NEW YORK (Diya TV) — Prediction market operator Kalshi has paused plans to introduce contracts tied to flight cancellation rates at U.S. airports, a company spokesperson told Fortune Thursday. The company made the decision after FlightAware objected to the proposed use of its data and some online users raised concerns about possible attempts to manipulate airport operations. Kalshi said it would not proceed “for now,” leaving open the possibility that it could revise the contracts.
Kalshi outlined the product in a July 14 filing with the Commodity Futures Trading Commission. The filing proposed contracts asking whether the percentage of canceled flights at a specified airport would fall above, below, between or exactly at a stated threshold during a defined period. The contracts could cover passenger flights, cargo flights or both.
The exchange planned to calculate the cancellation rate by dividing the number of canceled flights by a fixed total of scheduled arrivals and departures. Kalshi would establish that total approximately two days before the contract period. Delayed, diverted or reinstated flights would not count as cancellations.
Each contract would have produced a binary outcome. Traders who purchased the correct “yes” or “no” position would receive $1 per contract at settlement, while the unsuccessful position would receive no payout. Kalshi set a $25,000 position accountability level for each threshold and member.
Kalshi identified FlightAware as its primary source for determining contract outcomes. It listed the U.S. Department of Transportation’s Bureau of Transportation Statistics as a secondary source when FlightAware data was unavailable.
FlightAware’s parent company, RTX, said it had not authorized Kalshi or any other company to use information collected through the FlightAware network for prediction markets. RTX also said it could terminate customers who used the service in violation of its terms. Kalshi disputed that position, telling Fortune that the relevant information was publicly available.
The proposed rules included measures intended to address manipulation and insider trading. Kalshi would have prohibited certain airport, airline, government, air traffic control, labor organization and data-provider personnel from trading when their roles gave them access to relevant nonpublic information. The restrictions also covered members of their households and people acting on their behalf.
The rules also excluded cancellations caused by deliberate interference, including sabotage, false threats, unauthorized drones, malicious cyber incidents and damage to aviation infrastructure. When such an event determined the result, Kalshi proposed settling the contract at the last price it considered fair instead of using the resulting cancellation rate. Weather, staffing shortages, mechanical problems, strikes and ordinary air traffic control actions would have counted normally.
Kalshi submitted the product through the CFTC’s self-certification procedure. Under that process, a registered exchange certifies that a contract complies with federal commodities laws before listing it. Self-certification differs from the separate process through which an exchange asks the commission to review and approve a product in advance.
The company said the contracts could help travelers, conference organizers and other businesses offset losses associated with widespread flight cancellations. The contracts would not have covered the cancellation of an individual traveler’s flight; they would have measured airport-wide cancellation percentages.
Kalshi has not announced when or whether it will submit revised terms, replace FlightAware as the primary data source or revive the proposed contracts.
