I've used prediction (betting) markets in my class for years as a tool to explain how markets process information. These contracts traded in these markets are very simple - a contract based on a given event (i.e. Bush gets elected president or UNC wins the NCAA tournament) pays off $1 if the event occurs and $0 if it doesn't (in econ-speak, it's an Arrow-Debreu security). So, the "fair price" of the security would be the probability of the event occurring. Prediction markets have been useful tools for aggregating information.
Tyler Cowen at Marginal Revolution brings us the following roundup of betting markets related to the papal succession:
Addendum: Here are Tradesports.com odds by country, thanks to Paul N for the pointer.
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