...to the extent that betting markets are an accurate predictor of political outcomes
But that is the fundamental flaw : betting markets are not an accurate predictor of any kind of outcome. The prices in a betting market are set and moved by the bookmaker according to the bets placed; the odds move according to what the bookie stands to win or lose based on the current bets. Sure, the bookie makes an educated guess when setting the intial price, but after that, the price is entirely driven by bets received.
Imagine that there were such betting at the last election. If Rove dropped hundreds of millions to back Romney, what do you think that would do the betting price? The odds would be "predicting" a Romney landslide, but it would be no more a predictor of reality than all those blowhard pundits.