Kalshi has shed another legal challenge just as federal regulators become more aggressive in defending prediction markets against state attempts to treat them as gambling.
Kalshi Notches Another Legal Win as Feds Step Up Jurisdictional Defense
12 August 2026 - 17:35 UTC
By Matt Neill
Flight-tracking service FlightAware voluntarily dismissed its lawsuit against Kalshi on 11 Aug, one day after accusing the prediction market platform of using its data, name and trademarks without permission to settle contracts on US flight cancellations.
The dismissal was without prejudice, meaning FlightAware can sue again, and neither company has disclosed whether they reached an agreement. Kalshi kept the market live but changed its language. The contract no longer names FlightAware directly as its settlement source, instead linking to it through a generic "Primary Source Agency" reference and adding a disclaimer that FlightAware had not endorsed the product.
Kalshi, a US prediction-market exchange that lets users trade contracts tied to the outcomes of real events, has seen trading activity surge in 2026. The platform handled $27bn during the FIFA World Cup alone after reporting an annualized volume run rate of $178bn in May.
Its markets extend well beyond sports. Kalshi began offering contracts tied to airport flight-cancellation rates in 2026, with outcomes determined using FlightAware data, although publicly available figures do not show how much has been traded specifically in those contracts.
The lawsuit withdrawal does not settle the merits, but it removes an immediate challenge built around one of the industry's most contentious questions. FlightAware had argued that markets tied to cancellations could create incentives to disrupt air travel, an objection that goes beyond whether Kalshi has authority to offer the contracts at all.
Federal support strengthens
The dismissal came as the Commodity Futures Trading Commission (CFTC) increased its intervention in Kalshi's wider state-law battles.
On 11 Aug, the CFTC exercised emergency authority after New York sought to stop Kalshi from offering event contracts nationwide and demanded more than $36bn in damages. The regulator ordered KalshiEX, Kalshi's CFTC-registered derivatives exchange, to continue operating under federal market rules.
The move strengthens Kalshi's central argument that event contracts belong under federal derivatives law rather than a patchwork of state gambling rules. Kalshi CEO Tarek Mansour has compared the company to Nasdaq, arguing that it matches traders and charges fees rather than acting like a bookmaker.
Opposition remains
The legal record remains mixed. Kalshi has won preliminary relief in some jurisdictions, including New Jersey and Minnesota, but has lost key preemption arguments elsewhere, including New York. That means no appellate court has yet settled the broader question nationwide.
Public and political resistance is also growing. Senators have raised concerns about wildfire-linked contracts, while FlightAware's short-lived case put similar attention on aviation markets. Critics argue that some event contracts can create harmful incentives even if they are legally treated as derivatives.
Prediction markets are therefore gaining stronger legal protection without resolving the debate over what should be tradable. Kalshi's position in court and with the CFTC is improving, but the fight over market design, public interest and state authority is far from over.
