Meta’s reported plans to launch a standalone prediction market app could face regulatory hurdles in Britain, where rival US platforms have already struggled to gain access to one of the world’s largest betting markets.

The New York Times reported on Wednesday that the Facebook owner is internally developing Arena, a new experimental prediction market product that will allow users to trade contracts linked to future events. According to the report, the project remains in development.

The launch comes as interest in prediction markets continues to grow rapidly, particularly in the US, where operators such as Kalshi and Polymarket have attracted billions of dollars in trading volumes.

But neither company operates freely in Britain, with Kalshi having excluded the UK from its recent international expansion, while Polymarket blocks British users following scrutiny from regulators.

The Gambling Commission has previously said operators offering prediction market products to consumers in Britain would likely require a licence as a betting intermediary.

That has created an opening for Matchbook, the betting exchange operator that launched a licensed prediction market product in Britain earlier this year.

“Prediction markets are a hot topic right now,” chief executive Ronan Costello told City AM. “We’ve been building in this area for a while and obviously any new entrant helps raise awareness of the category.”

Costello said one of the biggest misconceptions among tech firms entering the sector is the complexity of gambling regulation outside the US.

“I don’t think companies always appreciate how regulated these markets actually are,” he said. “The UK has a very high standard of regulation and new entrants have to navigate that.”

The Gambling Commission declined to comment on Meta specifically but reiterated that operators transacting with British consumers must hold the appropriate licence.

A spokesperson said: “We do not comment on individual businesses, but to transact with consumers in Great Britain an operator must have a Gambling Commission licence.”

Meta declined to comment.

Two regulators for one market

The position is likely to become more complicated when prediction markets move beyond sports and politics.

City AM understands the Financial Conduct Authority (FCA) is also examining developments in the sector, particularly where contracts relate to financial outcomes rather than sporting events.

The regulator said prediction market products linked to political or sporting outcomes would generally fall under the Gambling Commission’s remit, and that products tied to financial indicators or certain climate-related events may well instead fall within the FCA’s regulatory perimeter.

The watchdog also noted that some structures resemble binary options, which were banned from sale to retail investors in 2019.

“Our current view is that the financial prediction market products we have seen are binary options,” the FCA said in recent guidance.

The regulator described such contracts as having a “speculative, gambling-like nature”, and said firms considering launching similar products should engage early with the appropriate regulator.

The debate comes as prediction markets become an increasingly significant part of the broader betting industry, with operators like Polymarket and Kalshi rapidly growing around major sporting events.

According to industry estimates, prediction market trading volumes have risen sharply over the past two years, fuelled by demand for election, political and sports contracts.

“The UK already has betting exchanges and consumers are familiar with them,” Costello said. “The challenge is making sure new products fit within the existing regulatory framework.”