Meta Moves Into Prediction Markets With AI-Powered "Arena" App, Eyes Partnerships With Polymarket and Kalshi
Meta is building a standalone prediction market application called Arena and has directed teams to explore formal partnerships with the two dominant platforms in the space, Polymarket and Kalshi, according to internal documents reviewed by NPR, corroborating reporting by The New York Times based on unnamed Meta employees.
Mark Zuckerberg personally gave the instruction to pursue those partnerships, unnamed Meta employees told The New York Times. No direct on-record statements from Zuckerberg are available in the sourced reporting; all directives are attributed to people familiar with the matter.
Arena, which also appears in internal documents under the codenames "Antwerp" and "FBForecast," is described as experimental but a top priority for the company. The app will launch with a points-based virtual currency rather than real-money wagers, a design choice that sidesteps oversight by the US Commodity Futures Trading Commission (CFTC), the federal body that governs real-money prediction markets.
How Arena Works
Users will receive a daily allotment of play money to bet on outcomes across sports, politics, entertainment, and other real-world events. Meta's Llama large language model will generate yes/no questions automatically from trending topics, deliver personalised market recommendations, and resolve markets in near real-time. That automation is a direct response to the failure of Meta's previous attempt in this space: Forecast, launched in 2020 and shut down in 2022.
The company cited "the operational cost of manual question curation" as the reason for closing it.
Arena will operate as a standalone app, separate from Facebook, Instagram, WhatsApp, and Messenger, though Meta's existing platforms are expected to drive traffic into it. Meta's combined daily active user count across those platforms sits at 3.56 billion, a distribution advantage no existing prediction market can approach.
A Market Already Moving Fast
Meta is entering a sector that has scaled sharply. Global monthly prediction market trading volume exceeded $20 billion in January 2026, according to data from TRM Labs. Comparable figures place the January 2025 total at roughly $1.2 billion.
Kalshi posted $17.91 billion in notional volume in May 2026, its ninth consecutive monthly record. Polymarket, which runs on the Polygon blockchain and settles trades in USDC (a dollar-pegged stablecoin), recorded 840,000 unique monthly active wallets in February 2026, nearly triple its October 2025 figure.
Transaction fees on Polygon have fallen below $0.01, a threshold that makes small bets economically viable and has been a meaningful driver of retail adoption in lower-income markets. Kalshi raised more than $1 billion in early 2026 at a $22 billion valuation. Intercontinental Exchange has committed $2 billion total to Polymarket, focused on data distribution rather than trading volume.
Bernstein analyst Gautam Chhugani has forecast that annual prediction market volume could reach $1 trillion by 2030. For context, the sector's revenue run rate stood at roughly $3 billion annually in 2026, with Citizens Bank projecting that figure could reach $10 billion by the same year.
The Regulatory Calculation
The play-money structure is a deliberate starting position. As Crypto Briefing summarised in its analysis of Meta's regulatory strategy: "Arena launching with play money is a starting position, not necessarily a final one."
The CFTC under Chairman Michael Selig has signalled a more permissive stance toward the sector. Selig stated in February 2026 that "the CFTC will no longer sit idly by while overzealous state governments undermine the agency's exclusive jurisdiction" over prediction markets, a signal that federal posture toward the sector may be shifting.
UK regulators are already paying attention. City A.M. reported that British authorities are poised to scrutinise Arena even in its points-only form.
What This Means Outside the United States
The regional picture is complicated. India has explicitly banned Polymarket and Kalshi under Section 69A of the IT Act. The country's Promotion and Regulation of Online Gaming Act 2025 came into force in August 2025, with implementing rules taking effect on May 1, 2026, establishing a new Online Gaming Authority to oversee the sector.
Despite the ban, India's Ministry of Electronics and Information Technology has flagged that users are accessing the platforms via VPNs and converting rupees into USDC to participate. Meta's points-only Arena could theoretically enter India without triggering the real-money gambling prohibition, opening a potential path into a market where the crypto-native competitors are blocked. Regulatory clarity for a points-only product has not yet been established, however, and any platform offering "online money games" would be required to register with the Online Gaming Authority under the new framework.
In South Africa, prediction markets sit in a gap between crypto law, exchange control rules, and derivatives regulation, with no clear classification under any of them. Draft Capital Flow Management Regulations published on April 17, 2026, will affect how South African users interact with offshore platforms; the public consultation window on those rules closed in June 2026.
A points-based Arena product could avoid the crypto and gambling classification problem entirely, though local consumer protection and gaming law would still apply. Across the broader continent, countries including Ghana and Rwanda are at various stages of developing crypto-specific frameworks, none of which yet address prediction markets directly.
What Comes Next
The timing is notable. Kalshi's data shows that 87 percent of its March 2026 volume came from sports contracts, much of it likely tied to the FIFA World Cup 2026.
A Meta product that normalises probabilistic sports forecasting through a free, points-based interface, distributed through WhatsApp in Africa and Facebook across South Asia, could reach audiences that crypto-native platforms have not. Whether Arena eventually pivots to real-money markets will depend on regulatory developments in the US and on whether its points model proves it can hold user attention at scale. Notably, the two platforms Meta is seeking to partner with are not purely competitors: Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan are jointly backing 5c(c) Capital, a $35 million venture fund targeting prediction market infrastructure, with Marc Andreessen and Millennium Management among its backers, adding a collaborative dimension to a relationship the Arena partnerships would complicate further.