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You're not accounting for the costs of investigating the prediction market itself. Perhaps if it was well known to be an extremely liquid market where I could be sure my bets would pay off. But I'm busy right now working on my start up, and even looking into the question will have a high opportunity cost.

My friend did a great job of arbitrage on the 2004 election, and made like $250 dollars. He would have made a lot more, but the market simply wasn't liquid enough to support it (he bought up all the contracts anyone would sell). It took him probably 5 hours to examine the market, find the arbitrage, and place the bets.

My wage consulting would be at least $100/hour. So it simply doesn't make sense to play in a market where, even if you realize the market is way out of whack, there simply isn't enough money in play to pay better than $50/hour.