The New York Times reports:

Mark Zuckerberg, Meta’s chief executive, has urged his lieutenants to explore partnerships with the popular prediction markets Polymarket and Kalshi as his company builds a similar app, three employees with knowledge of the matter said.

The app that Meta is creating, called Arena, could allow people to make bets on practically anything, aiming to capitalize on how prediction markets have become an increasingly big business. Internally, Meta’s executives have said Arena is different from Polymarket and Kalshi, which accept real-money wagers, because it will instead rely on video-game-like “points.”

But Mr. Zuckerberg has made Arena a top priority, and his plans for it go deeper than previously known. He has asked Meta executives to talk with Polymarket and Kalshi, though it is unclear how partnerships with them might work, said the three employees, who spoke on the condition of anonymity because they had signed nondisclosure agreements.

Mr. Zuckerberg’s target demographic for Arena is 18- to 34-year-olds, the employees added, and Meta is aiming to reach at least 100 million monthly active “predictors” for the app. Arena is being positioned as a place where people can bet on sports, culture, entertainment, politics and finance against friends and family. Executives have called it an app “designed for everyone,” they said.

“We believe that prediction markets are one of the more interesting new content types,” Ime Archibong, a Meta vice president of product who is leading the Arena initiative, said in an internal post last month introducing the app, which was relayed to The New York Times. “With the right containers, the social conversation is the payoff as people aim to show off how good they are at predicting things to their friends.”

Meta, Polymarket and Kalshi declined to comment.

Mr. Zuckerberg’s moves to potentially engage Polymarket and Kalshi signal his appetite for risk as he studies emerging digital behaviors and looks for ways to incorporate them into Meta’s products, which include Facebook, Instagram, Messenger and WhatsApp. He and his executives closely watch other companies that could become competitors to learn from them or, in the case of prediction markets, clone them outright.

But prediction markets have been under intensifying legal scrutiny for how they can create opportunities for people to use inside information to make money. In April, federal prosecutors in New York City charged a member of U.S. Special Forces with using confidential information to place bets on Polymarket about the secret plan to capture Nicolás Maduro, the president of Venezuela. The soldier made more than $400,000 betting on the operation, according to prosecutors.

On Tuesday, when The Times first wrote about Meta’s plans for Arena, Senator Richard Blumenthal, Democrat of Connecticut, said the Silicon Valley company’s business model was “profiting from addiction.” He directed people to support some of his legislative efforts on online child safety and prediction market rules. [Continue reading…]