First Test for Prediction Markets?

Intrade has Obama by a large margin (60 percent to 16 percent for Clinton shortly past noon) while the latest poll numbers say the race is too close to call.

Obama

Clinton

Much depends on the turnout, but it would be a victory for the prediction market crowd if the final results look more like InTrade than like the polls.

But over at WSJ, Justin Wolfers cautions against taking the Intrade Iowa numbers too seriously:

...the Iowa-specific prediction markets are quite lightly traded, with trading volumes measured in mere thousands of dollars. This definitely suggests some caution is warranted before putting too much faith in these projections, although the track record accumulated over recent election cycles suggests that even very thinly-traded prediction markets have proven surprisingly accurate.

And Chris Masse at Midas Oracle throws some water on the idea of arbitrage opportunities between different prediction markets.