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Not quite, Lancey. These enterprises are designed to even out the total payout relative to the total dollar value of bets received. Intrade and other online binary books are, by definition, simply binary pools, otherwise known as repeating parimutuel (yes, the spelling is correct) pools, with a very small number of horses, typically 2 or 3, participating in a race. There is no "vig" per se, as with a traditional betting book such as Ladbroke's. Instead, every punter is charged a fee when the wager is placed, which fee replaces the typical vig and generates the profit for the pool operator, i.e. Intrade et al.

Nothing "ideal" about it; just like the futures markets, in a 2-horse Intrade pool there are exactly the same number of bets on horse A as are on horse B. Said another way, for every buyer of the proposition that horse A will way, there is a seller of that same proposition, just as in the corn, or crude, or copper futures markets. It is the fact that some subset of the group of punters on a given proposition are more eager to wager on the success of A rather than B (and thus will willingly pay more for their wager) that creates the "favourite".

Also, Intrade and other such pool operators don't "adjust" anything, ever. The punters do that over time by bidding more or less aggressively for their favoured horse. The "adjustments" are merely changes in price, no more and no less, and differ not one whit from the "adjustments" (price changes) seen in futures markets.

A comparison to stock markets here is technically invalid because the mechanisms of the 2 mkts, binary pools and stocks, are different. These binary pools do not have market makers, specialists, or their equivalent. Why? Because they don't need them. Intrade et al., while desiring as many wagers as possible, do not (ever?) employ people to entice the punters to wager by putting up a narrow(er) bid/offer spread, which, along with stabilising a market, are the functions of typical market makers.

As political indicators, though, Intrade and other such pools are -- as one poster has already noted -- utterly unreliable because their small size makes them VERY manipulable. Who on FR would have any doubt whatever that, if voter sentiment might be changed favourably with the expenditure of VERY few dollars, the Zerobama people would spend such a small sum in a New York taxicab minute?