The Tradesports futures market offers four contracts for the 2008 election — one for the Democratic nominee, one for the GOP nominee, one for the candidate who wins the presidential election, and one for the party that wins. Using these contracts, we can determine who the markets think are the most electable candidates.

The markets are currently putting the party who will win at even odds, so a good candidate would have a better than 50/50 chance of victory, and a weak candidate would have less than a 50/50 chance.

Here is a ranking of the candidates who have contracts offered in the winning candidate market by the market’s implied probability of victory if they are nominated by their party:

Interestingly enough, the market is implicitly ranking Rudy Giuliani as the most electable candidate in a general election, followed by Al Gore! Mr. “Straight Talk,” John McCain, is ranked third — a surprising finding given all the hype about his appeal to Democrats and independents. Interestingly, Hillary comes in at about 50 percent, where a generic Democrat would be, along with John Edwards, who many (including me) see as more electable than her. Finally, Mitt Romney and George Allen perform significantly below the generic Republican percentage of 50 percent. These prices probably reflect the (regrettable but perhaps accurate) perception that Romney’s Mormonism is an obstacle to his election, as well as the damage done to Allen by publicity of ugly racial history as a result of his “macaca” gaffe.

Note: The fact that these probabilities are surprising may be a sign of an immature trading market. Traders may not be sophisticated enough to see that, say, the winning candidate contracts on Hillary and Gore are overpriced given the price of their nomination contracts.