Meta Develops Points-Based Prediction Market App as Rival to Kalshi and Polymarket
Meta is developing a prediction market app internally known as Arena. The project was commissioned by CEO Mark Zuckerberg and dispatched to a small team. It could position the social media giant as a direct competitor to Kalshi and Polymarket.
The app would initially let users trade in points rather than dollars. Sources said the company has not ruled out expanding this to real money. This design choice raises immediate questions about how users acquire points and whether it skirts or invites regulatory scrutiny.
After eighteen years across iGaming and sportsbook operations, I see platform entries like this as high-stakes bets on user behavior and enforcement tolerance. The details matter more than the headline.
Points Model and Sweepstakes Parallels
One difference in the preliminary version of the app is that unlike other major prediction markets it would allow users to trade in points rather than directly in dollars. It is unclear how users would acquire these points. If they could purchase them directly for real money it would appear to follow the sweepstakes casino dual-currency model.
Laws banning sweepstakes casinos often rely on the dual-currency model to prohibit users from playing casino-style games. They largely exclude prediction markets which claim to be legal as financial instruments rather than betting platforms. Meta has not officially confirmed the project.
There are no immediate plans to apply for a license from the Commodity Futures Trading Commission. There is also no information about the types of markets that would be offered on the platform or whether it would allow users to predict the outcomes of sporting events.
The points approach could lower barriers for casual users. It might also create gray areas that operators have spent years trying to clarify. $16 billion per year is the figure a report last year attached to Meta’s role in promoting illegal gambling scams and banned products roughly 10% of its total revenue.
Legal Headwinds Already in Motion
The news arrived in the same week that Meta was sued by a group of gambling companies in the Netherlands. Trade association VNLOK which includes licensed gambling companies such as Bet365 and Leo Vegas claims Meta facilitates illegal gambling through advertising on Facebook and Instagram.
“This is not only an economic problem but above all a major risk to consumer protection. Illegal providers do not adhere to rules regarding addiction prevention and actively target vulnerable groups such as minors and problem gamblers” says VNLOK Chairman Björn Fuchs.
VNLOK claims that Meta has no system to stop illegal gambling companies from advertising on its platforms but relies on retroactive reporting from users. That is like trying to mop up water with the tap still running. Illegal providers keep returning with new advertisements.
The Dutch gambling regulator the Kansspelautoriteit filed thousands of complaints to Meta over the presence of illegal gambling promotions last year. A Meta spokesperson told me that “We aggressively fight fraud and scams because people on our platforms don’t want this content legitimate advertisers don’t want it and we don’t want it either.”
Minors Protection Record and Broader Litigation Risk
Meta has also had to pay heavy penalties this year in several judgments ruling that its practices fail to protect minors. It paid $4.2 million in a landmark judgment in California in March brought by a woman who claimed they encouraged her to become addicted to social media.
In the same month a court in New Mexico ordered the company to pay $375 million for misleading users about the safety of its platforms for children. Last month the company agreed to pay a further $9 million to Kentucky schools over claims it fueled a student mental-health crisis.
Kentucky also filed a lawsuit against Kalshi and Polymarket last week. Given the litany of legal actions against operators Meta’s launch of a similar app would likely face strong opposition.
Any new entrant must navigate this environment. The risk section here is straightforward. Meta’s existing record on consumer protection and advertising controls could color how regulators and litigants view Arena from day one. A points-based system might be pitched as non-monetary yet the path to real-money conversion invites exactly the challenges sweepstakes models have faced nationwide.
From the supplier side this kind of ambiguity is what stalls commercial deals and invites copycat complaints. Prediction markets already operate in a contested space. Adding a social media owner with Meta’s scale and legal baggage changes the risk calculus for everyone.
What This Signals for Market Participants
The project is one of several that Meta is experimenting with to expand its business. Internal sources told the New York Times that Zuckerberg recently dispatched a small team to start developing an app similar to Kalshi and Polymarket.
No details have surfaced on integration with Facebook Instagram or WhatsApp. The absence of immediate CFTC license plans suggests Meta is still testing feasibility rather than committing to full regulatory compliance. That caution makes sense given the lawsuits.
Operators and tech partners should watch how the points mechanic evolves. If it stays non-cash it might avoid some gambling classifications. If it converts to real money the dual-currency questions become central. Either path puts pressure on Kalshi and Polymarket to sharpen their own compliance narratives.
The Bottom Line is that Meta’s Arena project highlights both opportunity and exposure in prediction markets. A points-first design could broaden participation but it collides with Meta’s documented struggles on illegal promotions minors protection and platform accountability. For gaming operators tribal executives and sports tech partners the story is less about one app and more about how scale players alter enforcement patterns and competitive margins. Expect litigation to shape the timeline and watch for any shift from points to dollars it will test the financial-instrument defense faster than anything else on the table. Those preparing for World Cup 2026 or broader market convergence would do well to model these risks now rather than react later. For advisory perspectives on related compliance questions see SCCG Management’s services overview.
