Meta surges into the prediction market under the code name “Arena”: no real money required—35 billion daily active users are the biggest leverage

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Author: Claude, Deep Tide TechFlow

Deep Tide Guide: According to The New York Times report on June 23, Zuckerberg has instructed the team to develop an independent prediction market app called "Arena," initially using points instead of real money bets, but not ruling out the possibility of introducing actual funds in the future. After the news broke, the stock prices of DraftKings and Robinhood both fell sharply, with market concerns that Meta, with its 3.56 billion daily active users, will leverage its distribution advantage to deal a blow to Polymarket and Kalshi.

Zuckerberg is once again eyeing a business others have started.

According to The New York Times report on June 23, Meta CEO Mark Zuckerberg recently directed a small team to develop a prediction market app codenamed "Arena." This app will operate independently of Facebook, Instagram, WhatsApp, and Messenger but will leverage Meta’s large social platform user base to drive traffic. CNBC later confirmed this news from sources familiar with the matter.

Two informed employees told The New York Times that Arena is currently positioned as an "experimental project but of the highest priority" within the company. Meta has not commented on this.

What is Meta planning?

The most notable design choice for Arena is: it will not involve real money initially. Users will participate in predictions through a game-like points system, rather than betting with actual funds like Polymarket or Kalshi. However, reports indicate that Meta does not rule out the future introduction of real currency trading.

The logic behind this strategy is straightforward. Prediction markets involving real money are regulated by the U.S. Commodity Futures Trading Commission (CFTC) and require compliance with a series of regulations. Polymarket requires users to deposit cryptocurrency, Kalshi requires KYC and fiat deposits, while Arena initially requires nothing. This lowers the barrier to entry for users, allowing them to develop behavioral habits with points first before deciding on the next steps.

Meta’s distribution advantage is the key variable in this entire matter. According to data released by the company in April, the total daily active users across Meta’s apps reach 3.56 billion. This figure dwarfs the user bases of Polymarket and Kalshi. Even if Arena does not involve financial transactions, simply converting a small portion of its users into prediction market participants could significantly alter the industry landscape.

Prediction market monthly trading volume has surged to $24 billion, with potential competitors’ stock prices falling in response

Market reactions were swift after the news broke. CNBC reported that DraftKings’ stock price temporarily dropped over 2% during trading, FanDuel’s parent company Flutter Entertainment also declined, and Robinhood’s stock price fell as well.

Over the past year, the rise of prediction market platforms has continued to erode the market share of traditional sports betting companies. The emergence of Arena has heightened investor anxiety. Meta’s own stock price, however, remained largely unaffected.

Prediction markets entered a boom phase by 2026. According to Pew Research Center analysis of The Block data, the combined monthly trading volume of Kalshi and Polymarket skyrocketed from less than $5 billion in September 2025 to approximately $24 billion in April 2026. Bernstein estimates that by the late 2020s, the annual trading volume of prediction markets could reach $1 trillion.

Competition in this space has become fierce. Kalshi’s valuation soared to about $22 billion this year, and Polymarket is considering a new funding round at an estimated valuation of around $15 billion. Trading platforms like Robinhood, Coinbase, and Interactive Brokers are also adding event contract features. Even Trump Media & Technology Group announced its own prediction market plans.

Not the first time: Meta launched Forecast in 2020 and shut it down two years later

Arena is not Meta’s first attempt at prediction markets. In 2020, Meta launched an app called Forecast, which also used virtual points instead of real money, allowing users to predict current events and trends. This product was created during the early stages of the COVID-19 pandemic. In 2022, Forecast was discontinued.

Zuckerberg’s product strategy has always been to find a proven category, quickly copy it, and then leverage Meta’s distribution power to crush early movers. Instagram Stories was a clone of Snapchat, Reels was a response to TikTok, and Threads is a follow-up to Twitter (now X). Arena follows the same script.

Reports indicate that Arena is part of Meta’s broader plan to develop "new types of applications based on emerging online social behaviors." In the context of near-saturated growth on major social platforms, Zuckerberg is seeking new user engagement scenarios. Meta is also testing another standalone app called Meta Photos, which uses artificial intelligence to generate new media content.

Implications for crypto prediction markets

Arena poses a threat to Polymarket that warrants industry attention. Built on the Polygon blockchain, Polymarket is one of the most widely cited on-chain infrastructure examples in real-world applications. If a Meta product reaches hundreds of millions of non-crypto users and offers similar features, it could divert attention and trading volume away from Polymarket.

However, the flip side is that Meta’s entry could also expand the entire market. Prediction markets remain a relatively niche category, and bringing billions of users into the behavior of "betting on event outcomes" could, in turn, cultivate a potential user base for Polymarket and Kalshi.

Currently, prediction markets face increasing regulatory and legal challenges. Several states have sued prediction platforms for violating gambling laws, and at the federal level, there have been a series of insider trading cases. In April, a U.S. special forces soldier was indicted for allegedly profiting over $400k on Polymarket using classified military operations. Arena’s initial use of points is also a way to circumvent some of these regulatory pitfalls.

Arena is still in development, with no public launch timetable. But given Zuckerberg’s track record of execution and Meta’s resources, even the mere announcement has already shifted market expectations.