Marketplace has a new podcast for kids, "Million Bazillion!" EPISODE OUT NOW

Regulators approve ‘futures trading’ for films

Gregory Warner Jun 15, 2010
HTML EMBED:
COPY

Regulators approve ‘futures trading’ for films

Gregory Warner Jun 15, 2010
HTML EMBED:
COPY

Regulators at The Commodity Futures Trading Commission have approved a new way to make money on films. For a new Matt Dillon film coming out in August, they’ll allow the sale of “futures contracts,” or bets tied to box office performance and ticket sales.

The Commission voted 3-to-2 to allow these kinds of bets on ticket sales at the box office. Those in favor said it’ll make the market safer. A futures contract could give film investors a way to recoup losses if the film flops. “You know if I’m investing in the stock market you’re always looking to hedge your bets,” says Mitchell Robbins, a Boston entrepreneur who invests in independent films.

Robbins says if he’s investing in films he’d like to do the same. Investors put down a lot of money for a film two or three years out trying to judge how the film will do on one opening weekend. A lot depends on marketing.

That’s what makes movies different from pork bellies, and why Professor German Bakker at the London School of Economics says a futures market is a dangerous precedent. “Participants in the futures markets could theoretically try to sabotage the marketing of a movie,” Bakker says.

Big hollywood studios oppose the commission ruling. They’ve pushed lawmakers to add a provision to the financial reform bill under debate: it would make this new futures market illegal.


Gregory Warner contributed to this report.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.