Wall St. Sets Its Greedy Eyes on Shaking the Silver out of Hollywood
If you thought the mortgage-backed securities and other complex financial instruments that crashed the economy were risky, you’ll love Wall Street’s latest brainwave: a new financial market in which players can gamble on whether upcoming Hollywood movies will be blockbusters or bombs.
For years, Cantor Fitzgerald, a Wall Street investment firm, has been operating the "Hollywood Stock Exchange," a fake-money game in which players trade "stocks" to bet on how films will do at the box office. Now Cantor could soon get government permission to make a real-money version of the game—a market in which players can gamble on the success or failure of, say, Pirates of the Caribbean 4. Critics are worried this new market could be vulnerable to insider trading and create bizarre incentives for moviemakers—and that it will also enlarge the risky family of financial products that helped trigger the economic crisis.
"This is such a bad idea on so many levels," says Lynn Stout, a law professor at UCLA and an expert in derivatives, the category of financial instruments that includes Cantor's proposed box office futures. "What they want to do is basically open up a casino for people who want to make money for predicting the next blockbuster."