Tao Zhu, Golden Finance

Abstract: When Meta entered the prediction market, most people’s reaction was that Meta was copying its homework again. On June 24, according to the New York Times, Zuckerberg directed Meta to develop a prediction market application "Arena", similar to Polymarket or Kalshi, which is an application for predicting betting on politics, sports and world events based on points.

1. What is Arena?

The prediction market has moved from niche to mainstream in a very short period of time. Trading volumes on leading platforms such as Kalshi and Polymarket have surged over the past year, from less than $5 billion per month at the end of 2025 to approximately $24 billion in April 2026. Originally used primarily for political predictions, prediction markets have rapidly expanded into fields such as sports, economics, and pop culture, transforming "betting on the future" into a new way of online participation.

Now, Meta CEO Mark Zuckerberg has directed his employees to create a prediction market mobile application called "Arena."

Zuckerberg ordered the development of a prediction market app that would allow users to place bets using a points system instead of cash, The New York Times reported on Tuesday, citing two employees familiar with the matter. It is reported that the application will operate independently of Meta's existing platforms, including Facebook and Instagram.

Insiders said that although the plan is in the experimental stage, it is the company's top priority. Meta reported that its app had 3.56 billion daily active users as of March.

Bernstein predicted in April that the forecasting industry could reach $1 trillion in annual transaction volume by 2030. If Meta succeeds, it may pose a challenge to platforms such as Kalshi and Polymarket.

2. What attracts Meta to enter the market?

1. The prediction market becomes mainstream

Since the 2024 US presidential election, the prediction market has completed the leap from niche experiment to mainstream track. During the general election, Polymarket’s market prices on Trump’s probability of winning the election were quoted by a large number of media, and even led traditional polling agencies at some key nodes to reflect changes in the election situation. The accuracy of its prediction results is amazing.

The recent World Cup events have proved that prediction markets have become mainstream. Driven by the World Cup, Polymarket's "football" category saw over $2 billion in trading volume in the first 10 days after the tournament kicked off, a 300% increase from the previous 10 days. Meanwhile, average daily trading volume in the category has increased from $53 million a month before the tournament to approximately $220 million so far during the tournament. In addition, on June 23, Polymarket became the exclusive prediction market partner of the Bundesliga in the United States. The official event contracts of the Bundesliga and its clubs are now available exclusively on Polymarket. Kalshi has also benefited from the World Cup fever. Data show that Kalshi’s aggregated open interest reached $1.16 billion last Thursday, a record high and the first time the platform’s open interest exceeded $1 billion. Kalshi’s open interest has grown 350% year to date.

2. Complementary with existing AI products

In the past few years, Meta's strategic focus has shifted to artificial intelligence. However, AI can only draw a certain conclusion based on existing information and cannot make predictions that are close to reality, but prediction markets can.

According to industry insider predictions, the most likely first version of Arena will be a social prediction layer based on distribution and social scale: Instagram creators publish marketing information for award shows, Facebook groups argue about sports odds, WhatsApp communities spread public consensus, and Meta AI summarizes what the network thinks will happen. Arena may not only be an independent product in the future, but may also become an important data source for Meta AI.

3. Why use points instead of real money?

The points-based structure allows Meta to test prediction markets without immediately becoming embroiled in regulatory battles surrounding real-money event contracts.

If users aren't betting real money, Arena is vastly different from Kalshi or Polymarket - more like a free social game built around predictions, contests, leaderboards and sharing. This can make it easier to promote to the international market on a large scale, while also teaching users how to operate prediction markets with real money.

If Meta eventually wants to offer real-money tournament contracts in the United States, it may have three major issues to complete:

• Apply to the Commodity Futures Trading Commission for approval and establish your own exchange;

• Acquisition of an approved exchange;

• Work with existing Designated Contract Markets (DCMs).

4. Will Meta take away the market from Polymarket and Kalshi?

If you only look at user scale, Polymarket and Kalshi are obviously no match. As of the first quarter of 2026, the number of daily active users of Meta's products has reached 3.56 billion. In front of 3.56 billion users, even if the user scale of Polymarket and Kalshi combined, they are far behind. If Meta later combines social networking with prediction markets, such as directly participating in predictions under posts and turning the comment area into a prediction market, Meta will directly threaten Polymarket and Kalshi.

But in terms of liquidity, Meta may not necessarily beat Polymarket. Polymarket has formed a mature on-chain trading ecosystem, with professional traders, quantitative funds, and arbitrage institutions continuing to provide quotes and liquidity. If Arena were just a points system, its price discovery capabilities would be difficult to reach the current level of Polymarket.

In terms of supervision, Kalshi has a huge advantage. Kalshi's operating entities are divided into two independent companies, each holding two top-level derivatives financial licenses from the U.S. Commodity Futures Trading Commission (CFTC), and is the only federally compliant prediction market in the United States. If Meta trades with real money in the future, it will need to face complex regulatory issues.

To sum up, while Polymarket has the most active prediction market community in the crypto industry, Kalshi has the most mature compliant prediction market user base in the United States. However, Meta’s user scale, traffic entrance and other advantages are still enough to keep industry leaders vigilant. Meta is trying to turn the prediction market from a financial product into a mass Internet product.

5. The debut of Meta prediction market ended in failure

This is not the first time Meta has entered the prediction market.

In June 2020, Meta launched Forecast. The app allows users to predict everything from COVID-19 vaccination rates to the winner of The Great British Bake Off. The app does not involve any real money transactions, and users spend virtual points to "buy" or "sell" events they believe are more or less likely to occur. But this trial only lasted for two years, and Forecast was officially closed on October 15, 2022.

Forecast project leader Rebecca Kossnick once pointed out: "We are interested in prediction markets because when they work well, they can encourage participants to remain rational. In such a period of uncertainty and division, what we hope most is to create a space where people, especially those with different views, can find common ground."

In 2022, the prediction market has not yet exploded and lacks user attention. Nowadays, the prediction market has become one of the hottest tracks in the encryption field, and Arena is more like Meta’s second attempt in an already proven market.

6. Are industry insiders optimistic about Arena?

Conn. Democratic Senator Richard Blumenthal criticized Meta's new project plan: "Meta originally copied the slot machine-style design and made children addicted to the photo wall; now Zuckerberg is transforming the company into a predictive gambling platform. The essence of Meta's business model is to make profits based on user addiction." He called on the public to support the two congressional bills he co-sponsored: the "Children's Internet Safety Act" and the "Prediction Market Security Integrity Act."

Forrester Vice President and Research Director Mike Proulx noted: "Regardless of whether prediction market applications are investing or gambling - they are indeed addictive. And Meta is already facing a high-profile lawsuit related to the addictive design of the product. The irony is obvious, and it is undoubtedly adding insult to injury for a company that is already under close scrutiny. Meta is following its usual copycat strategy."

Conclusion

For Meta, whether Arena can defeat Polymarket and Kalshi may not be the most important thing. What is important is whether the prediction market will become a new source of information.