on the fragile foundations of Main Street businesses, new financial instruments often face unexpected stress tests. For Kalshi, this lawsuit is one of those stress tests, and it has nothing to do with gambling regulations.
How Did A Data Company End Up Suing A Betting Platform?
On the surface, the FlightAware lawsuit is about unauthorized use of a trademark. According to the company, Kalshi featured FlightAware's name in its market descriptions as the source that would determine if bets won or lost. The deeper conflict is about the use of the underlying data. Kalshi allegedly created a free AeroAPI account on July 14, the same day it filed a self-certification with the Commodity Futures Trading Commission (CFTC) to list flight cancellation contracts. By naming FlightAware as the settlement source, Kalshi built a commercial product on top of FlightAware's infrastructure.
This isn't a small branding mix-up. It's a question of control and consent at the intersection of two different data markets. FlightAware sells data as a service to airlines, app developers, and logistics companies. Kalshi sells contracts on future events that are determined by that same data. The lawsuit argues Kalshi never paid for, nor asked permission for, a commercial license to use FlightAware's data this way. This creates a market-defining precedent: if you generate predictive information, does someone else have the right to monetize predictions about that information?
Why Your Prediction About A Flight Cancelation Is Now A Multi-Million Dollar Bet
Kalshi operates as a CFTC-regulated prediction market. It doesn't call what it does gambling. Instead, users buy and sell "event contracts" on specific outcomes, will Biden win the electoral college? Will 1.5% of U.S. flights be canceled today? The value of the contract settles to $1 if the event happens, or $0 if it doesn't. It's a financial instrument for hedging risk or speculating.
The flight cancellation markets Kalshi launched target a universal pain point: travel disruption. The mechanics are simple. Kalshi lists contracts like "Will more than 2% of flights scheduled to depart KATL be canceled on [date]?" According to the lawsuit, Kalshi told users the results would be "verified from FlightAware."
This demand isn't niche. Prediction markets have shown massive public appetite, creating huge demand for foundational data to settle these bets. The stakes are real money. In a separate case, a White House teleprompter operator allegedly made over $100,000 on Kalshi by using advanced knowledge of the president's speeches. A Polymarket user bet $32,000 on Venezuelan President Nicolás Maduro's removal, netting a $400,000 payout hours later when he was captured.
The Hidden Data Pipeline That Makes Flight Predictions Possible
FlightAware isn't just a website you check before a trip. It's a business-to-business data provider. It aggregates raw signals from airlines, airports, and a global network of terrestrial sensors and satellites. This compiled, cleaned, and real-time flight tracking data is then sold as sophisticated data feeds to airlines, logistics firms, and tech companies.
FlightAware's data is a proprietary asset. It powers critical, non-speculative operations. For example, an airline might use it for crew scheduling to minimize delays. An airport might use it to manage gate assignments and ground traffic. A travel app uses it to push accurate delay notifications to millions of passengers.
Contrast that with Kalshi's use of similar data: speculative trading. While the airline uses FlightAware to smooth operations, a Kalshi trader uses the same data feed to win a bet on whether those operations will fail. This fundamental difference in application is at the core of FlightAware's grievance. They built infrastructure for the aviation industry's operational backbone, not for a financial market's settlement oracle.
“Kalshi never informed FlightAware that it would rely on FlightAware’s data to determine the outcome of these betting markets,” the lawsuit says.
What FlightAware Says Kalshi Did With Its Name And Numbers
FlightAware's complaint details a precise sequence of alleged violations. First, trademark infringement: Kalshi displayed FlightAware's name and branding in its market listings without authorization, creating a false impression of partnership or endorsement. Second, breach of contract: Kalshi's use of the AeroAPI account allegedly violated FlightAware's terms of service, which prohibit commercial use of data from free-tier accounts. Third, unfair competition: by using FlightAware's reputation as a reliable data source, Kalshi gained an unfair commercial advantage.
The timeline is tight. After media inquiries, FlightAware says it shut down Kalshi's API account on July 15 and sent a cease-and-desist letter. Kalshi responded by disputing the claims, arguing its references constituted "nominative fair use," and later added a disclaimer stating FlightAware did not endorse the markets. But FlightAware argues the disclaimer is insufficient because Kalshi continued to tell users its data would still determine the outcomes.
Safety concerns add a dramatic layer. FlightAware argues that creating a financial incentive for flight cancellations could theoretically encourage bad actors to try and influence airport operations, posing a risk to travelers and employees. While Kalshi's rules exclude payouts for cancellations caused by malicious acts, FlightAware maintains the market's structure itself creates problematic incentives. It's a theoretical argument, but it changes the tone from a commercial spat to a public safety discussion.
The Bigger Fight Over Who Owns The Future
This case is a proxy war for a fundamental tension in the data economy. If Company A generates data about real-world events (flight statuses), does Company B have an automatic right to use that data to settle financial contracts about those events? A win for FlightAware could force prediction markets to secure explicit, and likely expensive, data licenses across countless categories, fundamentally reshaping their cost structures and business models.
The counter-argument is one of efficiency and public benefit. If the outcome (a flight was canceled) is a public fact, should the data confirming that fact be freely used to create liquid, informative markets? Does that foster innovation? Kalshi's position, hinted at in its legal response, seems to lean on this "fair use" defense.
The ripple effects are significant. Weather markets need meteorological data. Sports markets need official league results. As we've seen with crypto firms seeking regulatory clarity abroad, new financial platforms often look for stable ground. For prediction markets, that ground is reliable, trusted data. If data providers start demanding licenses or blocking access, it could choke off entire categories of event contracts.
What happens next will be dictated by a federal court in New York. FlightAware is seeking damages and an injunction to stop Kalshi from using its data and brand. Kalshi is already fighting state-level legal battles over gambling laws in New York, Wisconsin, and Nevada. This new suit is a different beast: a pure commercial contract and intellectual property dispute.
The practical takeaway is clear. Data is not a neutral public good. It's an asset created and maintained at significant cost. As prediction markets expand into ever more specialized real-world events, their reliance on third-party data becomes their biggest operational vulnerability. Every new market category, from flight delays to election results to corporate earnings, will require negotiation. This lawsuit is simply the first major shot fired in that coming negotiation. The outcome will determine who gets paid when a prediction comes true, and who owns the facts that make it so.
Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.
The Bottom Line
- The outcome could set a legal precedent for how prediction markets can use external data sources, potentially limiting or defining their business models.
- It highlights the growing tension between data providers who monetize their proprietary information and platforms that rely on it for commercial products.
- For consumers and businesses, it may impact the availability of financial products (like prediction markets) tied to real-time operational data, such as flight cancellations.
Originally published on XOOMAR. For more news and analysis, visit XOOMAR.
