What is ticket scalping?
Ticket scalping refers to the resale of tickets for events like concerts, sports games, and theater performances at prices higher than the original face value. Scalpers will buy up large quantities of tickets when they first go on sale with the intention of reselling them at a profit. This allows them to charge much higher prices, sometimes many times the original ticket price. Ticket scalping happens through secondary resale sites, auction websites, or in person outside of the venue on the day of the event. It is legal in many parts of the United States and Canada but illegal in some states and provinces.
The arguments for legalizing ticket scalping
It allows prices to reflect supply and demand
Supporters of legalized scalping argue that it allows ticket prices to more accurately reflect their true market value based on supply and demand. The initial face value ticket prices are often set artificially low by artists and event promoters to create buzz and sell out venues faster. This leads to excess demand from fans. Scalpers then buy up the underpriced tickets and sell them at their real market price which fans are willing to pay. So scalping helps allocate tickets to those who want them the most. With scalping illegal, only people who can camp out all night or get lucky in online rushes can buy tickets at low prices.
It eliminates black markets
Outlawing scalping does not get rid of the practice, but instead drives it underground into an unregulated black market. This creates greater opportunities for fraud, fakes, and exorbitant pricing. With legal scalping, there is greater price transparency and oversight from legitimate secondary ticket sellers. These companies can offer buyer guarantees against invalid or fake tickets. Legal scalping brings the secondary market into a legitimate business sphere.
It allows earlier access to tickets
Scalpers provide consumers with earlier access to tickets by bearing the effort and risk of quickly buying up initial ticket releases. Fans can then conveniently buy from scalpers without having to be online right at the moment tickets go on sale. This can be a useful service for busy people or those who don’t live near box offices. Early large-scale purchases by resellers also help events sell out quickly, creating buzz and momentum in the public eye.
It increases customer choice
Making scalping legal expands the options available to customers in the secondary market. They can choose from a wide array of ticket resellers and buy whenever they want leading up to the event, rather than having just one chance at the initial point of ticket release. Increased competition also puts downward pressure on secondary market prices as resellers try to beat each other’s prices.
The arguments against legalizing ticket scalping
It prices regular fans out of the market
Critics argue that scalping exploits ordinary fans by putting tickets in the hands of wealthy resellers who charge outrageous prices. These prices often far exceed what average fans can afford, especially for premium seats. Scalping essentially funnels the best tickets away from diehard fans to those who can pay the most but may not use the tickets themselves. The practice prices regular fans out of the market for the biggest events.
It increases costs for consumers
Scalpers artificially drive up costs for consumers who have no option but to pay inflated secondary market prices for in-demand tickets. Event tickets can end up costing two, three, or even ten times the original price. Critics view this as an unethical practice that harms consumers just to enrich scalpers. The higher prices can put once affordable events out of reach for lower income fans.
It incentivizes corruption and unfair practices
Legalized scalping gives resellers financial incentives to obtain tickets through questionable means. This could include hacking ticketing websites, using bots to unfairly buy up ticket inventories, bribing box office staff, or buying tickets reserved for fan clubs or artist inner circles. Such activities shut out the general public and corrupt fair ticket distribution. Scalping also incentivizes shady practices like withholding tickets to create artificial scarcity that drives up secondary market prices.
It circumvents price caps set by artists and promoters
Many artists and event hosts purposefully set ticket prices at below-market rates to make shows affordable for lower income fans. Ticket scalping undermines these intentions by jacking up prices beyond those caps. Performers lose control over how much their fans have to pay. Scalping redirects economic benefits away from artists and towards third-party resellers.
Key facts and data
Scalping market size
– The secondary ticket resale market in North America was estimated at $10 billion in 2021.
– Between 2016-2019, the size of the US secondary ticket market grew at an annual rate of 22%.
Average ticket scalping markups
– According to a 2019 investigation by the CBC, scalpers were reselling tickets for enormous markups such as:
– U2 tickets originally $35 being resold for $275 (686% markup)
– Elton John tickets originally $125 being resold for $775 (520% markup)
– An analysis by NerdWallet found an average ticket resale markup of 49%, but markups of over 100% were common for hot events.
Legality by state
– As of 2022, around 28 US states prohibited or restricted some forms of ticket scalping. 15 states allowed unregulated scalping. Laws varied widely between jurisdictions.
– Some states like New York prohibited scalping of tickets under $5. Others like Massachusetts banned scalping within 1,000 feet of venues.
– In Canada, ticket scalping laws existed at the provincial level. Ontario and Quebec had restrictions, while Alberta allowed a free market.
Fan opinion surveys
– In a 2019 Seton Hall Sports Poll, 75% of respondents were opposed to scalping for sporting events. 20% were in favor.
– A Ticketmaster survey found 61% of fans thought ticket scalping should be illegal. 33% said scalpers provided a useful secondary market.
– 80% said ticket prices on resale sites were unfair. Over 50% supported capping resale profits.
State | Scalping Legality |
---|---|
California | Illegal |
Texas | Legal |
New York | Partially illegal |
Florida | Legal |
Conclusion
The debate over ticket scalping legality remains contentious with good arguments on both sides. There are reasonable economic and ethical cases to be made for allowing a free secondary ticket market versus regulating scalping. Key factors in the debate include effects on affordability for average fans, incentives created around corrupting primary sales, and the ability to eliminate fraudulent sales. There are also countervailing interests between providing consumer options versus artist and promoter control over pricing. Overall, the most balanced approach may be moderate regulation of scalping instead of outright bans or unrestricted free markets. For example, price caps could allow some reasonable resale profits while preventing extreme gouging of fans. Disclosure laws and bot bans could also deter unfair sales practices. The optimal policy likely involves a compromise acknowledging both the benefits and drawbacks of the ticket scalping industry.