Meta Platforms is developing a new prediction market application called Arena after acquisition discussions with Kalshi failed to result in a deal. Reports indicate the company chose to build its own product rather than purchase an existing platform, adding another major technology company to a fast-growing sector that already includes Kalshi and Polymarket.
Arena is expected to launch as a mobile app using virtual points instead of real-money wagers. The approach allows Meta to enter the market while avoiding many of the regulatory issues surrounding cash-based prediction markets. Reports also state that Meta has not ruled out adding real-money features in the future.
According to reports, Meta CEO Mark Zuckerberg met Kalshi CEO Tarek Mansour last year to discuss a possible acquisition while interest in prediction markets accelerated. The negotiations did not lead to an agreement, although Meta and Kalshi later partnered to integrate Kalshi into Threads.
Different reports offer separate explanations for why the discussions ended. One account says Mansour preferred to keep Kalshi independent, while another states that Meta viewed the company's legal and regulatory challenges as difficult to navigate. Neither company has publicly confirmed the details behind the failed negotiations.
Meta has since assigned a small internal team to develop Arena. Unlike Kalshi and Polymarket, which allow users to place real-money predictions, Arena is expected to begin with a points-based model. Artificial intelligence will reportedly generate prediction questions and determine outcomes within the platform.
The decision also follows Meta's long-standing strategy of building products internally when acquisition opportunities do not materialize. Reports state that Arena could eventually expand beyond virtual points if regulations become clearer.
Prediction markets have expanded rapidly over the past year. According to reports, monthly trading volume across leading platforms increased from about $28 billion to nearly $220 billion during that period. Analysts at Bernstein estimate annual prediction market volume could reach $1 trillion by 2030.
Meanwhile, investor interest continues to increase. Reports indicate Kalshi is discussing a new funding round that could value the company at around $40 billion. Polymarket is reportedly valued at approximately $10.7 billion. Other financial companies, including Robinhood, Interactive Brokers and Charles Schwab, have also shown interest in offering prediction market products.
Meta enters the sector with a different advantage. The company already serves billions of users across Facebook, Instagram and WhatsApp. That existing user base could allow Arena to reach a much wider audience than current prediction market platforms without relying on cryptocurrency wallets or other onboarding steps.
Arena's virtual points model may reduce immediate regulatory concerns compared with platforms offering cash-based trading. However, prediction markets continue to face legal scrutiny across the United States.
Several states have challenged prediction market operators, arguing that certain products resemble gambling. At the federal level, questions remain over regulatory authority involving the Commodity Futures Trading Commission and other agencies. Court cases connected to prediction markets are also continuing including matters involving alleged insider information.
For the cryptocurrency industry, Arena introduces both new competition and wider exposure. Polymarket currently settles predictions using stablecoins, while Arena removes that requirement through its points-based system. At the same time, broader public awareness of prediction markets could increase interest in blockchain-based platforms if users later seek real-money participation.
Meta has not announced a launch date for Arena. Reports also indicate the company has not confirmed whether real-money trading will become part of the product in future updates. For now, the project marks Meta's latest expansion into digital consumer services after choosing internal development over acquiring Kalshi.
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