Meta is building a prediction markets app. These stocks fell

Meta Platforms CEO Mark Zuckerberg has directed staff to create a prediction markets platform, a person familiar with the company’s plans who asked not to be named confirmed to CNBC.

The New York Times was first to report the development on Tuesday. 

The person familiar, who was not authorized to speak on the record about the company’s plans, also confirmed to CNBC that the prediction markets app would not use actual money to trade on the platform, a contrast to other prediction markets where traders use cash to speculate on future events.

The Times report said Meta’s app would instead rely on a video game-style points system, but that money may be used on the app in the future.

Two employees with knowledge of the plans told the Times the app — referred to internally as “Arena” — would be separate from Meta’s social media platforms, Instagram and Facebook. Meta would seek to leverage its Facebook and Instagram user base to direct potential traders to the platform, the report said. 

The company declined a request to comment from CNBC.

Sports betting platform DraftKings fell more than 2% after the report was released, reaching its low of the day. The stock ended off 2%. FanDuel parent Flutter Entertainment also fell nearly 2% after the report, but was still positive on the day, up 0.4%. 

Flutter and DraftKings have both struggled over the past year on worries about how prediction market platforms — which offer sports-related event contracts — could disrupt their sports gambling businesses. 

Trading platform Robinhood, which offers contracts from various prediction market platforms, also declined after the Times’ initial report.