Monday, July 12, 2010

Dodd-Frank Cave to Hollywood: No Movie Futures

LA Times (June 14, 2010) -- "Box- office futures have passed a final regulatory hurdle, clearing the way for the first bets to be placed in the near future, and overcoming objections by Hollywood that sought to block it. In a 3-2 vote, the Commodity Futures Trading Commission on Monday afternoon approved a contract created by the company Media Derivatives that would allow traders to bet on the gross receipts that a movie pulls in during its opening weekend.

The idea of betting on future box-office receipts has faced vociferous opposition from the movie industry, led by the Motion Picture Assn. of America, which has said that the contracts would be vulnerable to manipulation and could even hurt how movies perform in theaters.

The decision Monday could still be counteracted by legislation that seeks to ban any trading in box-office futures. The Senate has approved such legislation, but it would need to be approved by the House of Representatives to make it into the final financial reform bill."


The Wrap (July 1, 2010) -- "Hollywood Stock Exchange (HSX.com) laid off the majority of its staff on Thursday, TheWrap has learned.  The move comes as HSX's parent company Cantor Fitzgerald's long-gestating plans to sell shares of box-office earnings hit a legislative roadblock last week.

Bowing to pressure from big studios, the House of Representatives and Senate have included a ban on movie box-office futures trading in their proposed financial reform legislation. On Monday, shortly after getting federal approval for Cantor's trading plan, exchange president Richard Jaycobs admitted that congressional action will prevent the company from moving forward."

2 Comments:

At 7/12/2010 8:14 PM, Anonymous Lyle said...

Lets call this what it is sheer gambling and let the Nevada Gaming commission regulate it. They can't do a worse job than the folks in Washington, and probably will do a better one. Legalize online gambling, set up a site in Vegas where you can enter bets and its the same difference, just a question of who is the house. Better the Vegas house than the Wall Street house, the Vegas house is at least honest in its motives, while the wall street house is a bunch of crooks. Come to think of it a lot of Wall Street should move to Vegas as housing is cheap there and much of the derivatives business is really nothing more than gambling. (Plus taxes take a defined part of the handle on gambling)

 
At 7/13/2010 5:27 PM, Blogger OBloodyHell said...

Actually, no, it's not sheer gambling. It's called "collective wisdom", and it's been found to have substantial value as a predictor of real results.

While no one person does a reliable job of estimating what something will be worth, a mass of people can do an amazingly effective job at guessing what the likelihood of an event, or the worth of something at a given future time, will be.

HSX data on the likely value of a box office release has been sold, because it's been found to be fairly reliable.

Similarly, InTrade estimates of, say, the likelihood of an election result have also been found to be more accurate representations of the end result than many other statistical techniques.

It's nothing but a lower-order form of what the real market does.

If you don't like the bet, Lyle, the advice for you is simple -- don't make one.

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LOL -- wordver is "prediall"

 

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