Meta wants in on prediction markets – has it learned anything from the metaverse?
The New York Times reported on June 23 that Mark Zuckerberg directed a small group to construct a prediction market app, internally referred to as Arena, the place customers would forecast outcomes in politics, sports activities, and world affairs utilizing factors.
The firm that renamed itself for a digital world that has produced almost $90 billion in cumulative Reality Labs working losses is now chasing prediction markets, a class with actual demand, a confirmed consumer base, and sufficient regulatory complexity to make this both the smartest pivot Meta has tried or the most acquainted type of costly mistake.
The metaverse invoice
When Meta modified its identify from Facebook in October 2021, Zuckerberg wrote that the firm’s focus can be to deliver “the metaverse to life,” predicting it would attain a billion folks inside a decade.
Reality Labs, the division tasked with delivering that imaginative and prescient, reported working losses of $17.7 billion in 2024 and $19.2 billion in 2025, bringing cumulative losses to almost $90 billion. Meta informed buyers it expects 2026 losses to land close to 2025 ranges.
Horizon Worlds, the flagship social VR platform, was reported in 2022 to have fallen under 200,000 month-to-month energetic customers after Meta had focused 500,000 and later revised that purpose decrease. Meta later moved to part out the VR model in 2026.
Why prediction markets are a distinct class
Kalshi and Polymarket have already pushed mixed month-to-month buying and selling quantity to roughly $24 billion in 2026, with present projections placing annual prediction-market quantity above $130 billion.
Robinhood launched a prediction markets hub in 2025, Interactive Brokers built-in occasion contracts into its platform, and prediction markets appeared in the Golden Globes telecast.
In this panorama, Bernstein estimated in April that the sector might reach $1 trillion in annual quantity by 2030.
Meta additionally has a documented file of copying scorching codecs and profitable by means of distribution, with examples similar to Stories arriving on Instagram as soon as Snapchat had constructed the format, Threads launching right into a market Twitter had owned for a decade, and Reels arriving nicely into TikTok’s dominance.
All of those merchandise discovered audiences as a result of Meta had 3.56 billion every day energetic customers throughout its apps as of April, a scale that dwarfs that of any prediction market platform.
Arena’s points-first design follows the identical playbook of absorbing a habits customers already need, embedding it in the consideration machine, and letting attain do the work originality as soon as did.
A prediction market app requires software program, feeds, identification, moderation, compliance infrastructure, and probably a regulated companion.
The metaverse required customized {hardware}, immersive content material, avatar programs, working environments, and years of behavioral adaptation. The losses at Reality Labs present how costly the manufactured future mannequin turns into.
| Category | Metaverse push | Arena / prediction markets |
|---|---|---|
| User demand | Meta tried to create a brand new social habits | Users already commerce, forecast, and argue over outcomes |
| Product requirement | VR headsets, avatars, immersive worlds, working programs | App, feed, identification, factors, moderation, compliance |
| Distribution mannequin | Requires customers to enter a brand new digital atmosphere | Can plug into Facebook, Instagram, WhatsApp, and Meta AI |
| Market proof | Horizon Worlds struggled with retention and scale | Kalshi, Polymarket, Robinhood, and Interactive Brokers already present demand |
| Cost construction | Hardware-heavy and capital intensive | Mostly software program and compliance infrastructure |
| Core danger | Users by no means totally migrated | Users arrive, however regulators and journalists do too |
Arena is Meta’s second try
In 2020, Meta launched Forecast, a points-based crowdsourced prediction app targeted on present occasions throughout the early COVID interval.
Meta shut it down in 2022, earlier than Polymarket’s breakout during the 2024 presidential election, Kalshi’s legal victory over the CFTC on election contracts, and the sector crossing $50 billion in annual quantity.
The sector Meta is getting into has an enforcement historical past: the CFTC ordered Polymarket to pay a $1.4 million penalty in 2022 for working an off-exchange event-contract platform as an unregistered derivatives venue.
Kalshi fought a multi-year federal courtroom battle to supply election contracts, profitable at the district degree in September 2024.
The CFTC dropped its attraction in May 2025, opening the door to election occasion contracts whereas retaining political and integrity objections on the agenda.
In April 2026, the CFTC filed its first-ever insider trading grievance tied to prediction market exercise, alleging an active-duty US Army officer traded Polymarket contracts using classified intelligence a few Venezuela operation.
Meta’s personal historical past with monetary infrastructure makes regulators alert to its ambitions right here.
The Diem Association, the Facebook-backed digital foreign money undertaking, offered its property to Silvergate in 2022 when policymakers concluded that giving Meta management over a fee community utilized by billions of individuals created unacceptable concentrations of economic and social energy.
Meta’s mixture of social identification, political content material, monetary incentives, and market information generated the most hostile reception throughout the Libra hearings.
A points-based forecasting recreation deflects these regulatory dangers at launch, which is why Meta is beginning there.
What distribution buys
The most believable first model of Arena is a social forecasting layer constructed on distribution and social scale: Instagram creators posting markets on award reveals, Facebook Groups arguing over sports activities odds, WhatsApp communities circulating crowd consensus, and Meta AI summarizing what the community believes will occur.
This model would sit under the real-money event-contract layer that introduced enforcement motion towards Polymarket and years of litigation round Kalshi, whereas working by means of a social graph of three.56 billion every day customers.
Prediction markets rely on monetary stakes to self-discipline forecasting and produce correct prices. Swap monetary stakes for engagement incentives, and the product tilts towards virality and time-on-platform over accuracy.
Meta’s long record on political content material and misinformation provides regulators and journalists a pre-built body for each controversy Arena generates.
The bull case is that Meta’s distribution benefit proves massive sufficient to construct actual class scale. Stories and Reels succeeded by taking behaviors customers already preferred and pushing them by means of platforms with billions of every day customers.
If Arena builds a social forecasting layer that retains monetary stakes manageable and makes prediction markets accessible to a mass viewers that makes use of Facebook and treats Kalshi as a specialist product, Meta might broaden the class in ways in which profit the established platforms too.
Crypto-native and financially literate customers turned prediction markets right into a class now projected to course of greater than $130 billion in annual quantity. Meta’s 3.56 billion every day energetic persons are the mass viewers the sector has by no means touched at scale, and that demographic distance is the alternative.
The bear case is that the mixture of political markets, creator incentives, engagement optimization, and Meta’s institutional file makes Arena a regulatory and reputational goal earlier than it reaches scale.
Regulatory scrutiny of insider buying and selling in prediction markets was already intensifying when Meta’s reported entry surfaced, with the CFTC’s first-ever event-contract insider-trading grievance filed simply two months earlier.
A Meta-owned prediction market overlaying elections, sports activities outcomes, and political figures provides regulators a recognizable purpose to maneuver, and Meta’s monitor file on politically delicate content material means the firm enters this house with a credibility hole its scale has traditionally deepened.
| Scenario | What Arena seems like | Why it works or fails | Impact on prediction markets |
|---|---|---|---|
| Bull case: Meta makes forecasting mainstream | Points-based social app with creators, leaderboards, sports activities, leisure, and Meta AI summaries | Distribution turns prediction markets right into a mass shopper behavior with out triggering quick betting scrutiny | Expands the class and sends extra critical customers towards Kalshi, Polymarket, Robinhood, and IBKR |
| Base case: viral however shallow | Arena turns into a social recreation, not a critical market | Points create engagement however weak forecasting self-discipline | Helps consciousness however doesn’t threaten real-money platforms |
| Bear case: Facebook makes it poisonous | Political markets, creator spam, misinformation, and engagement bait dominate | Meta’s status turns each dangerous market right into a regulatory story | Regulators scrutinize the entire sector extra aggressively |
| Black swan: actual cash arrives too quickly | Meta companions with or builds towards regulated occasion contracts | Politics, sports activities, and cash collide earlier than belief is earned | Triggers backlash just like Libra/Diem and will strain crypto-native markets |
The firm’s monetary merchandise have collapsed earlier than when policymakers determined the belief query was settled.
Arena might succeed as a result of prediction markets exist already and have already got customers. The platform constructing it carries the identical status it had when Libra collapsed in a class the place belief, as soon as elections and cash enter the image, is the one asset that scale has to earn earlier than it can spend.
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