Will Meta's 'Arena' app use real money?

Initially, Meta's 'Arena' app will operate using a points system, not real money. This approach likely aims to navigate the complex regulatory environment surrounding real-money prediction markets and online speculation.

Why is Meta building a prediction market app?

Meta's move into prediction markets is seen as an effort to find new avenues for user engagement, diversify its product offerings beyond traditional social media, and potentially tap into a growing market for speculative entertainment and collective intelligence.

How will 'Arena' compete with existing platforms like Polymarket and Kalshi?

By leveraging its massive user base and brand recognition, Meta could quickly attract a broad audience to 'Arena.' While starting with points, its eventual scale and potential for future evolution could pose a significant challenge to existing real-money prediction market platforms, drawing both users and regulatory attention.

Image: courtesy of TechCrunch

techJune 24, 2026By Veridact EditorialUpdated Jun 24

Meta's New Arena: Zuckerberg Pushes Into Prediction Markets, Shaking Up Rivals

Mark Zuckerberg has directed Meta Platforms to develop a new prediction market application, internally codenamed "Arena." The app is designed to operate separately from Meta's core social media platforms and will initially use a points-based system instead of real money. This move positions Meta to compete with existing platforms like Polymarket and Kalshi, and has already prompted a downturn in the shares of companies like DraftKings and Robinhood.

Outlook

Meta Platforms is actively developing "Arena," a new standalone app focused on prediction markets. This application will allow users to forecast outcomes on various events, ranging from sports results to political developments, but without directly involving real-money wagers at launch. Instead, it will employ a points system, a strategic choice that likely aims to circumvent immediate regulatory hurdles associated with online real-money prediction platforms. The app's separation from Facebook and Instagram suggests an attempt to create a distinct user experience while insulating Meta's primary platforms from potential regulatory scrutiny or brand dilution. This development, first reported on Tuesday, June 23, 2026, signals Meta's serious intent to enter a niche but growing digital economy.

Background

Prediction markets are platforms where individuals can 'trade' on the likelihood of future events. Users buy and sell shares corresponding to specific outcomes, with the price of these shares reflecting the crowd's perceived probability of that event occurring. For instance, if shares for 'Team A wins the championship' are trading at $0.70, it implies a 70% perceived chance of that outcome. If Team A wins, those who bought shares at $0.70 would receive $1, making a profit. If Team A loses, the shares become worthless.

This market structure offers a unique way to aggregate collective intelligence and has been shown, in some cases, to be more accurate than traditional polling or expert analysis. However, when real money is involved, these platforms often fall into a regulatory grey area, frequently being classified as illegal online gambling in many jurisdictions, including parts of the United States. This regulatory ambiguity is precisely why companies like Polymarket, which uses cryptocurrency, and Kalshi, which is regulated by the Commodity Futures Trading Commission (CFTC) as a designated contract market, have had to navigate complex legal frameworks. Meta's decision to start with a points system is a direct response to this environment, offering a pathway to market entry without immediately triggering the most stringent regulatory challenges.

Precedents

Meta has a history of experimenting with new product categories, often leveraging its massive user base and technological infrastructure to enter competitive spaces. Not all these ventures have succeeded, but the company consistently seeks new avenues for user engagement and data. A notable precedent for "Arena" is Meta's previous experiment with an app called "Forecast." Launched in 2020, Forecast was a similar prediction market platform that allowed users to make predictions on world events, though it also did not involve real money. That project, part of Meta's New Product Experimentation (NPE) team, was eventually shut down. The revival of this concept, now under direct instruction from Mark Zuckerberg and with a specific competitive focus, suggests a more significant, dedicated effort this time.

Historically, when a tech giant like Meta enters a market, even with an initially constrained product, it often signals a serious long-term interest. This can lead to increased scrutiny from regulators and pressure on smaller, incumbent players. The immediate reaction in the stock market, with companies like DraftKings and Robinhood seeing their shares fall, is a classic pattern: the market prices in the potential for a new, powerful competitor to disrupt existing business models, even if the direct competitive overlap isn't immediately obvious. DraftKings operates in online sports betting, which shares user demographics and engagement patterns with prediction markets, while Robinhood offers a trading platform that could potentially host similar speculative products.

Mark Zuckerberg's personal directive to build "Arena" marks a significant shift in Meta's strategic focus, signaling a renewed push into emerging digital economies beyond its advertising-centric social media core. For Meta, this represents a potential new engine for engagement, data collection, and, eventually, revenue, should the platform evolve to include real money or integrate with other Meta services. The company is constantly seeking ways to diversify its offerings and maintain relevance with younger demographics who might be drawn to the dynamic, real-time nature of prediction markets.

For existing prediction market players like Polymarket and Kalshi, Meta's entry is a double-edged sword. On one hand, it legitimizes the entire concept of prediction markets and could bring a massive influx of new users and awareness to the space. On the other hand, Meta's sheer scale, technical resources, and marketing power could quickly overshadow smaller competitors, making it difficult for them to retain market share or attract new investment.

Perhaps the most consequential aspect, however, lies in the regulatory domain. The prediction market industry has long grappled with legal definitions and oversight, often caught between classifications of finance and gambling. Meta's cautious approach with a points system is a clear attempt to test the waters without directly challenging regulators from day one. But if "Arena" gains significant traction, it will inevitably draw closer scrutiny from legislative bodies and financial regulators globally. This could force a re-evaluation of how prediction markets are classified and regulated, potentially leading to clearer guidelines for the industry, or, conversely, to more restrictive measures that could impact all players, including Meta. The institutional limitations and policy fragmentation in this area mean that the path forward for "Arena" and the broader industry will be anything but straightforward.

Scenarios

Analysis

One clear outcome is that Meta will use "Arena" as a testing ground for new forms of engagement. By starting with a points system, the company can refine the product, understand user behavior, and gather valuable data without incurring the immediate legal and financial risks of real-money transactions. This suggests that Meta is playing a longer game, potentially building a user base and proof of concept before considering a shift to real-money markets, if regulatory conditions allow.

Another possible outcome is increased regulatory attention on the entire prediction market industry. Even a points-based system, if it achieves significant scale, could be seen by regulators as a gateway to real-money speculation, or as a platform that needs oversight due to its influence on public discourse or potential for manipulation. This could lead to new legislative proposals or stricter enforcement actions, impacting not just Meta but also existing real-money platforms like Polymarket and Kalshi.

Conversely, Meta's entry could spur innovation among its competitors. To differentiate themselves, existing platforms might focus more on niche markets, advanced analytics, or unique user experiences that Meta, with its broader appeal, might not prioritize. This competitive pressure could ultimately lead to a more robust and diverse prediction market ecosystem, even if Meta captures a significant share of the casual user base.

Timeline

2020

Meta Launches 'Forecast' App

Meta's New Product Experimentation team launched 'Forecast,' a similar prediction market app that allowed users to forecast future events without real money, eventually shutting it down.

2026-06-23

Zuckerberg Directs 'Arena' Development

The New York Times first reported that Mark Zuckerberg has directed a small team within Meta to begin developing a new prediction market app, internally codenamed 'Arena'.

2026-06-23

Rivals' Stocks React

Following the news, shares of companies like DraftKings and Robinhood saw declines, reflecting market concerns over Meta's entry into the broader speculative engagement space.

Frequently Asked Questions

A prediction market is a platform where users forecast future events by buying and selling shares tied to specific outcomes. The price of these shares reflects the collective belief in the probability of an event happening. If the predicted outcome occurs, those who bought shares for that outcome typically receive a payout.

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