Cantor Fitzgerald-owned Hollywood Stock Exchange has always intrigued us, but play-money markets aren’t really our thing. But the site, which is more than a decade old, has a pretty hardcore following of people who like to like to try guessing box office outcomes, and supposedly the site has a decent track record — perhaps surprisingly, some studies have shown play-money markets to have predictive properties equivalent to real money ones.
Anyway, it looks like Cantor wants to take its experience with HSX and make a real money exchange for Hollywood
Variety: Bets on movie box office have been placed for decades, but Hollywood Stock Exchange parent Cantor Fitzgerald is ready to launch an actual financial market for domestic B.O.
Cantor has filed for federal regulatory approval for a new commodities venue called the Cantor Exchange. It would allow people or institutions — including the very industry figures making and releasing films — to buy contracts pegged to the first four weeks of a film’s gross.
If all goes according to plan, Cantor Entertainment, a subsidy run since May 2007 by former Nielsen exec Andy Wing, will start auction activity in January and then officially ring the trading bell in March.
The Commodities Futures Trading Commission (CFTC), which will have to approve the market, has been somewhat open to new, event-based trading idea, but it’s moved very slow. But there’s much more of an obvious business-case to be made for a market like this, as opposed to one for betting on Presidential races.
Given the extreme uncertainty surrounding box office results — you can have for huge stars in a Christmas movie that opens on a weekend with little else to go see, and it could still be a mega flop — markets to help participants predict or hedge outcomes could be very valuable. (For a great book on the subject, check out this power-law dominated industry, check out Hollywood Economics by Art De Vany)
Now once this is in place, next we’ll have to get what Michael Lewis called the jock exchange, that real money market for professional athletes going.