Meta is reportedly considering entering the burgeoning prediction market sector with the potential launch of a platform called "Arena." The New York Times indicated that a team assembled by Meta CEO Mark Zuckerberg is researching the concept, which includes a video game-like point system for currency. While the team is open to transitioning to a real-money platform eventually, such a shift would not happen at the initial launch.
The ongoing World Cup has highlighted that major sporting events serve as effective entry points for prediction markets to attract new users. Meta, which operates Facebook, WhatsApp, Instagram, and Messenger, boasts a reach of around 3.5 billion daily active users.
Should Meta proceed, it would be joining a competitive landscape that includes established sportsbooks, emerging cryptocurrency exchanges, and startups like Kalshi and Polymarket, both of which have achieved valuations in the billions. Kalshi is currently seeking a new funding round that could elevate its valuation to $40 billion.
In the social media realm, Truth Social, launched by former President Donald Trump, is also looking into a prediction market. Meta has yet to announce a launch date, and the company has not commented on the Times article.
In related news, Kalshi's CEO Tarek Mansour discussed the company's future during a CNBC interview, indicating that any IPO plans would not materialize this year. Kalshi has engaged in preliminary talks with investment banks regarding a public offering after recently reporting an annualized revenue surpassing $2 billion. "A company of our financial profile with the rate of growth that we’re seeing, that sort of conversation," Mansour stated. The valuation Kalshi seeks, $40 billion, would nearly double its previous valuation of $22 billion from earlier this year, following substantial funding rounds led by major investors including Coatue Management and Sequoia Capital.
Meanwhile, Polymarket, a competitor to Kalshi, is also looking to raise new funds at a valuation of $15 billion. However, this week a Wall Street Journal article highlighted concerns regarding alleged fake trades associated with Polymarket, including a fabricated $100,000 trade involving a college student and Donald Trump. Following an investigation into this matter, Polymarket has initiated its own inquiry while maintaining its commitment to accurate market operations.
Kalshi has also filed a lawsuit against Illinois over a new law imposing a 15% tax on gross receipts from sports-event contracts on prediction markets. Filed in the Northern District of Illinois, the lawsuit argues that the new tax violates the Supremacy Clause of the US Constitution, which is intended to prevent conflicts between state and federal laws. Kalshi is seeking a temporary restraining order to block enforcement of this tax, which is set to take effect on July 1.
