Meta is developing an experimental prediction markets application as Chief Executive Officer Mark Zuckerberg looks to capitalize on one of the internet’s fastest-growing categories.

The project, known internally as “Arena,” is being built by a small team inside the company and would operate separately from Meta’s established social platforms, according to reports citing employees familiar with the initiative. The app is expected to function independently from Facebook, Instagram, WhatsApp and Messenger, while drawing potential users from Meta’s massive existing audience.

According to The New York Times, people familiar with the plans said Arena would likely use a points-based system resembling video game mechanics rather than real-money wagering. The possibility of introducing cash-based betting at a later stage has not been ruled out, though no final decisions have been reported.

Meta declined to comment on the reported project.

Meta Looks Beyond Traditional Social Platforms

The effort reflects Zuckerberg’s long-standing approach of identifying shifts in online behavior and pursuing products that align with emerging trends. Prediction markets have become increasingly popular in recent years, attracting users who speculate on outcomes ranging from sporting events to political developments and economic decisions.

Meta executives reportedly view Arena as part of a broader effort to explore new categories of digital products. The company continues to command a vast audience, reporting 3.56 billion daily active people across its family of applications in April. That scale has prompted internal discussions about finding additional growth opportunities as Facebook and Instagram mature.

Arena is reportedly one of several experimental projects under development. Another standalone application, referred to internally as Meta Photos, is designed to create new forms of media through artificial intelligence.

Company insiders described Arena as an important initiative, although they cautioned that development remains ongoing and that the application may never reach a public release.

Meta has previously explored prediction-based products. In 2020, the company launched Forecast, a crowdsourced forecasting application introduced during the early stages of the Covid-19 pandemic. Users earned points by making predictions about future events. Meta discontinued the product in 2022.

Booming Industry Draws New Competitors

Prediction markets have expanded rapidly from a niche segment into a significant online business. Platforms such as Polymarket and Kalshi have attracted growing interest by allowing users to speculate on a wide range of outcomes.

According to reports, Kalshi and Polymarket generated a combined $50 billion in online trades during 2025. Trading volume has already exceeded $130 billion this year.

The sector gained substantial visibility during the 2024 U.S. presidential election and has since evolved into a broader financial category. Investors can now take positions on subjects ranging from central bank policy decisions to major sports competitions. Brokerage firms including Robinhood and Interactive Brokers have also introduced event-based contracts tied to prediction market activity.

Research firm Bernstein projected in April that prediction markets could eventually reach $1 trillion in annual trading volume before the end of the decade.

The growth has encouraged companies across several industries to enter the space. Traditional sports betting operators such as DraftKings and FanDuel have begun offering prediction market products. Gemini, a cryptocurrency exchange, has also entered the category. Trump Media & Technology Group has announced plans related to prediction markets as well.

Prediction market operators typically earn revenue through transaction fees on trades, creating a potentially lucrative business model as participation increases.

Regulatory Questions Remain in Focus

The rapid expansion of prediction markets has also attracted heightened regulatory attention.

Because users can trade on the outcomes of a wide variety of events, regulators and policymakers have raised concerns about the potential misuse of confidential information. Recent cases have intensified those concerns.

Federal prosecutors in New York charged a member of the U.S. Special Forces in April, alleging that he used confidential information connected to a classified operation targeting Venezuelan President Nicolás Maduro to place prediction market bets. Prosecutors said the individual earned more than $400,000 from those trades.

Regulatory oversight largely falls under the Commodity Futures Trading Commission. Reports indicate that the agency has seen staffing levels decline in recent years even as the scope and popularity of prediction markets have expanded.

Market observers have also pointed to unusually timed trades linked to major policy announcements from President Donald Trump, generating questions about whether some participants may have benefited from information unavailable to the broader public.

Investors React to Meta’s Plans

News of Meta’s reported interest in prediction markets affected several publicly traded companies connected to the sector.

Following reports about Arena, shares of DraftKings fell more than 2% and reached their lowest level of the trading session before finishing down approximately 2%. FanDuel parent Flutter Entertainment also dropped nearly 2% after the news emerged, although it later recovered enough to end the day slightly higher.

Robinhood, which provides access to contracts offered through prediction market platforms, also moved lower after the initial report.

Investors have increasingly viewed prediction markets as a potential competitive challenge for traditional sports betting businesses. The reaction in related stocks reflected ongoing concerns that expanding participation in event-based trading could reshape parts of the online wagering industry.

For Meta, Arena represents another attempt to establish a foothold in a fast-growing area of internet activity. Whether the project becomes a public product remains uncertain, but the reported initiative signals that Zuckerberg sees prediction markets as a trend worth pursuing as the company searches for new avenues of growth.