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...to manipulate the actual events on which the futures market speculates....This is the reason that the terrorism futures market is so flawed as a concept.

I highly doubt this. The FBI would have the names, bank accounts and addresses of the "winners".

Here is where you should spend your focus: FBI agents and analyists don't make that much money, and their money is not contingent on being correct, it is a matter of just showing up for work until retirement. Where the money is made is in the speculation. Let's say that an FBI agent, with all of their resources had a good feel to where the action might be, to simply report to his superiors might result in an "Atta-Boy", and that is pretty much it. So there is no real incentive, other than work ethic and partriotism (which we have no guarentee). But how about if that information slipped to a speculator? How much would that information be worth? Now we have security leaks within the FBI as more and more high level agents with many people under them turning in good information, passes this stuff to the highest private bidder - who may or may not be a friend of this country. IOW, we have institutionalized espionage.

Also look at this problem. You have a new garden industry of anaylsts who are speculating on the next terrorist strike. How does one do that? By collecting as much information on national weak-points and critical services. Some of the best and brightest minds in this nation will be spending their productive hours deliberately seeking the best bridge to blow up, the best electrical facility to dismantle, the best pipeline to sever. They will calculate how easy and how low-tech a terrorist would have to be, and they would be constructing all sorts of scripts on how to systematically destroy this nation. Before any money is placed on a terrorist future, there would be a priceless wealth of information exploiting the most vulnerable strike-points in this nation, complete with data on how bad the damage would be. This information would be priceless to terrorists, and could be delivered to them on a DVD.

Scared yet?