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Movie Box Office Futures Betting Market Approved

Written by:
Greg Tingle
Published on:
Apr/16/2010
Box Office Futures Betting Market

Do gambling and Hollywood mix?

Based on the mega success of the adaption of Hollywood titles from the likes of Paramount Pictures, StudioCanal, Warner Bros and Marvel Entertainment, later to find them in the likes of PartyGaming's PartyCasino, it would appear so.

Media Man and Gambling911 probe Hollywood, AussieWood and Bollywood, with this special report.

United States law men aka "regulators" have remarkable approved the creation of a market for movie industry participants and speculators to trade on predicted box office receipts, despite its denouncement by Hollywood studios as "legalised gambling".

The decision by the US Commodity Futures Trading Commission doesn't mean you can start trading right away on the Trend Exchange, so easy there punters.  The commission is still reviewing the kinds of contracts - essentially presales of a share of future box office receipts - that could be traded there.

They are also reviewing a prop to create a second market called 'Cantor Exchange'. That one would offer reduced investment requirements than Trend Exchange, making it more appealing for movie fans and others to participate, thus luring in the general public who are by all accounts still mega movie fans at heart.

A ruling on the Cantor proposal, backed by Cantor Fitzgerald LP, is expected next week, while the commission has until June 7 to decide on the specific contracts for the Trend Exchange, which is backed by venture capitalist firm Veriana Ventures.

The two online trading forums would be similar to futures markets common for commodities such as corn and pork bellies. Although goods are rarely exchanged directly through such markets, they let buyers and sellers reduce risks by locking in prices months ahead of time.

Backers of these sort of box-office exchanges say those markets would help Hollywood manage risk in a notoriously hit-or-miss business. Investors would be able to hedge against potential flops by preselling a share of future box office receipts. The exchanges could even guard against likely hits such as the upcoming Iron-Man, Harry Potter, Twilight sequels and big name flix like Captain America, Thor and Avengers falling short of projections. If a movie doesn't do as well as forecast, investors would at least be guaranteed revenue from those presales, known as futures contracts.

One member of the futures commission, Bart Chilton, said he "reluctantly" approved the Trend Exchange because it fulfilled the legal requirements, and a deadline for approval had arrived. However, he noted his "significant concerns" about whether such markets could effectively help offset risk and avoid manipulation.

"At this point in time, I have not heard any arguments to persuade me that 'movie futures' generally can overcome some fundamental design flaws," Mr Chilton said.

A House subcommittee on farm commodities and risk management has scheduled a hearing for this coming Thursday on the movie futures contracts.

Veriana CEO Robert Swagger applauded the market approval and predicted opposition would ease over time.

"Historically, initial product skeptics have eventually become the greatest adopters through a process of time, education and communication," he said.

The Motion Picture Association of America, which represents the major Hollywood studios, had no immediate comment.

iGaming powerhouse PartyGaming offers a spread betting service through InterTrader, however is not trading on movies at this point in time, despite strong Hollywood connections. PartyGaming's casino does however offer movie themed online slot games such as Marvel Entertainment's Thor, Spider-Man, Fantastic Four and The Incredible Hulk. Sinatra and Rambo are among the companies most popular games to date.

Our verdict: Hollywood, gambling, the stock market and online casino games do mix... just check out 'The Last Mogul' featuring politics, mob connections, Hollywood and the like, and if you're still not sure, look up Sly Stallone, Arnie Schwarzenegger, Hulk Hogan and Ronald Regan, and we think you'll agree.

*Greg Tingle is a special contributor for Gambling911

*Media Man http://www.mediamanint.com is primarily a media, publicity and internet portal development company, gaming being just one of a dozen industry verticals covered.

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