Pat Sullivan  /  AP
Former Enron executive Jeffrey Skilling outside the federal courthouse for his fraud and conspiracy trial last week.
updated 2/13/2006 10:00:33 AM ET 2006-02-13T15:00:33

Long before Enron Corp. drowned in scandal, its former chiefs Kenneth Lay and Jeffrey Skilling trumpeted the company's savvy in creating trading markets beyond energy. Now it turns out they are the subjects of futures contracts that allow investors to wager on whether they will be convicted of fraud and conspiracy charges.

Intrade, a futures market based in Dublin, Ireland, creates trading vehicles based on everything from which film will win best picture at the Academy Awards to whether bird flu will be discovered in the United States before March 31. It recently added contracts on whether jurors will convict Lay of at least four charges and whether they will find Skilling guilty on at least 16 counts.

And a Costa Rica bookmaking Web site has posted odds on the same bet.

Lawyers for the two men criticized such speculation on the future of their clients, who would face decades in prison if convicted. "I think it's abhorrent, betting on people's lives," Skilling lawyer Daniel Petrocelli said. Added Michael Ramsey, Lay's lawyer: "It should probably be illegal. That's an invitation to tamper with the case."

Prosecutors contend Lay and Skilling lied to investors about Enron's financial health before it filed for bankruptcy protection in December 2001. The defendants counter that there was no fraud and they are innocent of any wrongdoing. The trial, which will begin its third week on Monday, is expected to last four months or more.

Enron's once-envied trading operation sought to create markets in commodities beyond energy, such as metals and Internet bandwidth.

On Friday, when court was not in session, the trading at Intrade showed a more than 60 percent chance that Lay would be convicted of at least four of the seven counts of fraud and conspiracy against him. For Skilling, trading showed about a 75 percent chance he would be convicted on more than half the 31 counts of fraud, conspiracy, insider trading and lying to auditors pending against him.

"I can predict that it's going to be very volatile for the next few weeks. As more information comes out, you'll be able to see what the markets are hanging on and what the markets think are important," said Intrade spokesman Mike Knesevitch.

Intrade created a trading market for last year's molestation trial of Michael Jackson, who was acquitted. Those contracts settled at zero because of the acquittal _ as will those on Lay and Skilling if jurors exonerate them or finds them guilty of less than the requisite number of charges.

Intrade's other such markets include a 24 percent probability that U.S. Rep. Tom DeLay will be convicted in a Texas trial on money-laundering charges.

"The major difference between us and a bookie is the fact that we allow individuals to make markets in these events in the same way they make markets in a stock," Knesevitch said.

Oddsmakers for the Costa Rican site consider a conviction so likely that they require betters to put up a lot of money to win a little, Chief Executive Officer Mickey Richardson said in an e-mail.

The Costa Rica site places odds of a Lay conviction at 1 to 50 and an acquittal at 1 to 1.05. For Skilling, the site places odds of conviction at 1 to 100, and acquittal at 1 to 1.

That means betters stand to pocket less money if the men are convicted because oddsmakers consider that the most likely outcome, Richardson said.

For example, betters would get $51 if they bet $50 and Lay is convicted, and $101 if they bet $100 and Skilling is convicted. If the odds were 50 to 1, betters would only have to wager a dollar to win $50.

The even or nearly even odds for acquittal means oddsmakers give Lay and Skilling a 50/50 chance of being found not guilty. In that event, betters would double their money.

Oddsmakers in Las Vegas and London aren't taking similar bets.

Bob Scucci, race and sports book manager for the Stardust Hotel-Casino, said Nevada gaming regulations restrict them to taking bets on sports.

Graham Sharpe, spokesman for London bookmaker William Hill, said his outfit doesn't post odds on court cases because "it's a recipe for legal disaster."

And Nick Weinberg, spokesman for leading British bookmaker Ladbrokes, said in an e-mail, "it was decided that on the grounds of taste, we would have to give it a miss," he said.

Richardson said his site posted odds of 1 to 30 that Martha Stewart would be convicted of lying about a stock sale in her 2004 trial. But other recent high-profile trials — such as that of former WorldCom chief Bernard Ebbers last year that ended with his conviction of orchestrating an $11 billion fraud — didn't warrant odds, Richardson said.

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