Gambling on Saddam's future
www.bankrate.com By Laura Bruce • Bankrate.com
There's a little bit of gambler in most investors. After all, if you invest in stocks or mutual funds, you're taking on some risk.
So, while you're waiting for the stock market to quit behaving badly you might consider wagering, I mean investing, some money in a futures contract on Saddam Hussein's future.
Tradesports.com, www.tradesports.com based in Dublin, Ireland, has come up with a way to combine betting and investing.
"Tradesports is an exchange," says John Delaney, CEO. "We don't post any odds or make any book. Everything on the site is posted by other traders of the exchange. We provide a way for people to do futures contracts on issues."
One of the hottest futures contracts on the site is whether Saddam Hussein will still be the president of Iraq after March 31, 2003. A similar, more expensive, contract is available for June 30. A December 2002 contract expired unexercised since Saddam remained in power. If he's still top dog at the end of June, a fourth futures contract will be issued for Sept. 30. Continued below
"About 30,000 contracts will have traded for the three Saddam contracts; it's very popular." Delaney says. "When those chemical warheads were found, the market reacted very quickly. The probability of him being gone, assigned by the market, went up 10 percent, to 40 percent. As news comes out it's quickly assimilated by the traders."
"The current contract -- will Saddam be in power after March 31 -- is listed on a zero to 100 scale. If he's gone by the end of March that contract will settle at 100. If he's still president, the contract settles at zero."
Chris Cooper, a Toledo, Ohio, certified financial planner, lends a hand in explaining futures contracts.
"In investing, you win and lose together. You could have bought WorldCom when the stock was doing well and the company was doing well. But now the stock is down to 6 cents; you're not doing well and neither is the company.
"In commodities there's a winner and a loser. You think it goes up and the other guy thinks it goes down. One will be right, the other will be wrong.
"We've always had a bartering society. You trade corn for musket balls, chickens for pigs. Now we formalize it with commodities to represent the delivery of goods or services in the future. We have not only physical commodities such as oil and grain, but financial assets such as stocks and bonds. Here is a tongue-in-cheek sports marketplace that looks like a commodities exchange."
If betting on Saddam's future isn't your cup of tea, Tradesports lets you take positions on other current-event issues such as whether President Bush will win re-election, who will be the Democrats' candidate, who will win the Oscars and a full slate of sports bets.
When the Federal Open Market Committee gets busy adjusting rates again, Tradesports will offer three contracts; a change in bias, a move up or down by 25 basis points; and any move at all. Wheee!!
"It's a novelty bet, a lot of sports books offer bets on politics. It's not too uncommon. But I don't know of anyone else doing a proposition on Saddam Hussein," says Ashley Lang of Gambling Times magazine.
"They're not asking whether he'll be violently taken over, it's just a matter of whether he'll be the leader of Iraq. He could be out for a number of reasons -- steps down, or taken out of power by the U.S. or other forces."
But what if the U.S. and allied forces attack Iraq? Would Tradesports pull the contract when bloodshed begins?
"That's one of the trickiest questions for me to answer in an abstract way," says Delaney. "If you exclude what's happening in Venezuela regarding oil, the oil contract is really a Saddam Hussein contract. If there's bloodshed would people stop trading defense stocks or oil? I don't think we could and I don't think we should. But we'll always be respectful of what's going on in the world."
When you open an account with Tradesports and fund it, any money you put on a futures contract is frozen. If you win, money from the loser's account will flow seamlessly into your account, according to Delaney.
Of course it will flow seamlessly out of your account if you lose.
If you close your account or want a portion of the money that's in it, Tradesports sends a cashier's check. Delaney says accounts that hold more than $5,000 are paid interest.
If this seems like just another way to lose money, it probably is. Treat it like the lottery, worthy of a small part of your entertainment budget if you're so inclined.
-- Posted: Feb. 5, 2003