Mike Fleming over at Deadline Hollywood Daily has posted a terrific little article describing a new betting arena for studio heads who want to risk studio wealth betting on box office receipts. According to Fleming, Cantor Fitzgerald is readying a system through which people can purchase contracts for $1 for each $1M of box office business, and making advance over/under bets on the box office receipts.

In this peculiar scenario, studio heads can place wagers against their own film’s receipts in order to recoup losses they expect from some of their product. Or, conversely, these same moguls can make enormous sums of money by keeping certain potential moneymakers under the radar, thereby increasing their “winnings” if the movie becomes enormously profitable. As Fleming points out, this is similar to the scheme that got Pete Rose banished for life from baseball.

Even worse is the comparison to the recent stock market schemes that collapsed the worldwide economic system in the last two years, in the process destroying the housing market (I’ve lost at least $20,000 in my own house in the last year) and putting millions of people out of work. Cantor Fitzgerald, located in Manhattan, is closely tied with these bailout companies and the power structure of the government, and encouraged the bailout of banks that cost taxpayers their national treasure. In fact, Cantor Fitzgerald is one of only eighteen dealers who trade U.S. government securities directly with the U.S. Treasury, making them quite suspect in my book.

But what can such a scheme do to the movie business? As Fleming points out, the current system of test screenings and trailer releases becomes a currency to use to influence betting on a film’s grosses. A test screening, for example, becomes a way for studios to manipulate stocks much like an injury report influences sports betting. This degrades the current system, making it much more about influencing futures rather than creating acceptable, well-made films.

While some might argue that sports betting has little effect on the sport itself, it’s obvious that movie betting would influence the outcomes of countless films. Unlike sports teams, the fortunes of a film rise and fall on the subtle breezes of pop culture whimsy. Negative advance word often buries a film before it even has a chance to reach an audience. What if such negative buzz was used to make the rich even richer, while simultaneously destroying the careers of the people who worked on these ruined films?

Such a scheme is the final, cynical stake driven into the heart of the once-creative process of moviemaking. It is a dark day for Hollywood.

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