Meta’s Arena app could bring betting to 3 billion users

Mark Zuckerberg has quietly instructed a small internal team at Meta to develop a new smartphone app designed to rival prediction market platforms like Polymarket and Kalshi, according to a Tuesday report from the New York Times. The app, currently known internally as Arena, is being built to operate separately from Facebook and Instagram. Meta has declined to comment on the project.

Initially, Arena will operate with a video-game-style points system rather than real-money wagers, the report states. However, Meta has not ruled out introducing actual cash betting in the future. This distinction is critical because real-money prediction markets fall under the oversight of the Commodity Futures Trading Commission (CFTC), and regulators worldwide are increasingly treating them as a form of gambling.

The news rattled existing betting and prediction market stocks on Tuesday. DraftKings shares fell more than 2 percent, Flutter Entertainment dropped roughly 2 percent, and Robinhood also saw a decline. The market reaction underscores the significant threat Meta’s massive distribution advantage poses to smaller, niche platforms.

Meta’s reach is staggering. The company could direct its roughly 3 billion monthly active users across Facebook and Instagram toward a prediction market product, a scale no existing competitor can match. While Polymarket and Kalshi have seen rapid growth, they remain niche. Combined monthly trading volume across both platforms surged from under $5 billion to $24 billion between September 2025 and April 2026, according to Pew Research, but that figure is still tiny compared to Meta’s user base.

The timing of this initiative is also notable. On June 10, the CFTC proposed new rules that would ban contracts tied to war, assassinations, and terrorism, while potentially legalizing wagers on sporting events. The regulatory framework for prediction markets in the United States is still being written, and Meta’s entry could accelerate the process by bringing mainstream consumer attention to a product category that has largely operated in the margins.

DraftKings launched its own Predictions platform in December 2025, but its stock has fallen 37 percent year to date. The company’s 2026 revenue guidance of roughly $6.5 to $7 billion fell well below the $7.3 billion analysts had expected. This gap between its ambitions and financial performance suggests the prediction market category is harder to monetize than incumbents initially anticipated.

Prediction markets have also faced serious integrity issues. Both Kalshi and Polymarket announced new insider trading curbs in March 2026 after a series of high-profile incidents. A Google engineer was charged by the Department of Justice for using internal search data to profit on Polymarket, and a US soldier was separately charged for betting on Venezuelan political outcomes using non-public information.

Arena is just one of several new apps Meta is testing, according to the Times. Others include Meta Photos, a media-generation tool. The company has been expanding beyond its core social networking products under Zuckerberg’s direction, with recent initiatives including the Meta Business Agent for customer service across WhatsApp, Messenger, and Instagram, as well as paid subscription plans for its apps.

Whether Meta ultimately builds a points-only game or a real-money trading platform will shape the regulatory and competitive landscape. A points-based product would sidestep CFTC jurisdiction entirely and could launch quickly. A real-money version would require regulatory approval and compliance infrastructure Meta has never built, but it would tap into a market that has shown it can generate billions in monthly volume.

For Polymarket and Kalshi, the threat is existential in either scenario. A free, points-based prediction game from Meta could drain casual user attention from platforms that depend on active participation to set accurate prices. A real-money version would pit them against a company with more cash, more engineers, and more users than the entire prediction market industry combined.