Pentagon drops betting market on terror attacks

By ANDREW BUNCOMBE in Washington

The Pentagon has been forced to abandon plans to set up a online futures market on which investors could speculate on the likelihood of terror attacks.

Critics said the $8m plan was an incitement to terrorists to carry out attacks. Under the project, the Policy Analysis Market, traders could have speculated anonymously on the chances of the leader of a middle eastern country being assassinated or else North Korea firing a nuclear missile.

The Pentagon said the project was designed find the "broadest possible set of ways to prevent terrorist attacks". It said in a statement:"Research indicates that markets are extremely efficient, effective and timely aggregators or dispersed and even hidden information. Futures markets have proven themselves to be good at predicting things such as election results: they are often better than expert opinions."

But the revelation of the plan's existence - drawn up by the same Pentagon department that proposed electronically spying on US citizens to monitor terror suspects - caused outcry on Capitol Hill.

On the same day that a story about the project appeared on the front-page of the New York Times, the chairman of the Senate Armed Services Committee said the plan was being scrapped.

Senator John Warner said he spoke to the programme's director, "and we mutually agreed that this thing should be stopped".

Mr Warner announced the decision after the Democrat's leader in the Senate, Tom Daschle denounced the project as "an incentive actually to commit acts of terrorism."

The project was due to have started on Friday with around 1,000 traders taking part. Those traders would have been able to register anonymously, triggering concerns that terrorists could actually male money from their own attacks.

Two Democratic senators who discovered the project called it "morally repugnant and grotesque". One of them, Byron Dorgan of North Dakota, said he had found it difficult to convince people it was not a hoax.

He said:"Can you imagine if another country set up a betting parlour so that people could go in...and bet on the assassination of an American political figure?"

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