Author: Claude, Deep Tide TechFlow

Deep Tide Guidance: According to a report by The New York Times on June 23, Zuckerberg has instructed his team to develop an independent prediction market application called "Arena," which will initially use a points system instead of real money betting, but does not rule out the possibility of introducing real funds in the future. Following the news, DraftKings and Robinhood stocks both dropped sharply, with the market concerned that Meta, leveraging its 3.56 billion daily active users' distribution advantage, could severely impact Polymarket and Kalshi.

Zuckerberg has once again set his sights on a business that others have built.

According to a report by The New York Times on June 23, Meta CEO Mark Zuckerberg has recently instructed a small team to begin developing a prediction market application, codenamed "Arena." The application will operate independently from Facebook, Instagram, WhatsApp, and Messenger, but will leverage the vast user pool of Meta's social platforms for traffic. CNBC later confirmed the news from informed sources.

Two informed employees revealed to The New York Times that Arena is currently positioned internally as "an experimental project, but of the highest priority." Meta has not yet commented on this matter.

What is Meta planning?

The most eye-catching design choice for Arena is that there will initially be no real money involved. Users will participate in predictions through a game-like points system rather than betting with real funds like Polymarket or Kalshi. However, reports suggest that Meta does not rule out the possibility of introducing real currency transactions in the future.

The logic behind this strategy is easy to understand. Real-money prediction markets are regulated by the U.S. Commodity Futures Trading Commission (CFTC) and must meet a series of compliance requirements. Polymarket requires users to deposit cryptocurrency, Kalshi requires KYC and fiat deposits, while Arena requires nothing in its initial phase. This minimizes the cost for users, allowing them to form behavioral habits through the points system before deciding how to proceed.

Meta's distribution advantage is the core variable in this entire endeavor. According to data released by the company in April, the total number of daily active users across Meta's applications reaches 3.56 billion. This number dwarfs the user bases of Polymarket and Kalshi. Even if Arena does not involve monetary transactions, being able to convert a small portion of those users into prediction market behaviors could change the industry landscape.

Monthly trading volume in prediction markets has surged to $24 billion, leading to a drop in the stock prices of potential competitors

After the news broke, the market reacted swiftly. According to CNBC, DraftKings' stock fell by over 2% during trading, and Flutter Entertainment, the parent company of FanDuel, also saw a decline, with Robinhood similarly dropping.

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

Prediction markets are expected to enter a boom phase by 2026. According to analyses by Pew Research Center and The Block data, the monthly trading volume of Kalshi and Polymarket surged from less than $5 billion in September 2025 to approximately $24 billion in April 2026. Bernstein estimates that by the end of the decade, annual trading volume in prediction markets could reach $1 trillion.

The competition in this space has heated up significantly. Kalshi's valuation skyrocketed to around $22 billion this year, while Polymarket is considering a new round of financing at an estimated valuation of $15 billion. Trading platforms like Robinhood, Coinbase, and Interactive Brokers are also integrating event contract features. Even the Trump Media & Technology Group has announced its own prediction market plans.

This is not the first time: Meta launched Forecast in 2020 and discontinued it two years later

Arena is not Meta's first attempt in the prediction market space. In 2020, Meta launched an application called Forecast, which also used virtual points instead of real money for users to make predictions about current events and trends. This product was born in the early stages of the COVID-19 pandemic. Forecast was discontinued in 2022.

Zuckerberg's product strategy has always been this way: find a verified category, quickly replicate it, and then crush the pioneers with Meta's distribution capabilities. Instagram Stories are a copy of Snapchat, Reels are a response to TikTok, and Threads are an attempt to catch up with Twitter (now X). Arena follows the same script.

Reports indicate that Arena is part of a broader plan at Meta to "develop new applications based on emerging online social behaviors." With growth of major social platforms approaching saturation, Zuckerberg is looking for new user engagement scenarios. Meta is also testing another independent application called Meta Photos that generates new media content using artificial intelligence.

What does this mean for crypto prediction markets?

The threat of Arena to Polymarket is worth attention from the crypto industry. Polymarket, built on the Polygon blockchain, is one of the most widely cited cases of on-chain infrastructure used in real-world applications. A Meta product that can reach hundreds of millions of non-crypto users, if it offers similar functionalities, could divert attention and trading volume away from Polymarket.

But the flip side is that Meta's entry could also enlarge the entire market. Prediction markets are still a relatively niche category; Arena could bring billions of users into the behavior of "betting on event outcomes," which might in turn cultivate a potential user base for Polymarket and Kalshi.

Currently, prediction markets also face increasing regulatory and legal challenges. Several states have sued prediction market platforms for violating gambling laws, while a series of insider trading cases have emerged at the federal level. In April, a U.S. special forces soldier was charged with profiting over $400,000 on Polymarket by allegedly exploiting confidential military operations. Arena's choice to start with a points system is, in some respects, a way to navigate these regulatory minefields.

Arena is still in the development phase, and there is no public timeline for its launch. However, considering Zuckerberg's record of execution and Meta's resource endowment, even before the product is fully formed, just this news alone has already changed market pricing.