Meta is not exactly the flavour of the month with regulators due to its perceived attitude to gambling advertising, and this relationship could sour further as reports emerge that the tech giant is preparing to jump on the bandwagon of prediction markets.
The New York Times, citing sources within Meta, said that the company’s Founder, Mark Zuckerberg, has directed a team of developers to create a prediction markets app that will attempt to rival the likes of Polymarket and Kalshi.
Set to be called Arena, the app will reportedly utilise a points-based system rather than real money to begin with. However, the company has understandably not ruled out shifting to real money betting, given the size of the prediction markets sector.
Combined monthly global trading volume on prediction market platforms has risen from $5bn to $24bn in less than a year, according to the Pew Research Centre.
However, friction between the prediction market sector and the regulated iGaming industry has been inflamed and awash with legal challenges from across the US and further afield, as accusations have flared that the vertical is offering sports betting without the required licences or player protection measures.
A joint statement released by nine European regulators, including the Netherlands, France, Germany and Italy, described prediction market platforms as presenting ‘serious risk of illegality, fund blocking, fraud through insider information and financial volatility’.
“The combination of visibility, accessibility and the viral nature inherent to this type of platform creates a significant addictive cycle,” the statement added.
Meta under fire
This is the climate that Zuckerberg and Meta are preparing to jump into, while also continuing to face allegations that its social media platforms remain awash with illegal gambling advertisements.
A Reuters investigation suggested that the company earns billions of dollars each year from running fraudulent ads, including for illegal gambling. The tech giant internally projected that 10% of its overall annual revenue for 2024 – roughly $16 billion – came from running ads for scams and banned goods.
As a result, Meta is now facing legal action in both Thailand and the Netherlands over its ‘structurally inadequate’ measures in tackling illegal gambling ads, and regulators, such as the Gambling Commission (GC), are growing increadingly in patient with the perceived lack of action.
Speaking on the iGaming Daily podcast, the GC’s Executive Director, Tim Miller, said: He said: “I find it almost incredible that you read in the news all of these kinds of tech billionaires competing to be the first one to put a man on Mars. They think they can deliver that. Yet, they seem to claim that they are incapable of stopping non-GamStop ads appearing on their platforms. I mean, that’s just nonsensical.
“If they don’t play their role – and frankly they’re not at the moment – it massively undermines the efforts that the rest of us are putting in place.”
Diving into prediction markets, which it will presumably encourage people to engage with through Facebook and Instagram, only risks further angering the people seeking to bring Meta to the table over its gambling ad policies.
Will it pay off?
There’s also the question of whether the move will pay off financially for Meta.
The company previously launched Forecast in 2020 – a crowdsourced prediction market app which prompted people to make guesses as to what would happen during the Covid-19 pandemic. However, the platform was quietly shelved in 2022.
For it to be successful, Meta is relying on getting people who have not used prediction markets to use their platform, or current users to shift away from the likes of Polymarket and Kalshi.
An example of where Meta has tried to do something similar was the launch of Threads in 2023 as a rival to X, known then as Twitter. Three years later, Similarweb data suggests that the platform has surpassed X in terms of daily active users on mobile devices.
The lay of the land is more complicated for prediction markets, however.
Alongside Kalshi and Polymarket, FanDuel and DraftKings have also started to offer prediction market-style products in the US, increasing Meta’s competition.
Elsewhere, a myriad of nations globally have explicitly prohibited prediction markets, narrowing Arena’s potential customer base, especially if it does transition to offering real-money options.
