By Anne Thompson | Thompson on Hollywood April 16, 2010 at 9:02AM
Despite considerable opposition from the studios and their lobbying arm the MPAA, on Friday the Commodities Futures Trading Commission unanimously approved one of two box office futures exchanges. The question seems to be whether wagering on box office performance is a healthy way to raise film financing or a more sinister form of gambling that could lead to manipulation and abuse.
Subject to further approval, Chicago's Media Derivatives can now go ahead with its new exchange which allows investors to "buy and sell contracts that predict the box-office performance of upcoming films," reports the LAT. A Media Derivatives official told TheWrap that the co. plans to start trading box-office futures during the third quarter.
The Fed has until June 7 to approve separately Wall Street giant Cantor Fitzgerald's bid to open a second box office exchange.
There are other hurdles to clear before movie futures start trading, per Variety:
But the Commodity Futures Trading Commission, in its decision late Friday, said that Media Derivatives Inc. needed to agree to a greater level of oversight for the types of products that will be traded, the contracts that will be tied to weekend box office receipts.
Opposition to the movie futures trading is not going away. The MPAA coalition, including NATO, the DGA and the Independent Film and Television Alliance, seeks to ban box office futures wagering via congressional financial reform legislation. The group stated:
We note that in making their decision, a majority of the commissioners raised the same concerns that we have about the contracts themselves, concerns related to whether they can be manipulated, whether they serve a true hedging purpose, and questions about whether the contracts should be approved.
According to The Wrap, Cantor Fitzgerald and Media Derivatives execs as well as reps from the Hollywood opposition are expected to attend a House subcommittee meeting next Thursday.
Economist Harold Vogel wrote this comment on The Wrap:
What, pray tell, in general is movie-making except "legalized gambling". And what, pray tell, is advertising and marketing amounting to tens of millions and promo spots on Leno and Letterman but manipulation and gaming of the market by the studio/distributors who constitute the MPAA. Seems to me, the MPAA membership has a double-standard regarding the issue and hasn't looked in the mirror lately.