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Speculators betting on movie success

http://news.bbc.co.uk/2/hi/business/10317873.stm

Market traders who usually speculate on the price of oil or the value of the pound have found something new to bet on - movie releases.

Following US regulatory approval, a new exchange is to begin offering traders the chance to bet on the success of the latest cinematic productions.

Investors will enter into contracts betting on how much money a given film will make in its opening weekend.

But film studios and cinema owners have condemned the idea.

They argue that letting investors bet on whether or not their films are successful could be open to manipulation.

Rival studios could even bet against films in an attempt to sabotage them, some industry figures have argued.
'Popcorn predictions'

But the Commodity Futures Trading Commission has rejected those concerns, saying that box office earnings meet the law's definition of a commodity - meaning that futures contracts can be opened on them.

The Trend Exchange, operated by Veriana Networks, plans to start offering box office futures from August, though the industry is lobbying the US Congress to ban them.

"Takers", a film about a bank-robber starring Matt Dillon that opens in the US on 20 August, is due to be the first release to be speculated on.

Democratic commissioner Bart Chilton warned that "popcorn prediction markets would serve no national public interest".

But investors have defended the plans, pointing out that they could give finance companies a way of reducing the risk of investing in films.

Investors will be able to guard against making a big loss at the box office by betting some money against their film.

The move also signals increasing investor interest in the film industry, with global box office receipts reaching a record $30bn (£20bn) last year.