Federal approval will now allow you to make money betting on the box office, but Congress (and Hollywood) are seeking to make that against the law

By Chris Nashawaty
Updated June 25, 2010 at 04:00 AM EDT

If you predicted that Toy Story 3 would soar past $100 million last weekend and Jonah Hex would crash and burn with $5 million, congratulations. Soon, you might be able to parlay your celluloid smarts into an early retirement. On June 14, a Chicago-based futures market called the Trend Exchange received federal approval to begin trading based on box office returns. And while Congress could still nix it in the coming months, the day when people can wager real money on box office tallies is getting closer. While the Trend Exchange is designed for institutional investors with deep pockets (and not John Q. Moviegoer), a second market — the New York-based Cantor Exchange — would be open to anyone with an Internet connection, a bank account, and a hunch about the value of Will Smith’s name on a movie marquee. Cantor will go before regulators on June 28.

How does it work? Let’s say you have a good feeling about Sylvester Stallone’s upcoming action flick, The Expendables. Using the Cantor model, you would buy a ”contract” (not unlike a share of a traditional stock) before the movie opens based on how it’s trading on the Cantor site at the price of $1 for every $1 million it’s projected to gross in its first month in theaters. So, if The Expendables is listed at $70 million, you’d buy a contract for $70. Then, if it grosses $100 million after four weeks, you’d pocket $30; if it makes $40 million, you’d lose $30. Fun, right?

Well, the MPAA and the major studios it represents don’t think so. ”We believe these contracts fail to serve a public purpose,” says MPAA spokesperson Howard Gantman, adding that the exchanges are not only a form of gambling but also one that is wide open for manipulation, insider trading, and the potential to damage films with bad buzz. The exchanges say that’s baloney. ”The bad-buzz argument is completely backwards, in my view,” says Cantor Exchange president Richard Jaycobs. ”If you increase the number of folks who have an interest in the success of a picture, you’ll also increase its positive buzz.” Either way, the challenge going forward will be getting the green light from Congress, a day the MPAA hopes will never come. When asked what kind of odds he’d give the exchanges winning approval, the MPAA’s Gantman responds, ”I am not a betting man.” Stay tuned…