Intrade already has futures ready to go on the state-by-state results for the 2008 general election (disclosure: I don't gamble on politics, but I don't mind if you do), and I thought it would be worth comparing the best buys and sells.
Since we don't yet know which Democrat is going to be nominated, I have assumed a 75% chance of Obama as the nominee and a 25% chance of Clinton, which are essentially the same prices that have been forecast by Intrade. I've then produced a blended estimate of the Democrats' chances of carrying each state based on this 75/25 split, and compared it to the most recent trade on Intrade.
As of right now, it looks like the best buying/selling opportunities are as follows. The percentage listed are the fivethirtyeight.com estimate that the Democrat wins, followed by the most recent Intrade trade on the Democratic contract in that state.
1. North Dakota: buy Democrat (35.8% versus 10.0%; 25.8% discrepancy). Even if you don't quite believe the Survey USA poll that has Obama ahead in this state -- our regression model is a little skeptical -- this contract looks cheap at $10.
2. Pennsylvania: sell Democrat (53.5% versus 75.0%; 21.5% discrepancy). The polling averages here show a dead heat against either Democratic opponent. Will six weeks of scotched earth campaigning help or hinder those percentages?
3. Indiana: sell Democrat (9.2% versus 30.0%; 20.8% discrepancy). I'm not sure why Intrade is so sanguine about Democratic prospects here. Obama has an outside chance to take the state, if he can crush McCain in the NW part of the state that is tethered to Chicago, but it's only an outside chance, and Clinton has no chance at all.
4. Mississippi: sell Democrat (4.7% versus 24.5%; 19.8% discrepancy). It looks like the Democratic contract that was executed at 24.5 percent was a one-off -- you can't currently buy a contract at that price -- so I wouldn't read too much into this one. It's one of the worst states for the Democrats, even relative to elsewhere in the South.
5. Michigan: sell Democrat (67.8% versus 84.5%; 16.7% discrepancy). Boy, we're starting to see a pattern here, are we not? Intrade may be placing too much emphasis on the results of the 2004 election.
6. Florida: sell Democrat (26.8% versus 43.2%; 16.4% discrepancy). As I've written, it's certainly a swing state if Clinton is the nominee, but Obama has not polled at all well here and has plenty of better places to compete.
7. California: buy Democrat (96.4% versus 80.0%; 16.4% discrepancy). It's not like this state is getting any less Blue. McCain may make some pretense of competing here, but it looks like he'd be wasting his resources.
8. Colorado: buy Democrat (67.4% versus 51.5%; 15.9% discrepancy). This one entirely depends on Obama winning the nomination, who polls much stronger than Clinton here.
9. Virginia: sell Democrat (41.3% versus 57.0%; 15.7% discrepancy). The Intrade contract would be priced fairly reasonably for Obama, but Clinton is a long-shot here.
10. Kentucky: sell Democrat (3.5% versus 18.5%; 15.0% discrepancy). Obama is not competitive in this region, and states like Tennessee are better bets for Clinton.