Meta Tried to Acquire Kalshi Before Building Its Own Prediction Market

Earlier this week, NPR reported that Meta, the parent company of Facebook and Instagram, attempted to purchase the prediction market Kalshi. 

Now, with that in the rear-view mirror, Meta is working on their own internal project, Arena. While a deal never materialized, it shows Meta is serious about entering the market.

While Meta can build its own with Arena, a move to acquire Kalshi would've given it a platform already approved by the Commodity Futures Trading Commission.

In NPR's report, Meta approached Kalshi as its leadership team explored ways to enter the market. However, NPR says there are two narratives involving Meta CEO Mark Zuckerberg approaching Kalshi CEO Tarek Mansour, such as Mansour not wanting to move forward with a deal and Meta being a bit skeptical of the legal and ethical questions surrounding Kalshi. 

Arena Will Take a Different Approach

The report also mentions that Arena won't be like Kalshi or Polymarket. Instead, it'll have more of a social style of play similar to social casinos, it seems, where you use Gold Coins to play and can purchase packages to continue playing and predicting. 

NPR also reports that AI systems will determine the questions and the winners. 

According to Tim Wu, a Columbia University law professor who advised on tech policy during the Biden administration, entering the prediction market space aligns with Zuckerberg. 

"Meta seems to clutch at every shiny object," Wu said. "With the help of their advertising cash cow, they've been able to fail again and again without consequence," he said, citing Meta's pullback from the metaverse and crypto project, Libra. "I can't imagine a casino app with fake money is going to be much of a thrill," he said. "But maybe it's something my children would like, I don't know."

Prediction Markets Remain Under Legal Scrutiny

Kalshi recently had a valuation of up to $22 billion in May. Meta is worth more than $1 trillion, though, so a deal could definitely have been struck if both parties had wanted to. 

Prediction markets have been a battlefield of legal controversy, with the CFTC suing Kentucky, Nevada Rep. Dina Titus calling them out, and much more. 

From here, we'll see what Meta does with its own prediction market app, whether it becomes a social prediction market app similar to ProphetX, or perhaps something different to compete directly with Kalshi following a failed deal to acquire it.