Daily News (New York)

July 29, 2003, Tuesday SPORTS FINAL EDITION

SECTION: NEWS; Pg. 25

LENGTH: 381 words

HEADLINE: Gambling on terror Pentagon wants crisis Web site to take bets

BYLINE: By RICHARD SISK DAILY NEWS WASHINGTON BUREAU

BODY:
WASHINGTON - The Pentagon has a "hare-brained" plan to let investors profit by
placing bets on terror attacks, coups and assassinations, two Senate Democrats
charged yesterday.

Sound far-fetched?

It's not.

The Defense Department confirmed it wants $3 million in taxpayer funds to set up
an Internet-based futures trading site.

Sen. Byron Dorgan (D-N.D.) called the project for taking online futures
contracts on terror events "incredibly stupid. What on Earth are they thinking
of? This is a hare-brained scheme."

Bets would mostly be limited to events in the Mideast, but until late yesterday
the Web site of the Defense Advanced Research Projects Agency also used the
example of an investor taking futures on a North Korean missile attack.

Other hypothetical futures contracts would let investors trade on the likelihood
that Palestinian leader Yasser Arafat would be assassinated or Jordan's King
Abdullah would be overthrown.

In a statement, agency officials defended the market, which opens Sept. 1 - 10
days before the second anniversary of the terror attack on America.

'Good' predictors

Such markets offer efficient, effective and timely methods for collecting
"dispersed and even hidden information," the agency said. "Futures markets have
proven themselves to be good at predicting such things as elections results;
they are often better than expert opinions."

Registration for the Web site, www.policyanalysismarket.org, begins Friday.

Sen. Ron Wyden (D-Ore.) said "spending taxpayer dollars to create terrorism
betting parlors is as wasteful as it is repugnant. Clearly, this is morally
wrong."

The head of the defense research agency's Terrorism Information Awareness Office
is retired John Poindexter, who in the 1980s was a key figure in the Iran-Contra
scandal.

The House approved a $3 million Pentagon request to set up the site, but the
Senate rejected the proposal. The request is now before a conference committee
of the Senate and the House.

Wyden said $600,000 has been spent on the program, and the Pentagon plans to
spend $149,000 more this year.

In a joint letter to Poindexter, Wyden and Dorgan urged cancellation of the
project, suggesting the $3 million be used for "enhancing our security, not
gambling on it."