Meta, the parent company of Facebook, is reportedly considering a new venture into the realm of prediction markets through a platform named "Arena." A team assigned by CEO Mark Zuckerberg is exploring the project, which may feature a video game-style point system for currency. While there's a possibility that a real-money platform could be introduced in the future, it won't be part of the initial launch, according to a report from the New York Times.
The ongoing World Cup serves as an example of how major sporting events can aid in attracting customers to prediction markets. With access to approximately 3.5 billion daily active users across its platforms—Facebook, WhatsApp, Instagram, and Messenger—Meta would enter a highly competitive landscape of prediction markets that includes established sportsbooks, emerging cryptocurrency exchanges, and startups like Kalshi and Polymarket, both of which have reached multibillion-dollar valuations. Kalshi is currently seeking new funding that could appraise the company at $40 billion.
In a related development, Truth Social, the social media platform founded by former President Donald Trump, is also exploring the introduction of a prediction market. Meta has not provided any information on a possible launch date and has chosen not to comment on the report from the Times.
Kalshi’s growth trajectory has led to increased speculation about its potential public offering. CEO Tarek Mansour told CNBC that there won't be any public market move this year, even as the company has engaged in informal discussions with investment banks regarding an IPO. Kalshi recently reported surpassing $2 billion in annualized revenue, prompting discussions about its financial prospects.
Mansour expressed confidence in the company's future, stating, "A company of our financial profile with the rate of growth that we’re seeing, that sort of conversation. And we’re basically thinking about it, but obviously we don’t have an answer yet."
The anticipated $40 billion valuation for Kalshi nearly doubles the $22 billion valuation it achieved earlier this year. Following a Series D funding round last October, Kalshi raised $1 billion in Series F funding this year, led by Coatue Management and including contributions from Sequoia Capital, Morgan Stanley, and Andreessen Horowitz.
In contrast, its competitor Polymarket is aiming for new capital at a valuation of $15 billion. Recent scrutiny of Polymarket's practices surfaced after the Wall Street Journal reported on dubious trades allegedly orchestrated by influencers on the platform, including a fabricated trade where a college student supposedly won $100,000 based on a market involving Trump. Following an investigation, Polymarket announced it is looking into the matter, reaffirming its commitment to maintaining fair and transparent markets.
In legal news, Kalshi has filed a lawsuit against Illinois challenging a new state law that would impose a 15% tax on gross receipts from sports event contracts in prediction markets. In a complaint submitted to the US District Court for the Northern District of Illinois, Kalshi argues that the law violates the Supremacy Clause of the US Constitution. The lawsuit asserts that Illinois is overstepping its bounds and seeks a temporary restraining order to prevent the enforcement of the tax, which is scheduled to take effect on July 1.
