I can say that there are multiple traders on Tradesports who have accounts on other sportsbooks and will jump on any opportunity for cross-exchange arbitrage, so I suspect that the odds remain fairly close across markets regardless of which follows which.

I propose that:

Given a set of public markets, who offer the same trades/contracts; as this set grows in size, a predictable pattern of interdependence arises.

Further, this interdependence develops in a “follow the leader” type fashion.

e.g. The price of contract X moves on Book A, then on Book B, then on Book C, and so forth.

Implicit in your (Masse) and Gamble’s argument is that other traders and books will follow price moves/prices on TS. Lack of such evidence and/or evidence to the contrary, is confounding.

There is already a large body of studies on bookmakers. What interest the economists, these days, are the prediction exchanges (betting exchanges), because they embody fully the market mechanisms that economists are so enamored with.

Main betting exchanges: BetFair, TradeSports-InTrade and… Betdaq… and maybe MatchBook.
Main play-money prediction exchange: HSX (high volumes).

The sportsbooks/bookmakers probabilities will show higher odds (than the exchanges) for the likely winners. Keith Jacks Gamble cited the Levitt paper, which explains well that illegal bookmakers use their prices (=odds) as a marketing tool. They raise or lower them depending on how much their clients can pay. For instance, if you leave in the Indianapolis area, you’d pay a higher price for a Colts bet, because you’d be more optimistic about their chance of success.

The Tetlock paper that KJG cited is great, also. (Generally speaking, KJG himself is great, and all what he says is great. And whatever he touches becomes great too, including this group blog and his owner.)

Have you looked at tradesports probabilities vs. sportsbooks probabilities?