Prediction markets vs. Experts (a.k.a. pundits)

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Via betting expert Niall O&#8217-Connor, this Slate piece:

But in the run-up to this year&#8217-s midterms, Intrade futures prices are everywhere. RealClearPolitics offers &#8220-Live Intrade Quotes&#8221- alongside its polling summaries. HuffingtonPost now posts them on the front page in a snazzy, multicolored bar graph. The HuffPo graphics won&#8217-t help with Tradesports/Intrade&#8217-s defense. The headline shouts &#8220-Midterm Betting Odds,&#8221- and the caption adds, &#8220-Odds based on people betting real money on the Tradesports website.&#8221- Is betting real money on the midterms a form of online gambling?

My Answer: No. TradeSports-InTrade is a prediction exchange, which can give more objective outcome probabilities than bookmakers or sportsbooks, and the Huffington Post does a diservice to the public in presenting that as &#8220-betting odds&#8221-.

Never mind the current Congress – the real value of political futures markets like Intrade is their potential to put someone else out of business: pundits. Intrade&#8217-s predictions are erratic, unreliable, and meaningless – in other words, a perfect market in the conventional wisdom. Most Washington talking heads are just day traders in political gossip. Thanks to Intrade, you no longer have to listen to all the pontificators, because the market does it for you. In politics, it&#8217-s often hard to tell the difference between the conventional wisdom and &#8220-the wisdom of crowds.&#8221- One man&#8217-s CW is another man&#8217-s WC. As further proof that the market works, this wisdom is now available for free – which is exactly what it&#8217-s worth.

My Take: I agree with what I put in bold, but not with what&#8217-s in between and after.

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