Eric Falkenstein has a post up highlighting another area where there seems to be money on the sidewalk: Shorting the Vix. He notes that the VXX has underperformed a hypothetical outright short VIX position by a large margin due to the contango in the curve.
It seems like the people selling lottery tickets are making money, but it is unfortunate that his sample analysis period doesn't go back to the crisis of late 2008. Any trading strategy that was short volatility over a 10 year period and didn't blow up completely in that time period would probably have made a lot of money overall, but the "not blowing up completely" part is not trivial without utilizing future information.
He links a post from VIX and More where the author of that blog highlights new VIX Exchange Traded Notes (ETNs) and reveals that they are short VXX, one of the front month VIX ETNs.
One conclusion that can be drawn from this is that if someone wanted to go long volatility to protect their portfolio, front month VIX at this level of contango is one of the most expensive and therefore worst ways to do so. Now, there are probably good traders who are long the VIX at the short end, but these would be people who are either trading at small enough holding periods that the annual drift doesn't impact them or traders who have found something even better to be short and need to be long the VIX to protect their portfolio.