Meta considered Kalshi acquisition before developing Arena prediction market app: report
Meta had initially proposed acquiring prediction market platform Kalshi before deciding to develop its own standalone prediction market app.
That’s according to a report by NPR, citing sources familiar with the discussions.
Meta’s Chief Executive reportedly met with Kalshi’s Chief Executive back in 2025 to discuss a potential acquisition. However, negotiations did not progress, with sources offering different explanations, including disagreements over a sale and concerns about legal issues.
Although the acquisition did not proceed, the two companies announced a partnership in March 2026 that allowed Kalshi markets to be integrated on Meta’s social media platform Threads.
Meta has since begun developing its own prediction market app Arena.
Internal documents reviewed by NPR suggest that Meta’s AI systems will generate prediction questions and determine outcomes. It is expected to let users predict the outcomes of news events and trending topics but, unlike Kalshi, the app is projected to operate on a points system and use virtual currency instead of involving real money.
This development comes as prediction markets continue to expand across the US, with data from The Block showing monthly trading volume across prediction market platforms Kalshi and Polymarket rising from US$28 billion in June 2025 to US$220 billion in June of this year.
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Meta’s path from partner to potential rival
Meta’s reported work on a standalone prediction market app puts one of the world’s largest consumer internet companies into a sector that has moved from niche financial product to mainstream betting-adjacent phenomenon in less than two years. The company’s Arena project, described as a points-based app rather than a real-money wagering venue, follows an earlier phase in which Meta explored buying its way into the market before choosing to build its own product.
That sequence matters because it shows Meta has been studying the space from several angles: acquisition, partnership and internal product development. A prior report said Meta Chief Executive Mark Zuckerberg met Kalshi Chief Executive Tarek Mansour in 2025 to discuss a possible acquisition, but talks did not advance. The companies later reached a March 2026 partnership that allowed Kalshi markets to be integrated into Threads, giving Meta exposure to event contracts without taking on the full legal and operational burden of a regulated exchange.
Meta’s next step, according to earlier reporting on the development of the points-based Arena app, appears designed to test consumer demand while avoiding the most direct regulatory triggers attached to real-money contracts. Internal documents cited in reports said Meta’s AI systems could generate prediction questions and help determine outcomes, a structure that would align Arena more closely with social engagement and gaming mechanics than with the regulated platforms operated by Kalshi, Polymarket or brokerages such as Robinhood.
Why prediction markets became too large to ignore
The commercial backdrop is the rapid expansion of prediction markets tied to politics, sports, economic indicators and other real-world events. Combined volumes have accelerated sharply, with The Block data cited in previous coverage showing monthly trading volume across Kalshi and Polymarket rising from US$28 billion in June 2025 to US$220 billion in June 2026. That scale helps explain why Meta, financial platforms, exchanges and sports-betting companies are all assessing how event contracts fit into their businesses.
Unlike traditional sportsbooks, prediction markets allow users to buy and sell contracts whose prices move as expectations change. Supporters say those prices can capture collective forecasts. Critics say many contracts are functionally wagers, especially when the underlying event is a game, election or government decision. That ambiguity has become a business opportunity and a legal fault line.
For Meta, the appeal is clear. Its apps reach billions of users daily, and a prediction format built around trending topics could deepen engagement, extend time spent in its ecosystem and create new advertising or virtual-economy channels. The decision to use points rather than cash also suggests Meta is trying to separate Arena from the compliance demands faced by real-money exchanges. But scale cuts both ways: even a noncash product from Meta could draw scrutiny if users perceive points as having status, transferable value or links to prizes.
Investors weigh threat to sportsbooks
Meta’s move initially unsettled investors in companies tied to sports betting and event contracts. DraftKings, Flutter Entertainment and Robinhood shares all moved lower after reports about Arena, reflecting concern that a technology platform with Meta’s distribution could pull users away from existing gambling, brokerage or prediction products. DraftKings had recently highlighted momentum in its own prediction market business, saying in a securities filing that DraftKings Predicts generated US$3.1 billion in total annualized trading volume.
Some analysts have urged caution in treating Meta as a direct sportsbook competitor. Jefferies analyst James Wheatcroft argued in a note assessing Meta’s prediction market move that regulatory, product and data advantages still protect established online sports-betting operators. In that view, real-money betting remains a more compelling consumer product than points-based event prediction, especially for users seeking liquidity, payouts and sophisticated markets.
The distinction is important. Arena may compete for attention, but it would not necessarily compete for wagering dollars unless Meta sought gaming licenses or entered regulated prediction contracts. Those licenses are difficult to obtain in the U.S., and the political risk for a social media company would be significant. Meta has spent years managing scrutiny over content moderation, youth safety, privacy and market power. A product perceived as bringing gambling-like features to a mass audience would add another pressure point.
Regulators and lawmakers close in
The prediction market boom has already attracted federal and state attention. State gaming regulators have argued that certain event contracts amount to illegal gambling when offered outside licensed sportsbook regimes. Platforms have countered that federally regulated event contracts fall under commodities law rather than state gambling statutes. The result has been a patchwork of litigation, enforcement threats and uncertainty over where the line sits.
Congress has also begun looking at market integrity. House Oversight and Government Reform Committee Chairman James Comer said the committee would examine possible insider trading on Kalshi and Polymarket, seeking information about identity checks, geographic restrictions and systems for detecting unusual trades. The inquiry, covered in a report on the House Committee probe, followed concerns that government employees or others with nonpublic information could profit from contracts tied to official actions, military events or political developments.
That concern goes to the core of prediction markets’ legitimacy. If the markets are framed as information tools, they need mechanisms to prevent manipulation and trading on privileged information. If they are framed as entertainment, they still face gambling and consumer-protection questions. Meta’s points-based approach may reduce financial harm, but it does not eliminate questions over fairness, outcome verification, user incentives and the use of AI to create and settle markets.
Deal activity signals a land grab
Meta is not the only company considering how to enter or expand in prediction markets. Robinhood has moved aggressively through its Kalshi partnership, and earlier coverage noted that Robinhood users were estimated to account for 25% to 35% of Kalshi volumes each day. Robinhood Vice President and General Manager of Futures and International JB Mackenzie also said the company could consider acquisitions, joint ventures or partnerships as it builds the business, according to a report on Robinhood’s prediction platform plans.
The broader market has also drawn institutional capital. Intercontinental Exchange, owner of the New York Stock Exchange, invested US$2 billion in Polymarket, underscoring how prediction markets have moved into the orbit of established financial infrastructure. For exchanges and brokerages, the opportunity is to expand retail trading into event-based products. For sports-betting operators, the challenge is to defend regulated wagering while deciding whether prediction contracts can open new categories.
Data and rights companies are positioning around the same trend. Sportradar’s completion of its IMG Arena acquisition, detailed in coverage of the expanded sports data portfolio, gives it more official data, streaming rights and relationships with sports rightsholders. While not a prediction market deal, the transaction strengthens the infrastructure used by betting and interactive sports products, where reliable data feeds and settlement-grade information are essential.
The stakes for Meta and the market
Arena’s central test will be whether Meta can turn prediction into a mass-market social product without inheriting the liabilities of gambling or financial trading. A points economy could make the app easier to launch and scale, but it may also limit liquidity, seriousness and revenue potential. Real-money platforms attract market makers and traders because outcomes have financial consequences. A virtual system may rely more on entertainment value, leaderboards and social sharing.
Still, Meta’s entry could reshape user expectations. If millions of people become accustomed to predicting news outcomes inside a polished consumer app, real-money platforms may benefit from broader awareness. Sportsbooks may also see prediction markets less as an existential threat and more as an adjacent engagement tool, particularly in categories that traditional wagering cannot easily cover.
The risk is that rapid growth invites a regulatory response before business models mature. Insider-trading concerns, state gambling disputes and questions about AI-generated markets could force clearer rules. Meta’s history ensures that Arena would not be judged as a small experiment. It would be viewed as a test of whether prediction markets can be socialized at global scale without crossing into gambling, manipulation or consumer harm.
