"Are markets simply casinos for betting?" Asli recently asked  this question on the All About Finance blog. She argues that financial markets do a lot more than that, and I agree. But there are some markets that come very close to being casinos. Surprisingly, in the wake of the financial crisis, the U.S. Commodity Futures Trading Commision has given permission for one such market—a futures exchange based on the box office revenues of Hollywood movies. Basically, anyone will be able to bet on whether a movie will be a flop or become a runaway success. The NYT has the details .
Many were quick to ridicule the idea. Mother Jones screeched that Subprime Goes Hollywood , and compares a futures exchange for Hollywood films to subprime mortgage-backed securities. A blogger on the Davian Letter also astutely points out  that (1) Hollywood insiders have a massive informational advantage over the guy on the street (making it a bad idea for most people to bet), and (2) these contracts create the potential for moral hazard by studios that realize they could do better off by causing a movie to tank (although the NYT's article gives vague reassurances that this will be limited because the size of positions will be too small to create that kind of incentive).
Granted, these are both serious issues. However, one benefit is overlooked in all the commentary I've seen so far. As Friedrich von Hayek  pointed out many decades ago, prices are valuable because they convey in a single number an enormous amount of information about the costs of labor, capital, transport costs, etc to produce a good. Even if a futures market for box office returns is nothing more than a casino, it will still produce something of value in the form of a price.
Imagine that a studio wants to know a few years in advance if a particular script might make a good movie. The studio has little informational advantage at this point—all they have is a storyline. The studio could set up a contract on the futures exchange, and within a matter of a few days (assuming, of course, sufficient liquidity) have a decent prediction of whether the movie will be a flop or not. Based on this information, the studio can decide to proceed with investing tons of money into production or to put its money elsewhere. In the long run, the average quality of films produced is increased, as flops are screened out well before money is invested. All this depends on the accuracy of long-term prediction markets—I would say the verdict is still out on this question, but you can have a look at some of the research yourself .
Of course, the world will not be much changed because we have averted a few failed Hollywood films. (Although I would argue we'd have been appreciably better without the likes of The Love Guru ...) But a highly liquid futures exchange for films could eventually provide data on the accuracy of long-term prediction markets. If they turn out to be sufficiently accurate, we might then be able to set up markets on many other questions—for instance, on the likelihood of success of various aid initiatives. In an industry with precious few market mechanisms to sort out the good from the bad, the information produced by a futures exchange could be extremely valuable.