According to this betting site the market is 68.1% - 69.0% that President Bush will win re-election. For non-bettors, 68.1/69.0 is a 'two-way' market where traders are willing to buy and sell the likelihood that W will win. For instance, if you believe Bush will win you can buy at 69.0. (The best way to think about this is you are betting that there is more than a 69% chance that he will win) You can profit if the President wins (where the contract will settle at 100) or you can take profit earlier. Let's say W smokes JFK in the debate tonight, the price tomorrow could be 75-76. You could sell at 75 and take profit. There is a small commission charged.
If you believe in generally efficient markets where traders are all trying to maximize gains and the market overall has all the available information these markets can tell you alot. For instance 70% chance to win is pretty strong.
Other major markets:
Bush wins in Iowa 60/63
Bush wins in Florida 66.5/68
Daschle to win 60/61
Barack Obama to win 95/99
Osama caught by 12/31/04 18/20
I recall that a group headed by Admiral Poindexter proposed a government sanctioned betting operation that I thought had merit but was met with disbelief and outrage. Part of the thinking (which probably needed to be perfected) was that those who knew of terrorist attacks would try to monetize that knowledge and the government would get a 'tip-off' and be able to try and track the ip addresses.
[Several anti-idiotarian blogs had adverts from the site which drew my notice. I took a brief look at this site. It looks legit. This is not an advertisement nor an encouragement to bet here or anywhere else. Before you make any bets I would advise reading everything very carefully and remember, the markets are generally very efficient so there is not likely to be a free lunch. Though I must say Bush winning CA priced at 8.9/10.3 seems off-market.]