Meta $META CEO Mark Zuckerberg has directed a small team to build a prediction markets app, sending shares of DraftKings and Robinhood lower after the plans became public Tuesday.
A source familiar with the company's plans confirmed to CNBC that Mark Zuckerberg directed staff to create the platform. Employees who asked not to be identified discussing confidential matters told The New York Times, which broke the story, that the app — known inside the company as "Arena" — would operate as its own product, walled off from Facebook, Instagram, WhatsApp, and Messenger. Meta declined to comment.
Real-money wagering would be off the table at launch; Arena would instead operate through a points-based system akin to those in video games — even as the door to eventual cash betting remains open. Reaching those new users would hinge on Meta's existing footprint: the company's suite of social platforms collectively logs 3.56 billion daily visitors, an audience it plans to tap as a pipeline into Arena.
Shares of DraftKings dropped as much as 2% on the news before trimming that decline to around 1%, while Flutter Entertainment, which owns FanDuel, also moved lower, though it remained in positive territory on the day. Robinhood stock, which offers event contracts from several prediction market platforms, fell as well. The rise of prediction market platforms trading in sports-related event contracts has weighed on both companies for the better part of a year, stoking investor anxiety about what the category's growth could mean for conventional sports betting operators.
Meta Photos, an app designed to produce new media formats through artificial intelligence, is among the other experimental standalone products Meta has in development alongside Arena. Insiders described Arena as experimental but a top priority, the Times reported.
Arena would actually be Meta's second run at prediction markets. Back in 2020, the company debuted an app called Forecast that invited users to make predictions about unfolding world events — including the early spread of Covid-19 — using a points-based format rather than real currency. Meta pulled the plug on Forecast in 2022.
The prediction markets sector has grown considerably since then. Trading volume across Kalshi and Polymarket hit a combined $50 billion last year, and that figure has since blown past $130 billion in 2026 alone. Sensing opportunity, established sports betting operators FanDuel and DraftKings have moved into the space, and Trump Media & Technology Group has announced its own prediction market ambitions, putting legacy companies in direct competition with the upstarts.
The sector has also drawn regulatory scrutiny. Congressional investigators launched an inquiry into Kalshi and Polymarket on insider trading grounds; separately, federal prosecutors brought charges in April against a U.S. Special Forces soldier accused of exploiting a classified military operation — allegedly netting more than $400,000 — through bets placed on Polymarket.