Taking a punt on Harry Potter

PUNDITS reckon the much-heralded new Harry Potter film, and the merchandise that follows, could gross in excess of £1bn. The magic could rub off on punters willing to gamble on how successful the flick will be.

Cantor Index, a City-based spread betting firm, has set up a service to allow its customers to bet on how much money they think the film will take. Dominic Crosthwaite, business manager at Cantor Movies, said: 'We knew that Harry Potter would generate a great deal of excitement, but we never anticipated that City traders would be more interested in Harry Potter than in the Footsie. When we launched the index, all you could hear right across the trading floor was dealers calling for prices on Harry Potter.'

City spread betting firms largely focus on money markets and stock markets with gamblers guessing which way share prices or particularly indices will swing. But Cantor imaginatively set up Cantor Movies in July to allow financial professionals and small investors alike to put their showbiz judgment to the test.

The company sets a spread, its guess of how much money a film will take, and you say whether it will be higher or lower. You bet a stake, say £10. If you guess the right way, you win £10 for every $1m in America or £100,000 in Britain that you were right, and lose if you were wrong.

The spread for Harry Potter and the Philosopher‘s Stone in the UK, opening on 16 November, has been set at £10m to £10.4m for the first weekend. Harry Potter and the Sorcerer‘s Stone – renamed for fear Americans would be confused by 'Philosopher' – has been pegged at $81m to $84m for the first weekend in the US. The previous highest openings are £7.56m in the UK for Toy Story 2 and $72.1m in the US for The Lost World. The spread for the US for the first four weeks of Harry Potter is $220m to $225m.

However, Cantor had huge problems deciding how to set prices. Its analysts say British tales of good moral values and traditional school stories have a poor success rate in the US. Plus, there are no big Hollywood actors. While Julie Walters, Richard Harris and Dame Maggie Smith are household names in the UK, they are not traditional US box office blockbuster material.

To help work out spreads, Cantor bought HSX in Los Angeles earlier this year, the virtual Hollywood Stock Exchange. Investors buy films as if they were companies in virtual dollars when they list on the hope the price will soar. Harry Potter, for instance, floated at $20 last month and has since soared to $228. HSX has 800,000 investors, 18,000 of them British.

Crosthwaite added: 'Perhaps it is because of the volatility and uncertainty in the market recently, coupled with the current atmosphere of doom and gloom, but betting on the Harry Potter movie seems to have become a welcome distraction.'

To set up an account with a spread betting firm prospective clients must either prove their financial worth to get a credit account or deposit money in a real account to cover any potential losses. With Lord of the Rings and Star Wars: Attacks of the Clones around the corner, Cantor is devising ways to make it easier for people to place bets without opening an account but is keeping plans under wraps for now.