This year's favorite, currently running 4/1, is Amoz Oz, who I took in the pool last year. This makes sense, given that the geographical distribution of the prize the last few years seems to be pointing to the Middle East, and given Oz's mutually agreeable liberal Israeli politics. (Strangely, though, given the Swedish Academy's tendency to occasionally pass over someone whose "turn" it is, there are no odds given for David Grossman.) It will probably be either Oz, or a Scandinavian poet (been long enough—Thomas Transtromer, then?), or Philip Roth, finally, and we will all forget those mean, true things the Nobel people said about American literature last year.
Ladbrokes must clean up on this betting every year (except the year that Orhan Pamuk won), given how many people insist upon betting on Bob Dylan (currently 25/1, same as my two favorite living writers) every year because he's the only person on the list they've heard of. If he did win (he won't), Dylan would in fact become the second Nobel laureate in Literature to ever release a Christmas album (yes, yes he would too be, you're forgetting A Very Kenzaburo Oe Christmas).