Oh Boy....

[ALawPoker]

You can say the same about anyone if you want to assume every potential bettor thinks on those terms. "Rather than bet on Romney where I figure I have a 99-98 edge over the line, I could just put that money in a CD and expect more."

Who said you have to short Paul anyways? When one person artificially goes up, others artificially go down. So you could also capitalize by just betting on Giuliani if that seemed better to you. Whatever edge you can find in an efficient betting market will always tend to be negligible and thus one that you'd have done better to put in a different investment. Thinking this only applies to Ron Paul is very myopic. Every bet is one with such a small edge that it would always be +EV to put the money somewhere else instead.

"Betting markets are not efficient because the edge is so small that people will do better to put their money in other places." You need to realize that the betting market is comprised of individuals who, for whatever reasons, apparently prefer their money be live than in CDs. Since it exists, it is efficient.