There's a new generation of haunted houses this year that feature psychological torture, intense sensory deprivation and hands-on assaults by people playing mass murderers. The houses incorporate Hollywood-grade special effects, some designed by the same crews that build the sets for the biggest-grossing horror movies and backed by the directors or producers of major horror franchises.

Halloween has emerged as the second-biggest commercial holiday of the year, with anticipated revenue of $8 billion this year, the result of...