Coalition seeking ban on boxoffice betting
IATSE, DGA, NATO, IFTA join MPAA in making case to gov'tBetting a few bucks on boxoffice results might seem like a benign way to have some fun, but a growing cadre of interests is making a dramatic case against such schemes.
After the MPAA last week voiced its opposition to plans by the Trend Exchange and the Cantor Exchange to solicit wagers on how well movies perform, four others joined the fight Wednesday.
Besides the MPAA, the coalition consists of IATSE, the DGA, the National Association of Theater Owners and the Independent Film & Television Alliance.
The coalition fired off a letter to the Commodity Futures Trading Commission, a U.S. government regulatory entity, asking that it not approve applications that essentially would legalize boxoffice gambling, with winners being rewarded for accurately predicting how well -- or how poorly -- individual movies perform.
The letter seeks either outright rejection of the plans or for the decision to be delayed at least until April 16, allowing the coalition "time to submit a written comment."
After delays, Cantor is shooting for approval April 20 and Trend for Friday.
Among the specific concerns is that Trend is asking studios or distributors "to provide evidence to support its public boxoffice number when it falls outside the standard deviation level."
The letter doubts "whether any authority exists to require disclosure of any information from studios."
More vague concerns also are raised in the letter, including that it places movie industry jobs at risk. The letter even alludes to "abusive practices that triggered our nation's economic crisis," though without specifying how that crisis relates to boxoffice futures.
The coalition also suggests that Trend and Cantor are being disingenuous by claiming that studios actually could benefit from their services by using it as a hedge against risk.
Because the services have specific rules prohibiting those with certain inside knowledge from trading, it's unclear how studios and distributors would be allowed to speculate.
In fact, Cantor Exchange president Richard Jaycobs said he is in the process of clarifying that exact point with the CFTC.
"The concerns of the MPAA are well-founded, but they are not familiar with the solutions in place," he said. "Every issue they raised we have been discussing with the government for two years."
Said Clark Hallren, managing partner of Clear Scope Partners, an adviser to Trend, "I believe there are positive applications that can be created and traded on the exchange to reduce the volatility of film performance to investors."
The kind of exchange that Cantor is trying to establish, Jaycobs said, "might be new to the MPAA and their members, but it isn't anything that is not being done in other markets."
Cantor and Trend both make the point that the coalition's concerns are coming late in the game. Cantor, for one, said it first reached out to the MPAA in 2008. "Now they come in at 11:58 p.m. saying they don't understand?"
Said Hallren: "My understanding is that the time period allowed for interested parties to make comments about the exchange has closed, while the comment period for specifics products is currently open. For parties to take unusual actions to stop the approval of the exchange because they are concerned about a specific product seems odd.