Finance & Crypto
Kalshi faces conflicting demands as FlightAware drops lawsuit
Kalshi must keep operating in New York under a CFTC order, while FlightAware drops a separate lawsuit without prejudice after one day.
Kalshi is facing conflicting demands from state and federal authorities, while a separate legal challenge over its flight-cancellation markets disappeared almost as quickly as it began.
As Gizmodo reports, the U.S. Commodity Futures Trading Commission ordered Kalshi on Tuesday, August 11, to continue operating in New York. The directive clashes with a lawsuit filed by New York Governor Kathy Hochul and Attorney General Letitia James on July 31, which alleges that Kalshi is running an illegal gambling operation.
New York’s case seeks to force Kalshi to forfeit alleged illegal gains, compensate consumers for losses and pay fines equal to three times its New York revenue. Hochul said Kalshi had ignored state gaming laws intended to protect consumers, prevent problematic gambling and fund public services.
The CFTC takes the opposite view: Kalshi’s event contracts are financial instruments traded on federally regulated exchanges, not gambling products subject to a patchwork of state laws.
“Congress did not intend for derivatives exchanges to be regulated under a patchwork of state gaming laws. These are financial exchanges that offer financial instruments and operate across state lines.”
— Mike Selig, CFTC chair
The dispute follows a similar clash in Michigan. After Michigan sued Kalshi, a judge ruled in June that the company must use location-based blocking to keep Michigan residents from using the platform. The CFTC separately ordered Kalshi to continue honoring those trades, according to Gizmodo. Kalshi’s head of enforcement, Robert Denault, said the conflicting requirements placed the company in an “impossible position” and that it had already unwound the trades in compliance with the Michigan order.
The CFTC also sued New York in April, seeking to prevent the state from using gambling laws and cease-and-desist letters to restrict event contracts. The agency says state lawsuits threaten its exclusive regulatory authority over prediction markets.
FlightAware withdraws its Kalshi lawsuit
A separate dispute ended abruptly on August 11. Readwrite reports that FlightAware voluntarily dismissed its federal lawsuit against Kalshi one day after filing it in the U.S. District Court for the Southern District of New York.
The dismissal covered Kalshi Inc., KalshiEX LLC, Kalshi Klear Inc. and Kalshi Klear LLC. It was filed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A)(i), leaving FlightAware free to bring the case again. The filing did not explain the decision and did not mention a settlement or agreement.
FlightAware had sought emergency relief over Kalshi markets tied to flight cancellations. Its complaint alleged that Kalshi used FlightAware’s tracking data and trademarks without permission, identified the company as the “Primary Source Agency,” linked to its website and said outcomes were “verified from FlightAware.” FlightAware argued those references falsely suggested that it endorsed or participated in the markets.
The company also alleged that Kalshi continued using its AeroAPI data for commercial purposes, including prediction markets, after receiving a cease-and-desist letter. Kalshi reportedly disputed the claims, describing the references as nominative fair use before adding disclaimers that it did not endorse the markets.
Neither company has publicly confirmed a private resolution. The legal withdrawal therefore removes the immediate case but does not close the dispute—or the wider question of whether Kalshi’s contracts should be treated as financial products or gambling.