Ticket scalping, also known as ticket touting, is the practice of reselling tickets for popular events at higher prices than their original face value. Scalpers will often buy large quantities of tickets with the sole intention of reselling them for a profit. This raises the question – just how lucrative can ticket scalping be? Is there real money to be made in this secondary ticket market? Let’s take a look at some of the key factors.
What is Ticket Scalping?
Ticket scalping refers to the resale of tickets at prices higher than their original face value. Scalpers aim to profit by exploiting inefficiencies in ticket pricing and distribution. The practice relies on there being an imbalance between ticket supply and demand – specifically, when demand outweighs supply for a particular event. This creates an opportunity for scalpers to swoop in and buy up tickets, which they can then resell at inflated prices to consumers who are desperate to attend the event.
While there are laws against ticket scalping in some jurisdictions, it remains a widespread practice, especially for high-demand events like concerts, sports games, and theater shows. The advent of the internet has also made scalping much easier, with huge secondary ticket marketplaces like StubHub providing a ready platform for scalpers to connect with buyers.
Factors That Make Ticket Scalping Profitable
There are several key ingredients that can make ticket scalping a lucrative enterprise:
Imbalanced Supply and Demand
As mentioned, there needs to be an imbalance between the supply of tickets and public demand. When a hugely popular artist goes on tour or a major sports team makes the championships, demand will often far exceed the seating capacity of venues. With not enough tickets to go around, this creates prime conditions for scalpers to profit.
Underpricing of Tickets
Venues and event organizers often deliberately underprice tickets, either to reduce financial barriers for fans or to create a perception of affordability. This leaves money on the table that scalpers can swoop in to capture. The original face value price becomes almost irrelevant if people are willing to pay hundreds of dollars more.
Lack of Anti-Scalping Laws
Some jurisdictions have enacted anti-scalping laws which prohibit the resale of tickets above face value. However, many places impose few restrictions, allowing a thriving scalper market to develop. Lax enforcement also plays a role.
Popularity of Online Resale Platforms
The rise of digital ticket resale platforms makes scalping easier than ever. Sites like StubHub provide a centralized marketplace connecting scalpers with willing buyers globally. This reduces friction in transactions and also lends a veneer of legitimacy to inflated ticket prices.
Speculative and Impulse Purchasing
Consumers will often make speculative ticket purchases, even at inflated prices, if they anticipate high demand. There is also always a cohort of last minute, impulsive buyers. Such behaviors enable scalpers to sell out their inventories.
Profit Margins in Ticket Scalping
So what kind of profit margins can ticket scalpers reasonably expect? This can vary substantially based on the event type and demand levels.
For extremely high-profile events like the Super Bowl or a playoff game featuring a hugely popular team, markups can be staggering. Tickets with a face value of $500 may resell for $2,000 or more in some cases. This represents a 300-400% profit margin.
Big name concert tours also offer the potential for hefty gains. Markups of 50-100% are not uncommon, turning a $100 ticket into $150-$200 in the secondary market. Even greater multiples are possible for front row and VIP packages.
More routine events like regular season games and medium popularity concerts will have more modest scalping premiums in the 25-50% range – still enough to turn a tidy profit on volume.
To illustrate potential profits, consider a hypothetical scenario where a scalper buys 100 tickets for a major concert tour with a face value of $80 each. They then resell them on a secondary platform at an average of $120 per ticket. In this case:
- Face value cost = 100 * $80 = $8,000
- Resale revenue = 100 * $120 = $12,000
- Profit = Resale Revenue – Cost = $12,000 – $8,000 = $4,000
This equals a 50% profit margin and a net profit of $4,000 on the transaction.
Average Secondary Market Ticket Prices
Here are some examples of estimated average resale prices compared to face values across different event segments, per data from SeatGeek:
Event Segment | Face Value Price | Average Resale Price | Markup |
---|---|---|---|
NFL (regular season) | $150 | $230 | +53% |
NBA Basketball (regular season) | $100 | $170 | +70% |
NHL Hockey (regular season) | $80 | $110 | +38% |
MLB Baseball (regular season) | $40 | $60 | +50% |
Concerts (major tour) | $100 | $150 | +50% |
As shown, markups of 40-70% above face values are commonplace in the secondary ticket market. The most in-demand leagues like NFL and NBA command the highest premiums. This data indicates steady profits are achievable for scalpers across most event types.
Costs of Scalping
Of course, there are also costs associated with ticket scalping that eat into profits:
Acquiring Tickets
Scalpers first have to purchase, often in bulk, the tickets they aim to resell. Common approaches include:
- Lining up at box offices when tickets initially go on sale
- Using bots to sweep up tickets from online sellers
- Buying season ticket packages with no intention to attend games
These acquisition costs represent upfront outlays that scalpers hope to recoup.
Platform Fees
Popular secondary sellers like StubHub can charge commissions of 15-25% on ticket sales. These fees cut into the scalpers’ gain.
Taxes
In jurisdictions where ticket resale is legal, profits are subject to business taxes. Sales, income, and self-employment taxes may need to be paid.
Overhead
Scalpers may hire employees to buy and sell tickets in bulk, requiring labor costs. There are also overhead expenses like office space, hardware/software, transportation, legal compliance, and financing costs.
Risks and Downsides
Scalping does entail some risks that can challenge profitability:
Getting Stuck with Unsold Inventory
Scalpers speculate on demand when acquiring ticket inventories. If interest proves weaker than expected, they may be unable to unload all tickets at desired prices. Absorbing losses on unsold tickets can quickly diminish profits.
Fraudulent Tickets
Unscrupulous scalpers sometimes sell fake or invalid tickets, requiring refunds and damaging reputation.
Legal Troubles
Violating anti-scalping laws could mean facing penalties, fines or criminal charges in some regions.
Public Backlash
Ticket scalping tends to draw strong criticism for reducing affordability and shutting fans out of events. Maintaining a favorable brand image can be difficult.
Competition from Other Scalpers
With low barriers to entry,Ticket scalping tends to draw strong competition as others attempt Similar to ticket sellers, scalpers also compete with peers in the same market, depressing prices and margins.
Online Ticket Resale Platforms
The emergence of digital ticket marketplaces has been a major enabler for scalpers, by reducing friction in connecting them with buyers globally. Some of the largest platforms include:
StubHub
Owned by Viagogo, StubHub is the largest online ticket resale marketplace. It provides a platform for speculators and regular fans to resell event tickets at any price point they choose.
Vivid Seats
Also one of the largest resale sites, Vivid Seats offers a marketplace for ticket holders to sell seats across sports, concerts, theater, and other events.
SeatGeek
In addition to resales, SeatGeek also enables primary ticket sales, positioning itself as a primary destination for tickets online. The site aggregates inventory from multiple sellers.
Gametime
Unlike other platforms focused on pre-event sales, Gametime specializes in last-minute, even instant ticket sales. This caters well to impulse purchasers right before event start times.
These digital marketplaces provide scalpers with tools for inventory management, transaction processing, delivery logistics, and data-driven sales optimization. They essentially legitimize and facilitate scalping activities.
Is Ticket Scalping Legal?
The legality of ticket scalping varies substantially across different jurisdictions. Some of the regulations include:
United States
There is no blanket federal law, so legality depends on each state. Around 30 states allow unlimited resale price above face value. Others restrict markups to under 50% or ban only the use bots for bulk purchases.
Canada
Similarly, provinces have autonomy over scalping laws. Ontario and Quebec limit markups to 50% above face value. British Columbia bans ticket resale entirely.
United Kingdom
Ticket scalping is fully legal and unregulated in nearly all cases. Critics argue this drives up prices for fans and makes events less accessible.
Australia
Ticket scalping laws vary between states. New South Wales prohibits resale above 10% of face value without organizer consent. Victoria recently imposed a 20% cap on markups.
The trend globally seems to be toward relaxing restrictions, as online marketplaces make curbing scalping more difficult. However, regulation does remain a risk factor scalpers must consider.
Ethical Considerations
Ticket scalping also raises some ethical questions:
Fairness
Critics view scalping as exploiting fans and reducing affordability of enjoying concerts, games, and shows.
Affordability
By driving up prices, scalping arguably makes events less accessible to lower income consumers.
Deceptive Practices
Scalpers sometimes use predatory tactics like bots, tacked-on fees, or misleading listings to maximize profits.
Value Creation
Scalpers provide a service matching buyers who missed initial sales with spare tickets. But they also capture value not shared with creators.
Scalping exists in a gray zone – tolerated but not fully embraced. These ethical issues continue swirling around the practice.
Should You Try Ticket Scalping?
Given the above analysis, is becoming a ticket scalper a good business idea? There are arguments on both sides:
For
- Can generate sizable profits if events are selected astutely
- Relatively low barriers to entry
- Existing secondary marketplaces reduce hassles
- Limited or lax regulation in many regions
Against
- Highly speculative, with risk of getting stuck with unsold inventory
- Low repeat customer base
- High competition from professional scalpers
- Potential for unethical practices
- Ongoing regulatory uncertainty in many areas
For most individuals, the risks and limitations likely outweigh the modest potential rewards. Professional operations can profit on large scales but small-time dabblers will struggle.
Conclusion
Ticket scalping certainly can be a profitable endeavor, with markups of 25-50% or even higher possible on in-demand events. However, it also carries inherent risks around inventory management, regulations, ethics, and public perception. While the internet has opened new avenues, eliminating all friction, the basics of supply and demand still predominantly determine profit margins. For ticketing giants like LiveNation or Ticketmaster, huge pools of data help optimizing pricing and sales. But for individuals, uncertainties and risk of getting stuck with unsold tickets remain barriers. With enough business savvy and access to high-demand inventory, money can be made scalping tickets. However, it is far from a fail-safe path to riches.