The Iowa Electronic Market (IEM) is a prediction market run by the University of Iowa and sanctioned by the Commodity Futures Trading Commission (CFTC). PredictIt is the other exchange sanctioned by the CFTC; it just opened in the fall of 2014. IEM is capped at $500 per person. Being the oldest continuously running prediction market on politics in the USA, people often wonder why PredictWise does not show it more prominently in the aggregation of political prediction market data. There are several reasons.
1) IEM only has three markets: two-party vote share of the national popular vote for president, winner-takes-all for the popular vote for president, and formal balance of power of Congress. PredictWise builds all of its presidential and Congressional predictions on a state-by-state level (i.e., it predicts the Electoral College by the aggregation of the 51 states and DC), so IEM does not have data on this level.
2) The contracts that IEM do sell are not the ideal contract for the outcomes we care about predicting.
The two presidential contracts are exclusively constructed around the national popular vote. We only care about the national popular vote insofar as it relates to the Electoral College. Most recently in 2000 the winner of the national popular vote did not win the Electoral College and become president (this has happened 4 times total: 1824, 1876, 1888, and 2000). The national popular vote is very correlated with winning the presidency, but it is not the same thing.
Similarly the Congressional contract has two peculiar aspects. First, the contracts mix Senatorial and House control. They trade on five mutually exclusive outcomes: Democrats for both houses, Republicans for both houses, both directions of Democrats and Republicans each controlling a house, and other. Second, the “other” outcome is a bit confusing because either the Democratic or Republican party is going to control the houses of Congress! There are numerous candidates and sitting members of Congress whose formal party is not the Democratic Party, but caucus with them exclusively. They do not count in these contracts. For example, current candidate for the Democratic nomination for president, Bernie Sanders is a Socialist, so he does not count for this contract. If the Democrats actually controlled the senate, with votes from Sanders and King (ME-I), the contract would state “other”, rather than Democratic. Sometimes this is easy to adjust for, but other times it is not.