Zuckerberg Steers Meta Toward Prediction Markets With Standalone App 'Arena'

Meta is reportedly developing an experimental prediction-markets app, codenamed Arena, as CEO Mark Zuckerberg looks to plant a flag in one of the internet's fastest-growing categories — a move that immediately spooked traditional sports-betting stocks.

The project is being built by a small internal team and would run independently of Facebook, Instagram, WhatsApp and Messenger, according to reports citing employees familiar with the plan — while still drawing on Meta's enormous existing audience. Per The New York Times, Arena would likely lean on a points-based system resembling video-game mechanics rather than real-money betting, though insiders say cash-based wagering at a later stage hasn't been ruled out. Meta declined to comment.

According to the Times, the small team was assembled at Zuckerberg's direction after he took note of the rapid rise of Polymarket and Kalshi, where people trade on anything from the Super Bowl to how long a State of the Union speech lasts.

Meta looks beyond its social platforms

The effort fits Zuckerberg's long-running habit of spotting shifts in online behavior and chasing the products that ride them. With Facebook and Instagram now mature and the company reporting 3.56 billion daily active people across its apps in April, executives are hunting for fresh growth lanes. Arena is reportedly one of several experimental bets — another, internally called Meta Photos, aims to generate new kinds of media using AI. Insiders describe Arena as significant but caution that development is ongoing and the app may never launch publicly.

It wouldn't be Meta's first attempt at the genre. Back in 2020 the company launched Forecast, a crowdsourced forecasting app released early in the pandemic that let users earn points for predicting future events. It was shut down in 2022.

A booming industry draws new competitors

Prediction markets have rocketed from niche curiosity to serious online business. Platforms like Polymarket and Kalshi let users speculate on everything from sports to politics to economic decisions, and together generated roughly $50 billion in trades during 2025 — with volume this year already topping $130 billion. The category gained huge visibility around the 2024 U.S. election and has since matured into a broader financial product, with brokerages such as Robinhood and Interactive Brokers adding event-based contracts. Research firm Bernstein projected in April that the space could reach $1 trillion in annual trading volume before the decade is out.

That momentum has pulled in players from every direction: sports-betting operators DraftKings and FanDuel, crypto exchange Gemini, and even Trump Media & Technology Group have all moved toward the category. Operators typically earn revenue from transaction fees on trades — a potentially lucrative model as participation climbs.

How the platforms won their legal footing

Much of that growth followed a string of legal and regulatory wins. In September 2024, a federal court in Washington, D.C., ruled that Kalshi could offer contracts on the November 2024 presidential election; the CFTC withdrew its appeal in May 2025, leaving the decision intact.

Polymarket found its own way back into the U.S. market. In July 2025 it paid $112 million for QCEX, a little-known exchange registered with the CFTC that had first applied for that status in 2022. That September, chief executive Shayne Coplan said the platform had been cleared to launch after CFTC staff took a no-action position on swap data reporting and recordkeeping rules for event contracts.

Established gambling brands then built products of their own. Flutter unveiled FanDuel Predicts on its third-quarter earnings call in November 2025, gave up FanDuel's Nevada gaming licence as part of the shift, with CEO Peter Jackson promising that the company's investment would be "meaningful", and in December launched sports event contracts with CME Group in five states without legal sports betting — the third such launch by a major sportsbook that month, after Fanatics Markets and DraftKings Predictions. In late May 2026, DraftKings self-certified the first contracts for an in-house exchange, covering game winners, spreads and player props; until then its Predictions product had relied on contracts from CME or Crypto.com. Robinhood, Kalshi's main source of volume, agreed in November 2025 to form a joint venture with Susquehanna International Group and acquire the registered exchange MIAXdx, while continuing to offer Kalshi's contracts.

Regulatory questions remain in focus

The rapid expansion has also drawn sharper regulatory scrutiny. Because users can trade on the outcomes of almost any event, officials have flagged concerns about the misuse of confidential information — and recent cases have sharpened those worries. In April, federal prosecutors in New York charged a member of the U.S. Special Forces with using classified information tied to an operation targeting Venezuelan President Nicolás Maduro to place prediction-market bets, allegedly earning more than $400,000.

Oversight largely sits with the Commodity Futures Trading Commission, which reports indicate has seen staffing decline even as the market has ballooned. Observers have also pointed to oddly timed trades around major policy announcements, raising questions about whether some participants traded on information the public didn't have.

Pressure has also come from Congress. At the end of April, a group of Democratic lawmakers led by Oregon Senator Jeff Merkley wrote to the CFTC about what they called "the rapid erosion of integrity" on platforms such as Kalshi and Polymarket. They asked the agency for a rule to prevent insider trading and to prohibit contracts on elections, war and military action, sports and government decisions where no valid economic hedging interest exists.

Investors react to Meta's plans

The mere report of Meta's interest moved markets. Shares of DraftKings fell more than 2% to a session low before closing down about 2%, while FanDuel parent Flutter Entertainment dropped nearly 2% before recovering to finish slightly higher. Robinhood, which offers access to prediction-market contracts, also slipped after the initial report.

Investors increasingly see prediction markets as a competitive threat to traditional sports betting, and the stock reaction reflected fears that wider event-based trading could reshape parts of the online wagering industry. For Meta, Arena is another bid to gain a foothold in a fast-growing corner of the internet — and a clear signal that Zuckerberg views prediction markets as a trend worth chasing.