Unicast

Chris Hibbert has an excellent introduction to basic prediction market formats. (I found this through Chris. F. Masse's difficult-to-link RSS feed because my aggregator hadn't caught on to the fact that Hibbert's blog has moved.)

I have only one observation on "buying a basket": It makes it a bit more difficult to bet all your cash on some outcome. Suppose you have $100 available and the cheapest way to bet on outcome A right now is to buy a basket consisting of A and B for $10 and sell the B part for $4. (Assume that the best ask price for A is $6.50.) You buy 10 baskets of $10 each and sell 10 B's, yielding 10 A contracts and $40. You buy 4 more baskets of $10 each and sell 4 B's, leaving you with 14 A contracts and $16. Then you need to place one more order basket order, sell the B part, leaving you with 15 A contracts and $10. Finally you place your final basket order, buying a basket and selling the B part, and end up with 16 A contracts and $4.

Certainly this process could be automated by the market so you don't have to place four separate orders, but HedgeStreet and IEM don't do this.