Meta Developing Prediction Market App Called "Arena" To Compete With Polymarket, Kalshi

The company formerly known as Facebook which has yet to change its name from the terribly outdated Meta to something more AI-related, even if Meta has so far lost any hope of being a leading frontier model, is developing a new app called “Arena” that mirrors a prediction market platform to compete with the runaway success of Polymarket and Kalshi, according the New York Times.

The product - which would operate independently from Facebook and Instagram - would allow users to make forecasts about future events, ranging from politics and sports to entertainment and world affairs. However, unlike traditional prediction market platforms such as Polymarket or Kalshi, users would likely rely on a video game-like points system instead of cash, the report said, although the company has not ruled out the eventual use of real-money betting. In some ways, the product would be an extension of Meta's scuttled stablecoin project, Libra, when the company was hoping to enter the lucrative payments wallet market, however that venture proved unsuccessful and Zuckerberg pulled the plug in 2022.

The people described the product as both experimental and a top priority inside the company.

The effort comes as prediction markets have gained unprecedented popularity following Polymarket’s breakout success during the 2024 US presidential election, when traders came to the crypto-based platform to place bets on electoral outcomes, driving billions of dollars in trading volume and elevating prediction markets into the mainstream political conversation.

Meta previously launched a similar product called Forecast in 2020, which encouraged users to make predictions about current events and emerging trends during the early stages of the Covid-19 pandemic. But as with most other new ventures by the company, Meta ultimately shut down the product in 2022.

As CoinDesk notes, Meta’s renewed interest in the sector is hardly surprising given the broader industry trend in the same direction. Nearly every major trading platform has made some effort to offer prediction market-style products or event contracts. Crypto-native companies such as Coinbase and Kraken have explored opportunities in the space, while retail brokerage Robinhood has introduced event-based contracts tied to political and economic outcomes.

Yet the rapid growth of those markets has also attracted increasing legal and regulatory scrutiny. Critics argue that contracts tied to elections, geopolitics, or other sensitive events can blur the line between financial instruments and gambling. 

Regulators have also raised concerns about market manipulation, insider information, consumer protection, and the potential for participants to profit from events they may be able to influence. In the United States, the Commodity Futures Trading Commission has repeatedly grappled with whether certain event contracts serve a legitimate hedging purpose or constitute prohibited gaming activities.