Meta's 'Arena' Prediction App Spooks DraftKings
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- Meta Platforms CEO Mark Zuckerberg has directed staff to build a prediction markets platform internally known as "Arena," a person familiar with the plans confirmed to CNBC after the New York Times first reported it Tuesday.
- The app will initially rely on a video game-style points system rather than real money, though cash trading could be added later — a contrast to established prediction markets where traders use cash to speculate on future events.
- Arena will operate separately from Instagram and Facebook, but Meta plans to leverage its social media user base to funnel potential traders to the platform.
- DraftKings fell more than 2% after the report, reaching its low of the day and closing down 2%.
- Flutter Entertainment, parent of FanDuel, dropped nearly 2% intraday on the news but still ended the day up 0.4%.
- Robinhood, which offers contracts from various prediction market platforms, also declined following the Times' initial report.
- Both Flutter and DraftKings have struggled over the past year amid concerns that prediction market platforms offering sports-related event contracts could disrupt their sports gambling businesses.
Why it matters: Meta's prediction markets app 'Arena' — even with a points-only system initially — triggered selloffs in DraftKings (down 2%) and Flutter (nearly 2%), two names already under pressure for a year over fears that sports-event prediction contracts could erode their sports gambling revenue.
