Meta Plans on Prediction App as DraftKings Shares Fall

Social media and technology company Meta is reportedly developing a prediction market app to rival the likes of Kalshi and Polymarket. The platform, which will be named Arena, was first reported by the New York Times and led to declines in the shares of multiple operators in the industry, including DraftKings.  

Meta’s founder and CEO, Mark Zuckerberg, is behind the new plan and, according to sources familiar with the matter, has directed several members of his staff to build the platform. Arena is expected to launch as a standalone product, which won’t be linked to other Meta companies, Facebook, Instagram, WhatsApp, or Messenger.  

While described as a prediction market app, Arena appears to differ from typical structures, such as those managed by Kalshi and other prediction market apps. Instead, it will be run on a points-based system, similar to what is already offered in video games, rather than real-money wagering, although cash betting may be available at a later stage.  

Arena would not be Meta's first venture into prediction markets. In 2020, it launched Forecast, which it described as a points-based platform that asked users to make predictions on topics that included the COVID-19 pandemic. Forecast was subsequently closed in 2022.  

As Meta announced its new prediction market venture, stocks in rival companies ultimately fell. DraftKings saw its shares drop as much as 2%, while Flutter Entertainment and Robinhood also saw their shares drop.  

DraftKings shares had surged after growth in prediction market activity 

The drop in DraftKings’ shares comes after a rather successful month for the operator. Earlier in June, DraftKings’ shares rose nearly 11% after it announced in a SEC filing that its prediction markets platform, DraftKings Predictions, generated $3.1 billion in total annualized trading volume.  

On top of that, trading volume also rose from April’s figure to $1.3 billion in May, an increase of 24%. Although the figures remain subject to revision, they suggest growing adoption of DraftKings' prediction platform among prediction market users.  

DraftKings, better known as a sports betting operator, entered the sector at a time when major prediction market companies, Kalshi and Polymarket, were enjoying rapid growth. The company, along with sports betting rival FanDuel, which launched FanDuel Predicts, joined the industry after obtaining already-regulated futures exchanges.  

Despite their recent growth, DraftKings remains significantly smaller than the sector's biggest operators. Industry data shows that Kalshi alone generated over $10 billion in sports-related trading volume during May. 

Market analysts continue to see prediction markets as a significant long-term growth area, although most predictions see the sector remaining in its early stages for some time. Investors will be watching to see whether prediction market trading can become a significant contributor to DraftKings' future revenue despite increasing competition.