Washington, DC - A growing coalition of entertainment industry workers, creators, independent producers and distributors, business organizations and theater owners today announced opposition to two proposals to establish online wagering services based on speculation over box office receipts for motion pictures.
In a letter to the Commodity Futures Trading Commission (CFTC), the Directors Guild of America (DGA), the Independent Film and Television Alliance (IFTA), the International Alliance of Theatrical Stage Employees (IATSE), the Motion Picture Association of America (MPAA) and its member companies, and the National Association of Theater Owners (NATO) also jointly asked the Commission to postpone action now scheduled for April 2 on an application by Media Derivatives, Inc. (MDEX) to create a designated contract market for film futures.
The groups said that the proposal by MDEX and a separate plan by Cantor Futures Exchange, L.P. "are based on faulty understanding of the film industry and create a risk of rampant speculation and financial irresponsibility at a time when the nation is still seeking to recover from an economic meltdown of the financial markets."
"With Congress and the President working on reforming the financial markets to help curb the abusive practices that triggered our nation's economic crisis, now is not the time to open up new and highly speculative marketplaces that could end up costing jobs and harming legitimate businesses," the groups said.
In the letter to the CFTC, the groups said: "We respectfully ask that the deadline be extended to April 16, 2010 in order to allow the DGA, IFTA, IATSE and MPAA time to submit a written comment addressing the merits of this application. Several of these parties had no notice or knowledge of the applications until late last week. This will allow the time needed to gather factual information and provide detailed and focused arguments that we believe will be helpful to the Commission's consideration of the application.
"Among other things, we will address whether any exchange infrastructure is capable of surveying the box office marketplace to detect and address potential market manipulation. We have just received today the MDEX's current proposed rulebook that supports its application. This version of its proposed rulebook has not previously been available to the public. We also note that it was only yesterday afternoon that we received the MDEX's March 26, 2010 response to the MPAA's March 23, 2010 letter to the Commission. It includes facts that we previously have not been aware of including, among others, that MDEX's rules will require ‘the studio/distributor to provide evidence to support its public box office number when it falls outside the standard deviation level.' We were unaware of any proposed requirement that studios disclose information to MDEX, and, accordingly, our comment also will address whether any authority exists to require disclosure of any information from studios."
The letter to the CFTC notes that an extension of the deadline will not prejudice MDEX because the deadline for the contract it seeks approval to trade is not until April 23.
Cantor Futures Exchange, L.P.'s request for approval to register as a designated contract market is scheduled for April 20 and its request for approval to contract film futures and options is pending in May. The groups signing the letter today intend to file written comments about concerns about this proposal as well.