Here in Chicago, local government is set up not only with a central governing body but Alderman who are responsible for individual "wards" throughout the city - 50 of them in all. You think your street needs cleaning, call the Alderman. Annoyed about a new business going up 2 doors down? Call your Alderman. You get the point.
As you can imagine, this being Chicago, the politics around Aldermanic elections are pretty intense, and these elections are coming up in a few days. Jimm Disspensa, a local government worker, has been blogging intensely about the Aldermanic races but also used Inkling to set up a marketplace for all 50 elections back in December.
The marketplace has been getting heavy traffic as citizens and campaign workers alike pile on to try and influence the results.
What is interesting is how prediction markets are becoming part of the news cycle -- enough so that campaigns are worrying about how they are perceived in the markets as much as they are as the polls. Beyond our experience with this phenomena on a local scale, this is happening on a much larger scale on the popular for-money trading platform InTrade, where with only a few thousand bucks, a particular campaign can skew a market and show their candidate as "the crowd's current prediction." Perhaps there can be counter money involved to offset that activity, but then it simply becomes a matter of who has the most cash and us citizens are left on the sidelines having only a marginal ability to influence the outcome.
How to address this? In the future, I imagine the same people who run markets for elections (us included) will run private marketplaces as well, where the invite list can be controlled and the trading more closely monitored for manipulative activities. This is unfortunate because our own policy is try not to treat people like misfits until they act like it, but in this case, they've been acting like it so something needs to be done.
One day we'll also likely have to deal with this issue in the corporation as well. As these markets become more influential in decision making, who is to say a manager with an agenda somewhere won't go on a covert campaign to influence traders to say a project won't be late or that the product they are responsible for will be the best seller next year. This is no different than the politics that already goes on behind the scenes in all companies, but now there is a forum that makes that process transparent. At least when/if that happens, we can say prediction markets have really arrived as a mission critical tool!
Here is an article in The Reader, a free news weekly here in Chicago about James Disspensa, his blog, and his Inkling marketplace.