Watching the Prediction Markets

Reuters has an interesting story about how "prediction market traders" are forecasting the 2008 election.

We all know those Brits love to bet on just about anything, so this year's American election is giving them loads of opportunities to wager a quid or two.

WASHINGTON (Reuters) - Democratic presidential candidate Barack Obama will beat Republican John McCain in the November U.S. presidential election, prediction market traders were betting on Wednesday.

Traders on the Dublin-based Intrade prediction market gave Obama a 61 percent chance of winning the November 4 election, versus a 35 percent chance for McCain. Traders on the Iowa Electronic Markets gave the Democrat an almost 62 percent chance of winning, versus a 39 percent chance for the Republican.

Prediction exchanges let traders buy and sell contracts on the likelihood of future events. Contracts are usually structured so prices can be read as a percentage chance of an event occurring. Studies of prediction markets have shown they have an accuracy comparable to that of public opinion polls.

Traders were less certain about the vice presidential running mate for either candidate. Around midday on Wednesday, Obama's chief Democratic rival, Hillary Clinton, was seen as having a 22 percent chance of being his pick.

Sen. Jim Webb of Virginia, a former Navy secretary, was given an 19 percent chance of being Obama's choice, New Mexico Gov. Bill Richardson had a 6 percent chance and former Virginia Gov. Mark Warner a 5.5 percent chance.

On the Republican side, traders gave former Massachusetts Gov. Mitt Romney a 20 percent chance of being McCain's running mate. Minnesota Gov. Tim Pawlenty had a 16 percent chance and former Arkansas Gov. Mike Huckabee a 12 percent chance. (Editing by Alan Elsner)

Let's see...I'll put a fiver on Obama to beat McCain by at least 10 points, and I'll take 3 to 1 odds that Hillary WON'T get the VP nod!