I had a conversation with a friend of mine and she was telling me about this half-cocked plan of an anonymous gambling system based on betting on future terrorist attacks that this guy named Poindexter tried to create. I was beyond fascinated with this that I had to research just what exactly this scheme entailed and who Poindexter is.

Who is John M. Poindexter?
Truth be told, he has quite a record. He was an Admiral in the United States Navy and the National Security Advisor during the Ronald Reagan presidency. He was convicted of multiple felony counts: conspiracy, obstruction of justice, lying to Congress, defrauding the government, and the alteration and destruction of evidence pertaining to the Iran-Contra Affair. However, his conviction was overturned on the grounds that he had been granted immunity from prosecution as a result of his testimony before Congress.

In 2002 he had been appointed as the Director of the Pentagon’s Information Awareness Office. His duty was to gather as much information as possible about everyone into a central database run by the government. The information was to include details about travel, credit card purchases, medical history and so on and so forth. Thus, he is the brain behind the Total Information Awareness (TIA) program.

In protest against the unveiling of TIA, Matt Smith, a columnist of the San Francisco Weekly, published John Poindexter’s home address and phone number, along with the names and addresses of his next door neighbors. His actions quickly transposed into an internet meme and this information was popping up all over the internet. Shortly after his phone was disconnected.

What was Policy Analysis Market?
The Policy Analysis Market (PAM) was a proposed futures exchange developed by the United States’ Defense Advanced Research Projects Agency (DARPA) and based on an idea first proposed by Net Exchange, a research firm specializing in the development of online markets, and the Economist Intelligence Unit was also involved.

DARPA, of course, is headed by John M. Poindexter himself.

The Policy Analysis Market was a trading plan in which investors would be able to bet on political and economic events in the Middle East, such as the chance of assassinations and terrorist acts.

On PAM’s web page it had images and examples of how the trading system would be carried out. Unfortunately, that webpage has been withdrawn, BUT, thanks to Cryptome you can view the cached original version of PolicyAnalysisMarket.com.

In defense of PAM the Pentagon (who was overseeing the program) stated that it was part of a research effort “to investigate the broadest possible set of new ways to prevent terrorist attacks.”

The U.S. government was encouraging people to bet on and make money from atrocities and terrorist attacks.

When this project was revealed at a press conference, a political uproar ensued and the Pentagon immediately cancelled PAM and a week later John M. Poindexter submitted his resignation. (A copy of Poindexter’s resignation letter [PDF format])

For a brief time the PAM website revealed that it might be back in 2004 without government ties. This brings us to….

Prediction/Idea Futures Markets
I found a few prediction markets online:
Foresight Exchange
TradeSports

There are plenty of others, some real and some not. You just have to look for them. Interesting, to say the least, but not nearly as interesting as a government funded terrorist prediction market.