Wall Street is attempting to create a new exchange that would allow investors to trade future contracts based on how well upcoming films do at the box office. While this might excite movie buffs who hope to finally monetize their overabundance of film knowledge, Hollywood is not amused. In fact, the Motion Picture Association of America is trying to prevent the creation of the new exchange. It has some legitimate reasons for doing so, but the film industry could benefit significantly from the new futures market.
The New York Times explains several of Hollywood's complaints. Some are sensible, others are not.
Conflicts of Interest
The movie industry worries that studio employees could be tempted by the possibility of making money through this new futures market. If so, then that could affect their work. Think about a sports player or coach betting on a game. If a football quarterback bets against his team, then he could a purposely mess up so that he profits. The same could happen with a movie if its fate could be bet on.
Insider Trading Concerns
This also leads to a broader concern: insider trading. This potential problem was also brought up here. Anyone who knows nonpublic information about an upcoming film has an advantage on betting for or against it. One problematic example, in particular, is movie screenings. These early viewers have seen the product ahead of time and can capitalize on their experience. Will movie studios really be expected to submit lists of those who have viewed the film to the SEC to control insider trading? Anyone obtaining an illegal bootleg could also benefit. The last thing Hollywood wants is more incentive for hackers to acquire movies before release.