Will people soon be able to bet on a movie's box office?

Well, that appears to be the case, according to The Hollywood Reporter:

U.S. regulators have 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 "legalized gambling."

But the decision announced Friday by the U.S. Commodity Futures Trading Commission doesn't mean people can start trading right away on the Trend Exchange. The commission is still reviewing the kinds of contracts -- essentially presales of a share of future box office receipts -- that could be traded there.

It is also reviewing a proposal to create a second market called Cantor Exchange. That one would have lower investment requirements than Trend Exchange, making it more likely for movie fans and other amateurs to participate.

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 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 the 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 "Harry Potter" and "Twilight" sequels falling short of projections. If a movie doesn't do as well as expected, 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 requirements of the law, and a deadline for approval had arrived. However, he said he still had "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," Chilton said in a statement.

A House subcommittee on farm commodities and risk management has scheduled a hearing for 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 in a statement.

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

-Thoughts?