Barack Obama was trading at $7.12 a share, down one cent, in prediction markets yesterday, but still well ahead of Hillary Clinton, who was down a penny at $2.91.

Could the markets know more about politics than the polls?

Opinion polls show a tight race between the two candidates for the Democratic nomination. But in the prediction markets, where investors stake their money on the candidate they believe will win -- and face a loss if they are wrong -- Sen. Obama is far ahead. On the Iowa Electronic Markets, operated by the University of Iowa, Sen. Obama pulled ahead of Sen. Clinton in trading last week after Super Tuesday.

Meanwhile, on Intrade.com, which offers online trades in such diverse markets as Academy Awards and chances the U.S. will capture Osama bin Laden, Sen. Obama's recent wins have pushed him to a commanding lead.

Like bets on the Super Bowl, the odds set by the elections markets "reflect the wisdom of crowds," says University of Pennsylvania business professor Justin Wolfers, who studies predictive markets and also writes about them for the online edition of The Wall Street Journal. If the odds are wrong, investors will bet against them, reap a profit and cause a market correction.