FlightAware, a global provider of real-time flight tracking and status information, has filed a lawsuit against prediction markets platform Kalshi in a New York federal court, alleging the company used FlightAware's data and brand name to operate gambling markets on flight cancellations.

According to a Monday filing in the US District Court for the Southern District of New York, FlightAware said it repeatedly demanded that Kalshi cease using its registered trademark and stop offering bets described as "verified by FlightAware's data." Despite those demands, Kalshi has continued to list event contracts tied to flight cancellations.

The lawsuit cited assertions by authorities that event contracts on platforms like Kalshi constitute "wagers" in violation of state laws. FlightAware argued that Kalshi's expansion into trading on commercial flights, which began in July, has associated the FlightAware brand with activities that could damage its reputation. The company is seeking to "stop Kalshi's illicit behavior before there is any harm to public safety."

"[T]here was widespread outrage and concern that the markets would incentivize unsafe tactics to impact cancellations, threatening public safety and creating the potential for massive disruption of air travel. Airlines condemned the markets," the lawsuit stated. "And due to Kalshi's unauthorized use of FlightAware's data and mark, customers immediately assumed that FlightAware was involved in the scheme."

The case, grounded in claims of trademark infringement, breach of contract, reputational injury, and unfair competition, adds to the growing legal challenges facing prediction market operators such as Kalshi and Polymarket. Multiple gaming authorities have petitioned courts to block the companies' event contracts for state residents, setting up what is widely expected to become a major confrontation between federal regulators and state officials over alleged illegal gambling practices, particularly in the realm of sports betting. At the center of that conflict is a jurisdictional question: Kalshi operates as a federally designated contract market under the oversight of the Commodity Futures Trading Commission, while state gaming regulators argue that many of its event contracts function as unlicensed gambling under state law.

Cointelegraph reached out to Kalshi for comment but did not receive an immediate response.

Lawsuit Highlights Manipulation Risks in Prediction Markets

The FlightAware filing also raised concerns about the potential for manipulation within prediction market contracts, particularly in cases where participants possess advance knowledge of events before they become public.

Recent examples cited in the lawsuit and reported in the media include US President Donald Trump's teleprompter operator allegedly earning $100,000 through Kalshi bets tied to specific words in the president's speeches, and a US soldier accused of betting on the removal of Venezuelan President Nicolás Maduro in January after receiving nonpublic information about a military operation aimed at ousting him.

FlightAware argued that by permitting event contracts on flight cancellations, Kalshi has created not only opportunities for manipulation but also threats to passenger safety.

"A market that allows the public to wager on whether flights will be delayed or cancelled creates an incentive for participants to interfere with air travel — including by causing or contributing to flight cancellations — to profit from their wagers," the lawsuit stated. "Worse, wagers on flights being timely may incentivize airline, airport, or other aviation workers to cut corners to keep a flight on time."

According to the newsletter Predicted's "State of Prediction Markets - Q2 2026" report, Kalshi and Polymarket collectively controlled more than 90% of all prediction market volume, with the two platforms generating over $90 billion in second-quarter notional volume.