Author: Ma He, Foresight News
The world's largest social media and tech giant, Meta, has officially entered the prediction market arena.
On June 23, Meta Platforms CEO Mark Zuckerberg recently instructed the company to form a small team to develop a prediction market-style smartphone application called "Arena" to compete with Polymarket and Kalshi.
Starting with a Points System
According to sources familiar with the matter who spoke to *The New York Times*, Arena is currently in an early experimental stage with high internal priority, but its eventual launch remains uncertain. The app will operate as a standalone product, not deeply integrated with core social apps like Facebook, Instagram, WhatsApp, or Messenger, requiring users to download it separately.
Users will be able to predict outcomes of political elections, sports events, entertainment happenings, and world affairs. The initial version will not involve real-money betting but will instead adopt a points system similar to video games, where users accumulate points, rankings, and achievements through accurate predictions. This design closely resembles Meta's 2020 Forecast app—Forecast also used a points mechanism, allowing users to crowdsource predictions for global events like the COVID-19 pandemic, but that app was shut down in 2022.
The sources also revealed that while the initial focus is on a points system, the company has not completely ruled out the possibility of introducing real-money betting in the future.
Meta plans to leverage its daily active user base of over 3.56 billion to quickly jumpstart user growth for Arena through cross-platform promotion. This is typical of its strategy in recent years, involving multiple attempts with standalone apps (like the AI-driven Meta Photos). However, in the past, standalone apps have faced significant challenges in user discovery and download conversion.
Prediction Market Industry Booming
The launch of Arena coincides with the prediction market industry entering a period of rapid growth. Citing data, *The New York Times* reports that in 2025, the combined online trading volume of two leading platforms, Polymarket and Kalshi, was approximately $50 billion; by 2026, this figure has rapidly surpassed $130 billion.
Currently, Polymarket's valuation is near $20 billion, its monthly active traders once exceeded 600,000, and its daily trading volume recently surpassed $200 million.
Kalshi's valuation has risen to $22 billion and is currently discussing IPO plans. As of June 22, Kalshi's total trading volume has climbed to $52.7 billion, with an average daily trading volume of $29.27 million.
The revenue model for prediction market platforms is clear: by charging fees on each settled market transaction (typical rates range from 2% to 5%), a single platform's annual revenue potential is immense with trading volume in the hundreds of billions of dollars. According to the latest data, Kalshi's most recent annualized revenue is approaching $2 billion.
Even with an initial points system, Arena could generate revenue through virtual goods, leaderboard privileges, sponsored markets, or subscriptions. Once conditions mature and it switches to a real-money model, platform commissions would directly convert into large-scale cash flow. Meta's investment capabilities in compliance, payment infrastructure, and legal resources far exceed those of startup platforms.
Furthermore, users' prediction behaviors on Arena will generate highly valuable interest graphs and belief data—such as interest levels in specific political issues, sports stars, or tech events. This data can feed back into Meta's core advertising system for more precise targeted ads or the development of event-driven sponsored products. Traditional gambling giants like DraftKings and FanDuel, crypto exchanges like Gemini, and players like Trump Media & Technology Group have already entered or plan to enter the prediction market space. By entering early, Meta can seize first-mover advantage in user mindshare and liquidity.
Monetization is one aspect; the underlying strategy is also noteworthy.
Zuckerberg's decision aligns with his consistent "follow the users" strategy. Over the past decade, Meta has frequently achieved growth by quickly cloning or internally incubating popular social formats—from Stories replicating Snapchat to Reels emulating TikTok. Now, prediction markets have become one of the fastest-growing "destinations" and cultural phenomena on the internet, and Zuckerberg clearly does not want to miss out.
A deeper reason is the changing content format within its core apps. As Facebook and Instagram shift towards short videos and algorithmic recommendations, space for testing new features within the platforms has shrunk. Meta executives believe this pushes the company to develop more standalone apps to test emerging social behaviors. Arena is the latest experimental project under this strategy, alongside standalone AI-related apps like Meta Photos.
User base advantage is Meta's most core moat. 3.56 billion daily active users mean Arena can bypass traditional cold-start problems by directly leveraging the existing ecosystem for promotion. This is particularly crucial in the prediction market field, where network effects are strong—early liquidity and participation determine market depth and accuracy.
Additionally, the high-frequency interactive nature of prediction markets (repeatedly checking updates, discussing, sharing predictions) is expected to significantly increase users' overall time spent and engagement within the Meta ecosystem, which is highly aligned with the fundamental logic of Meta's advertising business.
Practical Challenges
This is not Meta's first foray into prediction markets. The Forecast app launched in 2020 was an early experiment with a points-based crowdsourced prediction system but was ultimately shut down in 2022 for various reasons. Arena can be seen as an upgraded version of this concept.
However, regulatory risks are an unavoidable hurdle.
The U.S. CFTC's scrutiny of event contracts is tightening, with cases emerging of trading using insider information. A real-money version would face multiple compliance pressures from state gambling laws, consumer protection, and more. Kalshi and Polymarket face lawsuits and bans in multiple jurisdictions.
While the initial points-based version of Arena may sidestep some risks, long-term commercialization still cannot avoid this hurdle.
Furthermore, Meta's past standalone apps have not had ideal conversion rates; user discovery and retention remain core challenges. Senator Richard has publicly criticized Meta, stating this move continues its business model of "profiting through addictive mechanisms."
