Don’t Bet The Box Office Just Yet

The Commodity Futures Trading Commission approved two proposals to create exchanges for movie box office futures, but don’t expect to place that first bet any time soon.

Trend Exchange, backed by Veriana Ventures, received the commission’s blessing April 16. Cantor Fitzgerald-backed Cantor Exchange got its OK April 20. The commission has not yet approved the actual products to be traded by each.

But the powers that be in Hollywood, some of whom are fiercly opposed to the idea of box office exchanges, have lobbied hard against the proposals and may have found allies on the Senate Agriculture Committee.

The committee on April 21 approved the Wall Street Transparency and Accountability Act, which includes a provision banning futures trading on movie box office, according to the Los Angeles Times.

The industry’s top lobbying groups, including the Motion Picture Association of America, National Association of Theatre Owners, Directors Guild of America and the Independent Film and Television Alliance, have fought to block the exchanges.

MPAA President Bob Pisano thanked the ag commissioners in a statement, adding that plans for the exchanges are “based on a faulty understanding of the film business and could cause real financial harm to both the film industry and other Americans drawn in by an online gaming platform that could be easily manipulated.”

Some commissioners expressed concern that the nature of the movie biz could present conflicts of interest or subject the exchanges to manipulation, according to Variety. Cantor Exchange and Trend Exchange would allow investors to hedge against potential box office bombs or underperforming films by preselling a share of future box office receipts.

But despite the pending legislation to outlaw the exchanges, it’s early in the sausage-making process. The bill will be merged with another financial reform package being put together by the Senate Banking Committee, and no such bill exists in the House to prohibit such exchanges.

And as any fan of “Schoolhouse Rock” knows, the bill has a long way to go before being signed into law.