Meta develops Arena prediction market app using points instead of cash

Meta's crypto-adjacent bets

Under Mark Zuckerberg, Meta has made a series of bets on emerging technologies tied to crypto and blockchain. First it was stablecoins. In 2019, the company faced intense pushback on Capitol Hill after unveiling a stablecoin called Libra and an accompanying digital wallet named Calibra. The project was later rebranded to Diem, and its assets were eventually sold to Silvergate Bank.

Then came the metaverse. Meta has reportedly poured $80 billion into Zuckerberg's vision for the metaverse. Yet results have been underwhelming. Earlier this year, the company said it would stop creating new virtual reality experiences for Horizon Worlds. Meta also scrapped its NFT initiative on Instagram a year after announcing it.

Arena: the next bet

Now it's prediction markets. The New York Times reported that Meta is preparing to enter the prediction market space in light of Polymarket and Kalshi's surging popularity. The Arena app enables users to make predictions on events using points rather than real-world cash.

Meta isn't new to this. The company released a prediction market app called Forecast in 2020, but it shut down roughly two years later. Arena represents a second attempt.

The company plans to capitalize on scale. With millions of users spread across Facebook and Instagram, Meta is hoping its massive user base drives adoption of the new platform. It's a natural fit for a company that's already begun monetizing crypto. In April, Meta began allowing content creators to receive earnings in USDC stablecoin directly to their crypto wallets across several networks.

Regulatory headwinds ahead

Prediction markets face scrutiny from lawmakers. Regulators currently argue that prediction markets are in need of guardrails to protect vulnerable consumers. Meta's entry into the space could intensify those calls for oversight, especially given the company's prior regulatory battles over Libra and data privacy.