Meta Plans to Launch Prediction Market App in Industry Shakeup
Meta, the tech giant behind Facebook, is planning to release its own social prediction market app, marking the biggest shakeup in the industry.
The app, known as Arena, will offer prediction markets similar to established operators like Kalshi and Polymarket. The key difference is the social trading aspect: you can buy and sell contracts in markets without risking real money.
Arena will be a standalone app and won’t be embedded on Facebook or Instagram.
At a Glance:
- Arena will offer social prediction markets without financial risk
- Players receive a daily allotment of play money to make trades with
- There is no word yet on which world events Arena will offer shares in
- However, it is thought that AI will be used to generate and resolve markets
Reliance on AI the key difference in the prediction markets model
Meta’s entry into prediction markets isn’t new. However, the approach taken is.
The company has been here before, attempting the launch of Forecast back in 2020. However, the crowdfunded predictions app only lasted two years before being pulled.
The advances in AI mean Meta is now giving the app a second crack. It’s thought that AI will play a big part in how markets will be opened and resolved.
As reported in the New York Times, artificial intelligence will be used, unlike markets like Kalshi, which are resolved from official sources.
Arena will give users a set number of daily credits to use on a range of global events. However, it’s unclear which markets app users will be able to predict.
Social sportsbooks on the rise
The rise of social sports betting is obviously one of the key factors behind Meta's move. Social sportsbooks are widely available in the U.S. and offer a freemium model.
Instead of betting real money, users simply receive or purchase virtual coins to place bets with.
The free-to-play Arena platform should follow a similar model, but with prediction markets instead of centralized bookmaker odds.
You will be able to rack up points by predicting outcomes, share your scores, and join leaderboards.
Global prediction market growth the main attraction
The growth of prediction market sites like Kalshi and Polymarket has once again attracted Mark Zuckerberg's attention. Though Forecast failed, it didn’t have the sort of AI that Meta is keen to take advantage of now.
Plus, the rapid rise of prediction markets has obviously piqued Zuckerberg’s interest.
DraftKings reported $3.1 billion in trading volume on its Predictions platform earlier this month. And DraftKings Predictions isn’t even the market leader in predictions.
For that, you need only look at Kalshi, which is now valued at $22 billion following a recent investment splurge.
Legal challenges will be on Meta’s mind
While entering prediction markets for Meta sounds like a good plan, they will be mindful of the current regulatory landscape.
Even the major platforms like Polymarket and Kalshi are embroiled in lawsuits with various states that oppose their business models.
Despite backing from the Commodity Futures Trading Commission (CFTC), prediction market sites are receiving cease-and-desist letters.
Even sweepstakes casinos, which promote the sort of social gaming model that Arena could follow, are under attack.
Oklahoma is one of the newest states to ban sweepstakes casinos, as states take on social gaming amid a broader crackdown. It’s another of the legal minefields Meta will need to navigate if Arena is to succeed.
