FlightAware has voluntarily dismissed its lawsuit against prediction market operator Kalshi just one day after filing the case, according to a Tuesday filing with the U.S. District Court for the Southern District. The flight-tracking company had also requested a temporary restraining order that would have barred Kalshi from activities involving FlightAware while the dispute was being considered, but the request did not proceed after the company dismissed the case. Corporate lawyer Ariel Givner said such a rapid withdrawal after seeking a temporary restraining order can point to a private resolution between the parties. 'When a plaintiff drops a case this fast after demanding a TRO, it usually means the parties worked something out privately,' Givner explained. FlightAware did not provide a public explanation in the supplied filing for why it withdrew the lawsuit so quickly.
The voluntary dismissal came amid very low retail participation in Kalshi's aviation contracts, with current data revealing only 31,412 total contracts traded representing $1,842.48 in aggregate dollar volume and just 1,120 contracts held in open interest. According to Fortune reports, Kalshi decided to pause flight cancellation contracts after social media users expressed concerns over malicious actors causing flight cancellations to collect payouts. The low liquidity stands in stark contrast to Kalshi's $148 billion in volume this year alone, highlighting the minimal market demand for aviation-related prediction markets. The case had raised novel questions over whether prediction markets can rely on third-party data and trademarks without a commercial agreement, even as Kalshi faces separate regulatory and legal challenges in multiple states.
Kalshi has changed its market language from 'verified from FlightAware' to 'verified from Primary Source Agency' following the short-lived dispute. The platform now states that outcomes are 'verified from Primary Source Agency,' while providing a link directing users to FlightAware's website. The revised language also contains a disclaimer separating the source used to determine an outcome from any commercial relationship with Kalshi. 'This market and these products have not been endorsed by the Primary Source Agency or its affiliates,' Kalshi states on one of the market pages. The company added that references to the agency's delay and cancellation page or associated marks are descriptive and do not represent an endorsement or affiliation between the source and the prediction market operator. Neither the voluntary dismissal nor the revised market terms establish publicly whether the two companies entered into a settlement.
New York's petition seeks at least $36 billion in damages, penalties and related relief while alleging that Kalshi operates an unlicensed gambling business in the state. The lawsuit targets Kalshi from its Manhattan headquarters, asking a court to stop the company from operating an unlicensed gambling business 'within or from New York or to persons in New York'. New York is also seeking restitution, disgorgement, damages, triple gains penalties and $100,000 for each alleged unauthorized sports wagering offer. According to the CFTC's interpretation, the 'within or from New York' language applies more broadly because Kalshi's principal place of business is in Manhattan, meaning the requested relief could prevent the exchange from offering event contracts to users outside the state. The $36 billion damages claim appears to derive from applying New York's 51% sports betting tax rate to Kalshi's total trading volume and adding civil penalties, though the figure is almost certainly uncollectable in practice. The case was removed to the U.S. District Court for the Southern District of New York, where federal forum and the state's request for interim relief remain central procedural questions.
The FlightAware case lasted only about a day, but Kalshi has been involved in a series of longer-running disputes over how its event contracts should be treated under U.S. law. In July, a federal judge rejected Kalshi's request for a preliminary injunction in its dispute with New York over sports event contracts, allowing the state's case to move forward to the motion-to-dismiss stage. U.S. District Judge Analisa Torres found that Kalshi had not established at that stage that federal commodities law was likely to preempt New York's gambling rules. A separate case in Michigan produced another setback for the company in June, when an Ingham County Circuit Court judge temporarily barred Kalshi from offering sports event contracts to Michigan residents for 14 days and required the company to comply with geolocation restrictions. The order carried potential fines of $120,000 for each day of noncompliance. The CFTC has responded by suing Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin to defend what it says is exclusive federal jurisdiction over derivatives traded on designated contract markets.
Kalshi's legal challenges have developed while trading activity on prediction markets has remained substantial. In June, Defirate data showed Kalshi recording $3.7 billion in weekly trading volume, compared with $3.2 billion on Polymarket. Sports-related contracts accounted for the largest category on both platforms, with Kalshi processing about $328 million in daily sports trading volume at the time. The regulatory dispute has also drawn the CFTC directly into court battles involving prediction markets, with the agency arguing that event contracts traded on regulated exchanges fall within federal commodities law and its jurisdiction. 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, allowing users to bet on the percentage of scheduled flights that would be canceled during specific periods.
