Hollywood Stock Exchange Set To Launch In April

You can buy and sell actor or movie "stock" for virtual cash on the website Hollywood Stock Exchange (HSX). Starting in April the company plans on letting you turn those movie performance predictions into real dollars. HSX filed with the US Commodity Futures Trading Commission for approval as an active trading site in November 2008 and has just entered the final phase of regulatory review. Richard Jaycobs, president of HSX's parent company, said, "The number of people who visit movie theaters each year and form opinions about a film's success is in the tens of millions. We believe that's the reason the public response to this product has been very positive."

Comments

What's the point

[Nethemas the Great]

I don't get it.

Re:What's the point

[DavidR1991]

It's about placing wagers on a film's performance, by the looks of it

Re:What's the point

[InsertWittyNameHere]

Slashvertisement. Nothing to get. No benefit to you anyways. Too bad adblock doesn't block these fake news stories.

Re:What's the point

[dunezone]

I think this is like Intrade which is a specialized gambling market. For example with Intrade you can bet if a democrat or republican will win a state and depending on how much you paid in and at what price you can return a profit.

Re:What's the point

[FooAtWFU]

The IEM do that too.

And I think for the big bucks, you can even hedge a little political risk with your favorite insurance company.

Re:What's the point

[Anonymous Coward]

And I wanted to add. Last time I checked Intrade was not regulated by any outside body although this was during the 2008 election when I last researched this.

It was interesting to watch the trend of the betting in the 2008 election season because it was running with the poll numbers right until about 2 weeks after Sarah Palin was selected and went on that Katie Couric interview and then it was like 90% in favor of Obama.

Re:What's the point

[furby076]

It's a way for them to make money off of ad dollars and you. Plus they get to advertise up and coming movies to draw attention to it.

I've seen stuff like this done before, and it is more subjective then a vindictive english teacher on a red marker spree.

If they don't ask for the end-users credit card (e.g. buy more cash) then this site should be a fine amusement, but if they say "fund your account of virtual money with real money" then that is a problem...again, unlike the real stock market, the stuff here is almost entirely subjective...at least in the real market its objective and subjective with insane regulations to help prevent scams.

Re:What's the point

[ThePlague]

HSX has been around for a long time, at least since the late 90's. I've had an account there since that time, and it certainly wasn't new then. It was a great way to find out about upcoming movies, and some of the behind-the-scenes politicking involved in their transition through the various stages. I don't follow it much anymore, maybe log in once or twice a year, and I certainly wouldn't pay money for it, but it was fun.

Re:What's the point

[Anonymous Coward]

I thought it was about investing money in actual films. I've spoken about it a few times but it would never really work.
Hollywood Accounting (tm) would get worse. The big hollywood guys would use it to remove their outlay but still take
fat percentages to ensure no films made that much money.

Re:What's the point

[Tacvek]

If they want to have a predictions market they can, others do exist, but please for the love of sanity do not call it a stock market, and don't use terms like stocks and bonds in the system except in cases where those words really apply.

I'm not sure what the correct term would be. Prediction market is the normal term, but that is not ideal.

It is not a spot commodities trading market, since in those cases you take delivery of the item, or in very few markets, the standard is for the seller to hold the item on your behalf, and while you can request delivery, it is rare. Besides it is based on a future event.

But it is also not a futures market. In a futures market, you are buying actual product too. In at least some markets what really happens is seller delivers the product to the standard destination unless a buyer has negotiated changes to that part of the contract. Then the items are usually sold immediately on the spot market, as the speculator who bought the product is not interested in having it.

But there are no physical products here. For Intrade (I suspect HSX is similar) the contract is for $10, but is contingent on an event occurring. In futures markets the product is not normally contingent.

It is definitely not like stocks, because in stocks there is a limited number of shares of any stock in existence. You cannot sell stock you don't have. You can simulate it by borrowing stock from somebody, but you need to buy replacement stock for them at some point. Here though, you can sell contracts even if you don't have any already. If you don't buy some back, then if the event occurs you must pay $10 to whoever currently owns the contract (although Intrade handles settling, so you just give Intrade the money, and they make sure it gets to the right place.)

Perhaps an insurance market is the best name, since insurance is a contract for cash contingent upon an event. Thus what you buy and sell on HSX would be better called "policies" than "shares" or "bonds".

Re:What's the point

[Tacvek]

Strike the last line there. HSX does model itself more like a stock exchange. That model probably cannot work for a real money system. Who would pay for the "stocks" when they close? If it was HSX then they would need to have the average IPO price exceed that of the closing price, which means that buying at IPO gives you a negative expected return. No thanks.

Re:What's the point

[Teancum]

On the "virtual" side of the Hollywood Stock Exchange, the "dividends" are paid based upon ticket sales after 4 weeks. Whatever the movie has made is then given to the "investors" which can then be re-invested into other issues.

As for the real-money aspect, the original founders of Hollywood Stock Exchange always intended to get into the real-world side of the market by trying to set up an investment market for film makers that would be based upon the same general principles, where a film project could be submitted as an IPO of sorts and have some real-world investment into the actual film via micro-transaction. In other words, mere mortals could "invest" into the actual film making costs as a sort of corporate entity.

In theory, some films might end up turning a tremendous profit, and some of the early fans of the concept could pool their money together to get the financing of some interesting project off the ground through some financing scheme like this. The stocks, when they closed under this model, would pay out based strictly on what revenue comes in.... keeping in mind Hollywood financing tricks and other garbage that would have to be reviewed incredibly closely on something like this too.

Something of this nature would be certainly interesting. Unfortunately, based on this very limited information in this article it doesn't sound like that is going to be the route this particular group will be going. It sounds more like something more akin to what Las Vegas casinos do with sports events and people betting on the success or failure of a given team winning a game. If that is the case, this would most certainly have to be classified as a gambling activity and not a legitimate security exchange.

Re:What's the point

[ShieldW0lf]

1) Sell the stock short
2) Release via bittorrent
3) Profit!

Re:What's the point

[Anonymous Coward]

"Bet matching system"?

Re:What's the point

[MobileTatsu-NJG]

4) Slap your forehead when the BT makes the movie more popular the profit pours in.
5) Get pointed and laughed at for not paying attention when this happened to Wolverine.

Re:What's the point

[mjwx]

I don't get it.

The point is to separate obsessive and dim witted otaku from their money.

The concept is not that hard to grasp.

Re:What's the point

[drkim]

Does this mean my millions of HSX dollars will be converted to real dollars?

Cool!

Re:What's the point

[Anonymous Coward]

my ad blocker filters them out just fine

Re:What's the point

[hitmark]

sounds more like a job for bookmakers then a stock market, but then again i cant tell the difference between the two these days...

Re:What's the point

[Teancum]

That particular experiment, to "buy out" HSX dollars, was tried back in the early days of HSX. I think the going rate at the time was 1 cent per 1m HSX bucks or something like that, with a minimum payment of $100 USD (presuming you were good enough to get into the "billionaires" club with HSX).

That particular experiment is dead and doesn't appear to be something to be revived.

No, we are talking about folks who invest real money into real movies that get spent on real actors and producers to be shown on real movie theaters. It is different here, not the virtual money.

How many more ways can they think of

[Finallyjoined!!!]

To separate people from their cash?

Re:How many more ways can they think of

[Killer Orca]

To separate people from their cash?

To find out the answer please attend a free seminar this Saturday and the airport Hilton.

Re:How many more ways can they think of

[Androclese]

At least one more...

Re:How many more ways can they think of

[knghtrider]

More like.. 'To part Fools and their Money.' In the words of Gordon Geckko....'Greed is Good'.. yeah...right, until the economy nosedives into the crapper, you and your spouse are on Unemployment, maxed out on credit cards, paying 4 car payments (yours, your spouse, and your two kids), College Expenses, a boat payment and you're upside down by over 20% in your house. (not me, thankfully just a generalization what may be out there).. The point is..live well within your means, save money (6 months complete living expenses at least; though I'd say closer to 12 now)..greed is NOT good.

Re:How many more ways can they think of

[Jedi Alec]

Ehmm, spending money you don't have isn't particularly greedy, just stupid.

The trick is to take it away from other people and *then* spend it.

too late!

[Anonymous Coward]

I could have made a fortune betting against tucker max's ego-fest, I hope they serve beer in hell. You didn't need to be kreskin to predict it. What kind of retard gives a douchebag $6 million to make a movie about how awesome he is? And then wastes another $6 million when every distributor passes on it?

Re:too late!

[twistedsymphony]

Anyone know where I can get some Samuel L IPO?

American Dad

[Bob the Super Hamste]

I believe that American Dad already parodied this.

Re:American Dad

[megamerican]

That's because this idea has been floating around for awhile. This company was founded by Max Keiser, who created a model that would allow you to set up a Stock Exchange based on any market. Keiser, to say the least is a very colorful character.

Scarily enough, the Pentagon had once wanted to set up a similar stock exchange that would rely in predicting when terror attacks would occur.

He is doing a very interesting project called Pirate My Film where producers can finance their films by selling future copies of their movie, where investors can expect a share in any future profits from sale of the film.

http://www.piratemyfilm.com/

Re:American Dad

[Anonymous Coward]

I put all of our money in the stock SJP. It's a sure thing.

As soon as that bell rings, we'll be in the money.

Here we go. Watch SJP take off!

What the hell was that? You said SJP was a sure thing.

I don't understand. SJP is in the new Spielberg movie. It's going to be huge.

What are you talking about? SJP is a Canadian chiropractic supplies company!

- You mean it's not Sarah Jessica Parker? - What?! No!

Isn't this the Hollywood Stock Exchange?

You know, the Web site where you buy and sell celebrity stocks

based on the ups and downs of their careers?

No!

- Then what is all this? - This is the New York Stock Exchange!

Like in the movie Wall Street?

I thought that was Hollywood make-believe,

like children of every color being at the same McDonald's.

But, back home, you said you were about to make a fortune in silver.

Ron Silver!

Re:American Dad

[Stile 65]

Idea/prediction markets are actually a hotbed of research, and there are several different theories about what could've happened with the terror attack thing. In any case, it was less about specific terror attacks and more about stability indexes for different parts of the world, etc.

By the way, there's awesome open source software under active development for running your own prediction markets and experiments with prediction markets.

Oh, goody

[Hawthorne01]

Now instead of getting spam about how selected penny stocks on the Vancouver and Hong Kong exchanges are set to explode and make me hundreds of thousands of dollars, I'll get spam about how "TEH A-TEAM MOVIE IS THE BOMB!!!1!! BUY NOW!!!!1".

FWIW, I've been playing the old, free version of HSX for over ten years, and HSX has utterly botched not one, but two beta releases (ask anyone who was on their forums about the V2 rollout and how that went). No way, no how am I letting them anywhere near my real money.

Oh, and "BUY PINK2!".

Heckuva Job, Government

[longacre]

Online gambling = illegal

Trading intangible nonsense under the guise of a "commodity exchange" = cool!

Re:Heckuva Job, Government

[longacre]

Also, how is there any way this won't be rife with insider trading and other criminal activity? Movie production staff are not licensed/fingerprinted/sworn to secrecy the way execs at publicly traded companies are. Not to mention, how easy would it would be for organized crime to short sell a particular movie, and then make sure the star OD's or has an "accident" in the middle of production.

Re:Heckuva Job, Government

[lwsimon]

That gives me an idea...

Re:Heckuva Job, Government

[Anonymous Coward]

Well, this just confirms that lobbying efforts are still functioning correctly. Nobody said it was Government for the people.

Re:Heckuva Job, Government

[vlm]

Not to mention, how easy would it would be for organized crime to short sell a particular movie, and then make sure the star OD's or has an "accident" in the middle of production.

Traditionally, doesn't that make box office returns soar, not sink?

I can think of some TV shows that were canned after a major actor croaked. Specifically one Sy-Fy vampire TV show a couple years back based on the RPG game where the lead actor killed himself on a motorcycle in Jolly Ole England so they canceled the show after a couple episodes. OR maybe the ratings sucked and that was a great excuse.

But generally, dead actor equals more revenue not less.

Re:Heckuva Job, Government

[Anonymous Coward]

Who? (seriously)

Re:Heckuva Job, Government

[epee1221]

Heath Ledger w/ the recent Batman movie?

Re:Heckuva Job, Government

[SydShamino]

It was almost 15 years back, and the show was Kindred the Embraced on Fox not Siffy.

Re:Heckuva Job, Government

[b4dc0d3r]

I didn't see that for the acting, I went for the magic trick. Why? Because everyone loves magic tricks. It was well worth the ticket and concessions.

Heath's performance was a nice bonus, and I'm going to say the movie's success depended a lot more on it being a pretty well done movie than on a star dying. You need a quality movie in order for a death to boost sales, and it's free advertising at that point. If the movie sucks, all of the death coverage will mention "... who is in the crappiest movie ever, showing now" or some variation like "whose performance in... should have been a warning of personal problems".

So it's only the biggest stars (biggest in hindsight of course) that have the cloud of doom over them.

So why doesn't HSX take this to the logical conclusion?

1: Go through a list like this http://www.the-movie-times.com/thrsdir/actors.mv?actors+ByAG
2: See what movies they are "in production" according to IMDB
3: Place bets on who the MAFIAA will knock off just for the publicity
4: PROFIT!!

Re:Heckuva Job, Government

[citylivin]

Online gambling isn't illegal in Canada at all.

I find it hard to believe it is even illegal in the usa. When i am at the gym, there are many ads for party poker and other online gambling sites. Not sure what country you are from, but if american TV channels are any indicator, online gambling is alive and well in the USA.

Of course, if i were to run a "online weed distribution" business, THAT would probably be shut down quick, because its actually illegal to sell.

Re:Heckuva Job, Government

[Little_Professor]

Only in the "Land of the Free" USA

Re:Heckuva Job, Government

[nametaken]

The insider part would worry me, but I dunno about the organized crime part. I mean, how many basketball and football stars get disappeared before the big game?

Re:Heckuva Job, Government

[Teancum]

It is illegal to do on-line gambling in the USA. It is even more sinister than that: Any debts that happen via on-line gambling are legally unenforceable. In other words, if you run up a huge tab on your credit card for on-line gambling, all you have to do is simply assert that the debt was done for the purposes of gambling on-line and the debt will be instantly forgiven by the bank (or take the bank to court for dismissal of the debt... the same thing after a fashion). The bank either writes off the debt or does a charge-back to the on-line casino.

Funny thing about "online weed distribution businesses" (presuming that the "weed" is marijuana): In California it is legal... as long as the customer and the buyer are both in California and a medical prescription has been properly filed with the seller.

Unless I'm reading this article wrong, what is suggested here is nothing different than a sports bookie who takes bets on winners of sporting events. IMHO that is gambling, even if it isn't quite so clear from the SEC filings. It will be interesting to see how these guys get around those gambling laws.

Re:Heckuva Job, Government

[AuMatar]

Its illegal to run an online gambling site in the USA, or to pass money off to one if you're a bank. Its not illegal to actually gamble online.

Re:Heckuva Job, Government

[khallow]

Also, how is there any way this won't be rife with insider trading and other criminal activity?

Insider trading isn't automatically illegal or bad. As far as I know, it is illegal only for stocks and similar securities. Second, one of the points of a market like the HSX is to come to a consensus about the expectation of some future event (such as how much money a new movie will make). If you exclude insiders, you lose the most valuable source of information.

Re:Heckuva Job, Government

[JesseMcDonald]

Second, one of the points of a market like the HSX is to come to a consensus about the expectation of some future event.... If you exclude insiders, you lose the most valuable source of information.

That's true of stocks as well, with the future event being the price of the stock (or some influencing factor). The real problem with insider trading is conflict-of-interest: the insider, as an agent of the shareholders, is manipulating the stock prices or using privileged information for personal gain at the expense of his/her principle(s). If you're not in an agent/principle relationship then insider trading doesn't really apply. (Note that this can be an implied relationship. Further note that I am not a lawyer, and especially not your lawyer, and this is not legal advise.)

Re:Heckuva Job, Government

[Teancum]

If you would read my reply, it is essentially the same thing. BTW, even if it may not be "illegal" according to federal law, it may be according to state or local laws.

So even if you may be transferring funds from an account in say the UK or Switzerland into the on-line gambling site (so you avoid the restrictions), it may still be illegal in many localities simply for being connected at all as an individual.

Still, by prohibiting banks from the USA to process money transfers to the on-line gambling companies, it effectively eliminates the customer base from America... shy of some creative book keeping and financial gymnastics.

There are some sites that allow you to "play" with virtual money (in other words, no actual money changes hands and therefore is "legal") but then have a link from within the site that goes to the "real" on-line gambling site. A sizable amount of money still somehow makes its way out of the USA to these on-line sites regardless, including some rather interesting television advertisements and some other strange things connected to these websites.

Re:Heckuva Job, Government

[sjames]

It's perfectly legal in the U.S. as long as it's called day trading and is run by a brokerage. The rest are kept out because our financial sector doesn't want competition.

Re:Heckuva Job, Government

[khallow]

The real problem with insider trading is conflict-of-interest: the insider, as an agent of the shareholders, is manipulating the stock prices or using privileged information for personal gain at the expense of his/her principle(s).

Did I mention that I'm also a fan of market manipulation and of ignoring conflicts of interest in the market (conflicts of interest IMHO should be delegated to contract law not enforced at the level of the market)? I guess at this point, I must look like a crazed neo-liberal, globalizing the hell out of your Slashdot thread. The thing is a lot of market behavior has been made illegal because it is unfair. But it is worth remembering that fair trading is a myth. There are plenty of people with privileged information (we call them fund managers, "the House", "smart money", and such) who have huge advantages over the average person. Perhaps it's the cynical neo-liberal in me, but it looks to me like those rules are designed to protect the big players not Grandma investing her nest egg.

Re:Heckuva Job, Government

[drkim]

Good point...

Heath's death didn't do much to help Terry Gilliam...

Re:Heckuva Job, Government

[AuMatar]

Its actually not that bad to get money to those sites yet- they still take western union after all. Or direct withdrawl if you don't mind giving them your bank info (something I'm leery of). Its harder than it was, and it definitely has cut down the US player base (and many of the poorer players especially :( ) but anyone who really wants to still can without too much problem.

Re:Heckuva Job, Government

[martin-boundary]

So what you're saying is you'd like to remove the few rules left that actually apply to the advantaged few, so that it's fairer for the disadvantaged? 2008 called, they want their bonus back.

Re:Heckuva Job, Government

[khallow]

So what you're saying is you'd like to remove the few rules left that actually apply to the advantaged few, so that it's fairer for the disadvantaged?

It's not going to be fair to the disadvantaged no matter what. But the market will be more efficient and the gullible and ignorant will get screwed quicker and more efficiently. There's a moral hazard associated with comfortable regulation. It creates artificially high complacency. Knowing that nothing protects you from insiders is better than thinking incorrectly that something protects you from insiders.

Re:Heckuva Job, Government

[martin-boundary]

But the market will be more efficient and the gullible and ignorant will get screwed quicker and more efficiently.

Efficient at what, exactly?

Re:Heckuva Job, Government

[khallow]

Efficient as in society doesn't spend more effort than it has to generate the same end result. That is, you don't have a bureaucracy determining whether or not the gullible and ignorant lost their money in an acceptable, properly documented manner. And nobody isn't under any illusions that government (or some other big, friendly, and totally unaccountable organization) is looking out for them when it's not.

But enough fantasizing about that sort of thing.

The end of Creativity

[Brigadier]

I can just see it now, just like how wall street controls cooperations, putting $$$ in front of quality, and innovation. The same will happen to hollywood. Not that that doesn't happen now, it would just be worse.

So it's a real version of...

[s0litaire]

BBC's "Celebdaq" game?
ooh! I've amassed well over £20Mill in the BBC game....
Think I might give the real lief one a go... lol!

My moneys on Nicolas Cage

[Kitkoan]

Because I know that everything in life is better with a little more of Nic Cage http://niccageaseveryone.blogspot.com/

Sports Stock Exchange

[marquinhocb]

So when is the sports stock exchange opening? I sure would love to bet... eh ehm I mean, "exchange and buy stock", for my favorite team.

Re:Sports Stock Exchange

[vlm]

So when is the sports stock exchange opening? I sure would love to bet... eh ehm I mean, "exchange and buy stock", for my favorite team.

That WAS tradesports, a sister website of intrade.

tradesports flamed out utterly spectacularly in 2008 for no apparent reason.

I was always mystified how two sister sites under the same company, presumably sharing code, management and backend equipment, could have one self immolate itself so thoroughly yet the other one seems just ducky even years later.

My guess is the mafia guys told them to butt out of the sports betting business, or else... That would explain a whole lot about that situation.

http://en.wikipedia.org/wiki/TradeSports

Re:Sports Stock Exchange

[ottothecow]

I thought the reasoning was that sports betting was tarnishing their image (and maybe raising regulatory questions) as the InTrade portion was growing so they opted to shut down the questionable side of their business.

Pressure from organized crime might make sense but there is a good business reason for dropping it too

Re:Sports Stock Exchange

[sjames]

The great similarities between the two sides of the business should probably tell us something about the basis of our economy....

Ideosphere and intrade are much more interesting

[vlm]

Ideosphere/Foresight Exchange and Intrade are much more interesting. Both market "real world" events instead of hollywood flakes.

Ideosphere/Foresight is free, intrade is real dollars.

Ideosphere is semi-comatose, and the email list is currently filled with a debate over what exactly "astrology is true" means, which is at least somewhat more interesting than the past six months debating if an ipod touch/iphone is a real computer or not.

Intrade, last time I checked, is very much alive. Once I feel I know what I'm doing with monopoly money on ideosphere, I have been planning on moving to intrade and investing real money. At my present rate of learning, which only exceeds my weight loss program for failure to progress, I'll be moving to intrade right around the year 2100.

http://www.ideosphere.com/

http://www.intrade.com/

Both have been around for "forever" on the internet. The only new thing about HSX is that its securities are based on the actions of hollywood drug addicts, thus inherently unpredictable, whereas you can gain an advantage by trading intelligently on ideosphere and intrade. HSX is pure gambling, intrade is investing or at least intelligent speculation. Two inherently different activities.

Rights to use Celebrity and Movie names?

[crow]

So can they do this without paying each Celebrity and Movie studio for the rights to use the names? That question will probably keep some lawyers busy for a while.

Rogue Trader

[thefritob]

Anyone remember roguetrader.com? That's basically this thing from 12 years ago. I made a fortune off of Art Bell XD

Hollywood Accounting?

[CthulhuDreamer]

Since most (all?) Hollywood movies lose money, can I just short them all and retire?

BBC Celebdaq

[Pop69]

This has been going for more than 7 years now, strange it's about to close just as a site with real cash is opening.

http://www.bbc.co.uk/celebdaq/

Re:BBC Celebdaq

[Teancum]

Hollywood Stock Exchange is a fair bit older: It dates back to the mid 1990's.

What is new here is the filing with the U.S. securities officials to be able to legally take money and to pretend it is a real stock exchange rather than a virtual one.

Re:BBC Celebdaq

[s0litaire]

CelebDaq is not closing! it's just changeing to a new site. (bit more flashy than the origional and a bit worse, but playable!)

.com, housing,

[squirrelist]

Seems that we now have one more bubble to burst.

Own a piece of The Rock!

[davide marney]

The Rock is trading at $62.95 this week. Hurry up and buy!

User funded movies?

[Anonymous Coward]

So, if enough people invest in a movie idea, will they have to make it?

Real Money

[gd2shoe]

From the summary:

HSX filed with the U.S. Commodity Futures Trading Commission for approval as an active trading site in November 2008 and has just entered the final phase of regulatory review.

There's no reason to do that if you're not trading real money.

Maybe some potential??

[digitalhermit]

It seems like another way for Hollywood to steal money, but maybe a similar idea could have merit...

Now we have a bunch of "producers" who listen to a bunch of ideas and determine which has potential for making money. They grab the least offensive ideas that can be marketed to a wide group of consumers.

Way back, when people wrote plays and stories, the writers would get a bunch of people to underwrite (i.e., subscribe) the cost of writing a story. If the author was good he/she could earn a decent living.

Imagine if some movies were made the same way? It probably won't work for the biggest movies requiring huge CGI budgets and exotic location shots, but maybe it could help with the independent films that have great stories but just not quite enough budget to push it from an amateur attempt to something people will pay money to watch.

Maybe movies like "Serenity II: The Alliance Strikes Back" could be made if this were the case.

What do you own?

[Migraineman]

I'm confused. If this is a game, or strictly entertainment, why do they need to be registered with the U.S. Commodity Futures Trading Commission? If this is a real trading forum, what exactly do you own? May I expect a distribution from Angelina Jolie's next big blockbuster, because as a shareholder, I expect her first and only priority is to maintain and enhance shareholder value.

I didn't think it was legal to own a person. Maybe it's legal if you only own a small percentage of a person.

Re:What do you own?

[vlm]

Nobody's responded in an hour, yet a bunch of questions is modded +4 insightful?

If this is a game, or strictly entertainment, why do they need to be registered with the U.S. Commodity Futures Trading Commission?

They wanna trade real money futures contracts. Technically they want to write futures contracts, and it just happens they are trading them on their own private exchange. Then again I am not a futures contract lawyer, just a futures contract trader, and minutia of the legal document don't interest me as much as the market price vs my opinion of its value.

If this is a real trading forum, what exactly do you own? May I expect a distribution from Angelina Jolie's next big blockbuster, because as a shareholder, I expect her first and only priority is to maintain and enhance shareholder value.

Futures work a totally different way than you describe. You mention Ms Jolie, perhaps because you like her movies. Personally, I am not a fan. In fact, I'm willing to put my money where my mouth is. I'm willing to sell you a redeemable ticket has written on it "vlm 69642 will pay the owner of this ticket $1 if Ms. Jolie's next movie is an absolute stinker". I'm willing to sell you this ticket, which might turn out to be worth $1, or maybe a worthless piece of paper, for, say, 25 cents. Deal? Deal. Migraneman 632303 you are now a futures trader. Had real money actually changed hands, I'd be a felon in "a pound me in the ethernet port prison" as per office space, and perhaps you too, since I'm not registered to write futures contracts, but whatever, its just an example.

At first glance, in addition to futures, HSX seems to do some really bizarre analog of bonds and stock options. The CFTC is probably going to freak about that. What they call "stocks" seem to be something like stock options. I don't really know, I'm not a hsx user.

I didn't think it was legal to own a person.

Then you're going to have real issues wrapping your head around the meaning of futures contracts based on SP500 index close prices...

If you trade a contract on the quality of Ms. Jolie's future artistic productions, you don't own her, or her artistic production. I suspect that if you did own her, you'd find something more fun to do with your time than post to slashdot; then again with a name like Migraneman 632203, perhaps Ms Jolie would be hearing "not tonight honey I have a headache"...

Re:What do you own?

[Migraineman]

I chose Ms. Jolie simply because I expect most folks will know who she is and what she does. And yes, I'm sure she would cause me headaches.

I understand how futures contracts work. For money exchanged today, we agree that I will buy "Product A" at an agreed-upon price at a specific date in the future. If Product A's market price drops below the futures contract strike price, I'm losing money (had it been a futures option, I could back out, worthless piece of paper in-hand.) Regardless, the futures contract is an exchange-traded derivative, and it's associated with tangible property at some point.

What you're describing with "vlm 69642 will pay the owner of this ticket $1 if Ms. Jolie's next movie is an absolute stinker" is gambling, not commodity futures trading.

Re:What do you own?

[JesseMcDonald]

Regardless, the futures contract is ... associated with tangible property at some point.

The ticket the GP described is also tangible property.

What you're describing with "vlm 69642 will pay the owner of this ticket $1 if Ms. Jolie's next movie is an absolute stinker" is gambling, not commodity futures trading.

You're right that the system described is a form of gambling, but so is commodity futures trading. Gambling occurs any time you make a choice where the resulting profit or loss depends on some as-yet-undetermined future state. It makes little differences whether that future state is the price of a traditional commodity or the success of a movie.

If you want to argue over whether the ticket counts as a "commodity" be my guest, but that's not really the issue here.

Re:What do you own?

[Anonymous Coward]

You're not a big fan of weather derivatives, I take it.

Re:What do you own?

[Migraineman]

No, I'm not. They're more "insurance policy" than securities. I really think our financial system is in trouble. You can magically convert intangible things like "the weather" into pseudo-tangible entities by wrapping them up in a pretty bow and changing the name (i.e. call them "derivatives".) That's bad, especially when the item that's supposed to be "securing" the derivative turns out to be an IOU written on a bar napkin.

Um, hello people

[northernfrights]

This service uses fake money, and its free. I can't believe how much people will bitch about a subject when they are completely uninformed.

Re:Um, hello people

[Teancum]

The point of the article is that real money is going to be used and that they have filed with the SEC for "approval" as a real exchange.

As for what these guys are going to be actually buying and selling on the exchange, that is a different issue. On that, I have my doubts. It sounds like something even more intangible than the marginal insurance on Collateralized mortgage obligations that caused this current recession in the first place. The article about this concept doesn't really go into enough detail to really know what it is that is being sold here.

Opening Date April 1?

[Kagato]

Sounds like the seeds for an April Fools joke.

The point of this..

[molo]

As I see it, this is purely to the benefit of movie companies. I see two uses of this for them:

1. Propose a movie idea and put it on the futures market and see how it does. Don't make movies that don't do well. Cost to them is nearly nothing, but upside is preventing losses.

2. Hedge risks of investing in a movie or an actor. This is a big one in my opinion. The movie company bets against one of the movies they have in production or one of the actors they have under contract. If the movie bombs or actor is caught in a drug-induced coma after fucking a 12 year old prostitute then they can recover some of their losses.

If you hated hollywood before, just wait until they just might be able to make a profit from a really terrible movie or event.

-molo

Whuffie!

[thoughtlover]

Perhaps this could herald the beginning of a reputation-based currency? I'm not sure if there's earlier references to this concept, but the one I remember is from Cory Doctorow's book, "Down and Out in the Magic Kingdom". http://en.wikipedia.org/wiki/Whuffie

Wha!?

[Temujin_12]

letting you turn those movie performance predictions into real dollars

I thought that's what I was doing every time I chose to buy or not to buy a movie ticket (or rental).

HSX... Starting in April...

[yabba-dabba-do]

To me this sounds like someone is yanking our chains early. HSX is awefully close to HOAX, and we all know what April 1st is...

Rinkworks

[Bratmon]

Rinkworks beat them to it. http://rinkworks.com/market/

Don't forget the golden rule:

[fullymodo]

Buy Lowe.
Sell High School Musical.

Whom the gods would destroy...

[CptNerd]

Whom the gods would destroy, they first make publicly traded...

Damn

[macemoneta]

I couldn't buy Alyson Hannigan, so there was no point in playing.

I wondered how long it would take.

[DerekLyons]

I've been playing HSX for over a decade, I've been wondering when they'd find a way to make money off of it.
 
Which also means the fun of playing will soon depart as the gamblers, riggers, farmers, and spammers move in.

Re:Ideosphere and intrade are much more interestin

[EdZep]

HSX is much older than Intrade. I think I read where Intrade gave props to HSX when it started.

The posted story is misleading. HSX is the fake money exchange, and will remain so. The Cantor Exchange is where the real money will be.

Re:Ideosphere and intrade are much more interestin

[JesseMcDonald]

There's a "play money" version of Intrade available which appears to track the events and prices/odds on the real site, so you can experiment risk-free right now if you wish.

HAX is a hoax anyways...

[seanvaandering]

HSX is a hoax more or less... and once you figure out that you can just bet the farm on the weekends big releases and then short sell the hell out of it the Monday afterwards, you'll be at $100 million in no time and bored out of your freaking mind. Rinse and repeat.

Actually

[Bloom Berg]

Serious real markets also trade on abstract intangible stuff. Here are some examples

Indexes
Volatility
Interest rates
Weather
Pollution
Payroll

I always thought of a market to invest in film production, where your money went to actually finance a movie and entitle you to a share in revenue (if any). However, film making is a high profit low risk business and as such is reserved to a select number of people, and I'm not sure they need the mass investors for financing, they have enough money.

However I'm not sure where this "movie stocks" and "celebrity bonds" would fit. Technically speaking they are not stocks nor bonds.