Meta’s New Prediction Market App to Challenge Major Players

Meta is preparing to launch a prediction market app named Arena. This strategic move aims to compete with leading platforms like Kalshi and Polymarket. These platforms operate within a burgeoning industry projected by analysts to potentially reach a $1 trillion valuation in the coming years.

Meta CEO Mark Zuckerberg has tasked a team with developing this standalone app, which allows users to predict the outcomes of real-world events. Two insiders disclosed this initiative to The New York Times, though they were not permitted to discuss it publicly. NPR has also accessed internal documents from Meta, revealing further details about Arena’s development.

Unlike existing prediction markets where real money is wagered, Meta’s new app will grant users a daily allocation of virtual currency to place bets on future event outcomes. This approach is a departure from the current models used by leading apps like Kalshi and Polymarket, where billions are traded weekly on diverse topics ranging from movie ratings to geopolitical events.

Currently, there is no clarity on the exact scope of topics Meta’s app will cover. However, the company intends to leverage artificial intelligence to power this service. The app will use Llama, Meta’s large language model, to create questions from trending topics and offer personalized market recommendations. Moreover, AI will deliver near real-time resolutions on market outcomes.

In 2020, Meta introduced a prediction market app named Forecast, facilitating crowdsourced guesses about global events, including pandemic trends. The initiative ceased two years later due to high manual curation costs. According to internal documents, the new app serves as a rebuilt version of Forecast.

Upon finishing a prototype, Meta plans for its employees to conduct tests before launching the app to the public on iPhones and Android devices. No specific release date is confirmed, and Meta has refrained from commenting on the project.

Although the absence of real monetary betting might seem unorthodox, gaming lawyer Daniel Wallach believes it allows Meta time to secure federal licensing amid a complex legal environment. Over 30 lawsuits currently question the legality of prediction markets, and Wallach anticipates a resolution might take a year or more.

Meta is the latest significant player from Silicon Valley entering the prediction market arena. While concerns about potential market manipulation and insider trading persist, the prediction market industry gains traction. It has support from the Trump administration, with regulatory revisions underway to possibly encourage such markets.

Many firms, including DraftKings, FanDuel, and TruthSocial, have launched or plan to launch their prediction markets. Over 70 companies have initiated similar projects, as reported by Event Horizon, an industry newsletter.

Although Meta’s numerous apps, such as Facebook, Instagram, and WhatsApp, are integral to daily life for billions worldwide, the company faces challenges in establishing new standalone apps in a competitive market.