Meta CEO Mark Zuckerberg has directed employees to develop a prediction markets app called Arena that will operate separately from the company’s existing social media products, the New York Times reported Tuesday, citing two employees familiar with the project.
summary
- Meta has reportedly hired a dedicated team to build Arena, a standalone prediction markets app that can compete with Polymarket and Kalshi.
- The proposed platform will initially use a points-based system, although The New York Times reports that real-money betting is still under consideration.
- Meta’s announced entry comes as prediction markets face increasing scrutiny from US lawmakers, regulators and gaming industry groups over oversight and consumer protection concerns.
The report said that Arena would do so initially Allows Users make predictions using a points-based system rather than real money bets. Sources quoted by the newspaper said that Meta also discussed the possibility of introducing cash betting in the future.
Meta plans to keep the app independent of Facebook and Instagram, though the New York Times reported that the company could use its existing platforms to steer users toward the new service. Employees familiar with the initiative described the project as a pilot, but said it remains a high-priority effort within the company.
Arena will put Meta in direct competition with prediction market operators like Polymarket and Kalshi. Meta reported 3.56 billion daily active users across its suite of apps as of March, giving the company a potential distribution advantage if it launches the product.
Prediction markets attract big companies
The reported Meta plans arrive at a time when prediction-style products are gaining interest from large financial institutions.
As crypto.news previously I mentionedCharles Schwab has partnered with Cboe Global Markets to develop contracts tied to the performance of the S&P 500 Index. People familiar with the matter told the Wall Street Journal that Schwab clients could access these products in the coming months.
Unlike Polymarket and Kalshi, which primarily offer event-based contracts tied to elections, sports, economic developments and other real-world outcomes, Schwab’s proposed offering is expected to be structured as options contracts.
Meta has also pursued other initiatives related to digital assets and blockchain technology in recent years. The company introduced Libra Stablecoin project in 2019 before rebranding to Diem and eventually discontinuing efforts in 2022.
In April, Meta expanded support for USDC payments to select Facebook creators in Colombia and the Philippines. Some US lawmakers later raised concerns over reports that the company was exploring additional stablecoin-related activities in the US.
Meta also announced workforce reductions earlier this year. Reports in April said the company was planning to lay off about 10% of its employees, affecting approximately 8,000 employees. Increase investment in artificial intelligence projects.
Intensify regulatory scrutiny
Prediction market operators still face challenges from regulators, legislators and gaming industry groups.
Earlier this month, nine House Democrats, led by Reps. Kevin Mullen and Gabe Vasquez, asked the F.T.C. Searching Whether prediction market companies present themselves differently to consumers and regulators. Lawmakers cited ads that promoted sports betting activities while at the same time companies described their products as financial contracts in regulatory settings.
Congress has also scrutinized predictive market platforms on issues including insider trading, geolocation controls, and market surveillance practices. Lawmakers have previously questioned how companies identify users with direct knowledge of events that could affect contract outcomes.
The political debate has expanded beyond consumer protection issues. On June 17, the American Gaming Association, Indian Gaming Association and other gaming organizations urge Congress will use pending cryptocurrency market structure legislation to prevent sports and casino-style prediction markets from operating under federal derivatives rules.
These groups argued in a letter cited by Semaphore that sporting event contracts operate similarly to traditional sports betting products and should remain subject to state and tribal gaming laws rather than oversight by the CFTC.
But federal regulators have maintained a different stance. The Commodity Futures Trading Commission (CFTC) continued. Defense Its authority on event contracts while developing a framework that can evaluate individual contracts rather than impose broad restrictions on entire classes.
