Is the Link Between Prediction Markets and Social Media Algorithms Another Form of Human Fracking?

 

By Mariana Meneses

People are betting billions of dollars on everything from sports competition results to what politicians will say in their next speeches. Meanwhile, social media companies use algorithms to predict what will capture our attention and keep us scrolling. These seemingly different businesses have something important in common: they turn predictions about human behavior into opportunities for profit, while creating incentives to influence the very outcomes they anticipate. Who benefits from these systems, and what do they mean for our ability to make independent decisions? 

A prediction market is a speculative platform where people buy and sell contracts based on the outcome of future events. The price of a contract reflects the crowd’s collective belief or probability that an event will happen, such as a political election, a cease-fire, an economic trend, a new pop star album, or, basically, anything else. Correct predictions yield a financial payout, while incorrect ones become worthless, potentially leveraging financial incentives to generate forecasting data. 

“The products traded on prediction markets are frequently referred to as event contracts, and they’ve existed in U.S. regulated markets for more than two decades.” – Commodity Futures Trading Commission/US Government. 

In November 2025, writing for Forbes, executive Jason Wingard explained that prediction markets generated more than two billion dollars in profit that year, with some single events gathering up to twenty million dollars in wagers, while total prediction-market trading involved around thirty billion dollars in 2025. Wingard notes that these markets are being praised by some for “anticipating outcomes”, becoming a “real-time intelligence system” and a “forecasting infrastructure”. Those analysts expect that the sector will grow to nearly $95.5 billion by 2035, growing by around 47 percent annually until then. 

“These bets aren’t happening in Vegas or offshore casinos. They’re happening on Polymarket, a fast-growing prediction-market platform where people wager real money on real-world events. Polymarket operates legally in the United States under specific regulatory constraints, and its markets have grown rapidly despite ongoing debate over how real-money forecasting platforms should be overseen.” – Jason Wingard. 

According to a 2026 Pew Research Center analysis by computational social scientist Kaitlyn Radde, the combined monthly trading volume on Kalshi and Polymarket, two of the biggest platforms, more than doubled between May and July 2026. This surge is largely driven by sports-related trading on both platforms, with activity surging during the FIFA World Cup. Political events accounted for a relatively small share of trading on both platforms, although they remained more prominent on Polymarket. 

“Monthly trading volume related to politics has averaged around $2 billion on Polymarket since the start of 2026. On Kalshi, it has consistently remained under $300 million. Politics was the largest category on both platforms during the 2024 U.S. presidential election.” – Kaitlyn Radde/Pew Research Center. 

 

And as Mitchell Labiak, writing for BBC in May 2026, explains, “‘The vibes are young male vibes’”. Labiak’s report shows that 71% of prediction market users are men, most of them under 45 years old. Experts link their popularity to the overlap with male-dominated online cultures, including sports betting, cryptocurrency, and financial speculation.  

Labiak says supporters see these platforms as opportunities to profit from knowledge and predictions, and critics, on the other hand, warn that they normalize gambling while downplaying financial risks. According to the report, just 0.1% of Polymarket accounts capture 67% of profits, as ordinary users compete with professional traders and firms equipped with advanced data (which may include insider knowledge) and advanced software tools (which may include AI models). 

 

 

Sharon LaFraniere, reporting for The New York Times, warns that prediction markets are creating new opportunities for insider trading and market manipulation. LaFraniere mentions cases including a Google engineer accused of using confidential corporate information and a U.S. soldier accused of using classified military intelligence to profit from bets. Even seemingly trivial events can attract substantial wagers: over a 12-month period, Kalshi offered roughly 5,800 bets on which words U.S. President Trump would say across 231 speeches, with traders waging $237 million.  

LaFraniere notes that, despite the risks, the Commodity Futures Trading Commission has proposed reviewing potentially problematic contracts individually rather than banning entire categories of bets, an approach critics consider impractical given the enormous number of contracts available. The article also notes the Trump family’s financial connections to the industry, including Donald Trump Jr.’s roles as a paid adviser to Kalshi and an investor in Polymarket. 

“‘If a press secretary closes a briefing early, or a baseball player changes their pitching style midway through an inning, we never used to wonder if they had a financial incentive to do so,” said Andrew Verstein, a law professor at the University of California at Los Angeles who has studied prediction markets. “Now, everything is potentially in on the fix.’” – The New York Times. 

When we turn the future into something people can bet on, we create new financial incentives to influence what happens. The pervasiveness of insider trading challenges the very premise of prediction markets as forecasting tools.  

Another realm in which the boundary between predicting and influencing behavior becomes blurred is social media, where algorithms help shape the very patterns they are designed to anticipate.

In a June TQR article, we discussed how social media algorithms do more than predict what users want to see: they actively shape what people encounter, how they behave, and what receives public attention. Because these systems are designed around commercial incentives to maximize engagement, they can amplify polarization, misinformation, and potentially harmful content. In an August article, we explored this business model through the concept of human fracking: the systematic extraction and commercialization of human attention through addictive content and platform design, turning our attention into a source of advertising revenue. In doing so, platforms can also influence the preferences and behaviors they claim merely to anticipate. As a case in point, there have been numerous allegations that social media algorithms favor certain political ideologies and influence elections around the world. 

This October, as reported by The Rio Times, Brazilian President Luiz Inácio Lula da Silva’s re-election campaign accused Meta of interfering in the October 25 presidential runoff in favor of his opponent, Senator Flávio Bolsonaro. While Meta denied the allegations, Lula’s campaign announced plans to take the matter to electoral and data protection authorities, questioning the lack of transparency of social media algorithms and their potential influence on democratic elections. 

 

 

“The main Brazil election market there [on Polymarket] has traded about US$179.8 million in bets. A separate Polymarket margin market rates a Flávio win by four to eight points as most likely, at 48.5%, with about US$412,000 traded. On Kalshi, (…) Flávio stood at 87% and Lula at 13%, with more than 5 million contracts traded.” – The Rio Times 

Brazil is not the only case. A February 2026 report by Romanian digital rights organization ApTI, in partnership with the European Digital Rights organization, found that Facebook, Instagram, and TikTok recommended political content during Romania’s 2025 presidential election campaign regardless of users’ expressed preferences. Political recommendations continued during the legally mandated campaign silence period, when 80% of posts shown to an underage TikTok account contained political messaging. Following the annulment of Romania’s 2024 presidential election amid allegations of foreign interference and algorithmic manipulation, as “one candidate received disproportionate online exposure amplified by algorithms,” ApTI argued that these findings reveal how recommendation systems can undermine electoral integrity.  

In March, the non-profit organization People vs. Big Tech published the results of an investigation in France showing that X and Tik Tok’s algorithms push content from the far-right to both right-leaning and left-leaning accounts. The results are in line with was later published in August by the Human Rights Research Center about the United States, which argued that social media algorithms amplify certain political viewpoints while reducing the visibility of others, as well as recent scientific findings.  

For instance, in an article entitled “The political effects of X’s feed algorithm”, published in Nature in February 2026, Germain Gauthier and co-authors find that exposure to X’s algorithmic feed shifted users’ political attitudes toward more conservative positions, compared with exposure to a chronological feed. The algorithm increased the visibility of conservative content and encouraged users to follow conservative political accounts. Importantly, switching from an algorithmic to a chronological feed did not reverse these effects, suggesting that algorithmic recommendations can have persistent political consequences.

 

 

People around the world are increasingly concerned about social media’s impact on democracy, according to an October report by the Pew Research Center. Based on a survey of more than 45,000 people across 37 countries, the study found that negative perceptions have grown significantly in many countries since 2022 or 2023, particularly in wealthier nations, with 64% of Americans now considering social media harmful to democracy. Considering their whole sample, they found that 79% believe social media facilitates manipulation through misinformation and 68% say it deepens political divisions. 

Prediction markets and social media platforms both profit from human behavior while exploiting inequalities in information and power. 

Prediction markets’ billion-dollar system attracts people hoping to profit from their forecasts, even as most gains flow to a small minority of traders with superior information, technology, and, in some cases, opportunities to manipulate outcomes. Social media platforms extract value from users’ attention, using behavioral data to predict their reactions and algorithms to influence what they see and do, with reported consequences for electoral processes around the world. In both cases, the promise of individual choice conceals a system in which those who control the information and technology can profit from shaping the behavior of those they depend on for revenue.  

As technology becomes better at predicting us, who gains power from those predictions, and what happens to our capacity to make decisions independently of the systems profiting from them?

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