Before Meta CEO Mark Zuckerberg directed employees to build a standalone prediction market app, he proposed buying Kalshi, the leading company in the prediction market sector, according to three people with knowledge of the discussions who were not authorized to speak publicly.

Zuckerberg met with Kalshi CEO Tarek Mansour about a possible takeover last year as Kalshi’s popularity surged, but the negotiations never advanced, according to one of the people who had direct knowledge of the meeting.

There are competing narratives about why the talks broke down, with some saying Mansour would not move forward with a sale and others indicating Meta considered the legal and ethical questions surrounding Kalshi too messy.

Whatever made the discussions fall apart, Meta still wants to tap into the prediction market craze. Zuckerberg has stood up a team that is now working to release its own prediction market app called Arena, which internal documents reviewed by NPR show will allow people to make guesses about future events.

Unlike Kalshi and its main competitor, Polymarket, Meta’s app will not take bets using real money. Instead, users will wager “play money” on the outcome of happenings in the news and topics trending online. Meta’s documents say the company’s artificial intelligence systems will power the questions and determine who wins or loses based on something happening or not.

Neither Kalshi nor Meta would provide NPR with a comment when asked about the acquisition talks.

Prediction markets have become one of the fastest-growing parts of the tech industry in recent years. The sites allow people to place bets on everything from sports to elections to whether Iran will develop a nuclear weapon.

The massive influx of users into prediction markets makes the space an obvious target for Zuckerberg, according to Tim Wu, a Columbia University law professor who advised the Biden White House on tech policy.

“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 so-called “metaverse,” and the abandonment of its cryptocurrency 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.”