Meta enters prediction market: Can Arena shake Polymarket and Kalshi?

Tao Zhu, Jinse Finance

Summary: When Meta enters the prediction market, most people's reaction is that Meta is copying homework again. On June 24, according to the New York Times, Zuckerberg instructed Meta to develop a prediction market application called "Arena," similar to Polymarket or Kalshi, an app that allows users to predict and bet on politics, sports, and world events using points.

1. What is Arena?

Prediction markets have gone from a niche track to the mainstream in an extremely short time. Over the past year, trading volumes on leading platforms like Kalshi and Polymarket have surged, skyrocketing from less than $5 billion per month at the end of 2025 to about $24 billion in April 2026. Initially used primarily for political predictions, prediction markets have now rapidly expanded into areas like sports, economics, and pop culture, transforming "betting on the future" into a new form of online engagement.

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

According to a report by the New York Times on Tuesday, citing two informed employees, Zuckerberg has ordered the development of a prediction market app that allows users to bet using a points system rather than cash. The app is said to operate independently of Meta's existing platforms, including Facebook and Instagram.

Insiders indicate that this initiative, while still in the experimental stage, is a top priority for the company. Meta reports that as of March, its apps had 3.56 billion daily active users.

Bernstein predicted in April that by 2030, the annual trading volume of the prediction industry could reach $1 trillion. If Meta succeeds, it could pose a challenge to platforms like Kalshi and Polymarket.

2. What Attracted Meta to Enter?

1. Prediction Markets Go Mainstream

Since the 2024 U.S. presidential election, prediction markets have completed the leap from niche experiments to the mainstream track. During the election, Polymarket's market prices on Trump's probability of winning were widely cited by the media, even leading traditional polling agencies in reflecting election changes at certain critical points. The accuracy of its predictions was impressive.

The recent World Cup events further prove that prediction markets have entered the mainstream. Driven by the World Cup, Polymarket's "Football" category saw trading volumes exceeding $2 billion in the first 10 days after the tournament started, a 300% increase from the previous 10 days. Meanwhile, the category's average daily trading volume rose from $53 million in the month before the tournament to approximately $220 million so far during this event. Additionally, on June 23, Polymarket became the exclusive prediction market partner for the Bundesliga in the United States. Official event contracts for the Bundesliga and its clubs are now exclusively available on Polymarket. Kalshi has also benefited from the World Cup frenzy. Data shows that Kalshi's aggregated open interest reached $1.16 billion last Thursday, a record high and the first time the platform's open interest has exceeded $1 billion. So far this year, Kalshi's open interest has grown by 350%.

2. Complementing Existing AI Products

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

According to industry insiders, the most likely first version of Arena to be announced is a social prediction layer based on distribution and social scale: Instagram creators post market information for award ceremonies, Facebook groups debate sports odds, WhatsApp communities spread collective consensus, and Meta AI summarizes what the network thinks will happen. In the future, Arena may not only be a standalone product but could 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 the prediction market without immediately getting involved in regulatory battles over real-money event contracts.

If users are not betting real money, Arena is vastly different from Kalshi or Polymarket—more like a free social game built around predictions, competitions, leaderboards, and sharing. This makes it easier to scale internationally while also teaching users how prediction markets work with real money.

If Meta eventually wants to offer real-money event contracts in the U.S., it may have three major tasks to complete:

• Apply for approval from the Commodity Futures Trading Commission and establish its own exchange;

• Acquire an already approved exchange;

• Partner with existing Designated Contract Markets (DCM).

4. Will Meta Steal Market Share from Polymarket and Kalshi?

If we only look at user scale, Polymarket and Kalshi are clearly no match. As of the first quarter of 2026, Meta's products had 3.56 billion daily active users. In the face of 3.56 billion users, even if the user bases of Polymarket and Kalshi were combined, they would be far behind. If Meta later combines social features with prediction markets—for example, allowing users to directly participate in predictions under posts, turning comment sections into prediction markets—then Meta would directly threaten Polymarket and Kalshi.

However, 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 continuously providing quotes and liquidity. If Arena is only a points system, its price discovery capability is unlikely to reach Polymarket's current level.

In terms of regulation, Kalshi holds a significant advantage. Kalshi's operating entity is split into two independent companies, each holding one of the two top-tier derivative financial licenses from the U.S. Commodity Futures Trading Commission (CFTC), making it the only federally compliant prediction market in the U.S. If Meta uses real money for trading in the future, it will face complex regulatory issues.

In summary, although Polymarket has the most active prediction market community in the crypto industry and Kalshi has the most mature compliant prediction market user base in the U.S., Meta's advantages in user scale and traffic entry points are still enough to keep industry leaders on alert. Meta is trying to turn the prediction market from a financial product into a mass internet product.

5. Meta's Prediction Market Debut Once Ended in Failure

This is not Meta's first foray into prediction markets.

In June 2020, Meta launched Forecast. This app allowed users to predict various things, from COVID-19 vaccination rates to the winner of "The Great British Bake Off," covering everything. The app did not involve any real money transactions; users spent virtual points to "buy" or "sell" events they believed were more or less likely to happen. But this experiment lasted only two years, and Forecast was officially shut down on October 15, 2022.

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

In 2022, prediction markets had not yet exploded and lacked user attention. Now, prediction markets have become one of the hottest tracks in the crypto space, and Arena is more like Meta's second attempt in a market that has already been validated.

6. Do Industry Insiders See Arena Favorably?

Connecticut Democratic Senator Richard Blumenthal criticized Meta's new project plan: "Meta once copied a slot machine-style design to make children addicted to Instagram; now Zuckerberg wants to transform the company into a prediction betting platform. Meta's business model is essentially built on profiting from user addiction." He called on the public to support two congressional bills he co-sponsored: the "Children's Online Safety Act" and the "Prediction Market Safety and Integrity Act."

Forrester Vice President and Research Director Mike Proulx pointed out: "Setting aside whether prediction market apps are investing or gambling—they are indeed addictive. And Meta is already facing high-profile lawsuits related to addictive product design. The irony here is obvious, and it's piling on for a company already under close scrutiny. Meta is continuing its usual imitation strategy."

Conclusion

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