Future's Bright for Terror Betting

A futures market first proposed by the Pentagon that allows speculators to bet on assassinations, coups and acts of terrorism is to be set up without government involvement, it emerged yesterday.

The project, abandoned in August after political criticism, will be launched next month by the San Diego-based technology company Net Exchange - the firm the Pentagon worked with on the idea.

"At present, we aren't making any of that public," said the company president, Charles Polk, yesterday. "Given the treatment this received in the political machine in July and August, and in much of the press, we are being a little guarded in our approach."

The Pentagon's proposal, known as a policy analysis market, was slated, particularly in the US senate. Critics derided the prospect of speculation on acts such as terrorism, assassination and armed conflict.

Retired vice admiral John Poindexter, who served as Ronald Reagan's national security adviser, headed the office overseeing the project. His association with it contributed to the furore, and he later resigned.

The market was based on the idea that, just as bookmakers' odds are often a better indicator of political events than professional pundits, so a "policy analysis market" would exploit hidden information about the Middle East, and help to foresee threats.

As with other futures markets, such as those for agriculture and energy, traders make a profit or loss depending on their foresight.

The agency cited the potential benefit of tapping the knowledge of participants.

Mr Polk said: "One way to look at the use of a market-type process is that it provides a filter at the very front of this that gives the survey-takers the incentive to concentrate on those things they actually know something about."