To reasonably conclude that PredictIt’s limits are “limits of prediction markets”—as your title asserts—you need to show either that the other existing prediction markets also exhibit these limits, or that there is a fundamental theoretical reason for expecting such limits to be exhibited by any prediction market. As far as I can tell, you do neither. (You do say that «similar analysis is applicable to any [prediction market]», but you never justify this assertion. In fact, of the six problems you note, I think the only one that may be plausibly claimed to be inherent to prediction markets is #4, and even that one may be potentially solvable.)
To reasonably conclude that PredictIt’s limits are “limits of prediction markets”—as your title asserts—you need to show either that the other existing prediction markets also exhibit these limits, or that there is a fundamental theoretical reason for expecting such limits to be exhibited by any prediction market. As far as I can tell, you do neither. (You do say that «similar analysis is applicable to any [prediction market]», but you never justify this assertion. In fact, of the six problems you note, I think the only one that may be plausibly claimed to be inherent to prediction markets is #4, and even that one may be potentially solvable.)
Agreed − 4/ is solved by allowing margin.
(Although margin is trickier if the event can suddenly resolve to 0 or 1 at any time, I think there are even solutions to this)