Let Us Scalp

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Can you spare a ticket to the World Series? The answer is yes in Illinois, where diehard White Sox fans are fortunate that their legislators embraced free markets earlier this year, in time for that team’s first championship appearance since 1959. As a result, sportsloving Chicagoans can now tap into a largely unfettered secondary market for tickets to see the Sox, or any other event for that matter. New Yorkers should be so lucky.


To be more precise, the issue is the reselling of tickets through brokers, often over the Internet. It has become a booming business that even has its own trade association, the National Association of Ticket Brokers. Brokers acquire the tickets from individuals – a season ticket holder, for example, who can’t make it to a game or two – and then sell them on to clients at a mark-up on the face value of the ticket.


Popular perception holds that the brokers gobble up large blocks of tickets from venders before the seats go on sale to the general public. But the brokers themselves are adamant that they have no business relationships with primary vendors like Ticketmaster. Rather, this variety of Internet scalping represents a classic case of a market at work. Brokers base their livelihoods on their ability to set market-clearing prices that will precisely match the number of buyers to sellers. Adam Smith would be proud.


Yet when Albany revisited the issue of scalping regulations early in the summer, legislators and the governor flinched from throwing open the ticket market. Why? Not for economic reasons. An economics professor at Arizona State University who has studied scalping, Stephen Happel, tells us there is no theoretical justification for limiting this behavior. The main risk is that brokers can’t always guarantee the validity of tickets they ac quire from others, although most have refund policies in such cases.


The benefit to that risk is the possibility of getting in to an event that would otherwise be unavailable, which is why people are willing to pay the high prices on the secondary market in the first place. Illinois lawmakers have elected to give the people of that state more opportunities to do so, opting in May to free up ticket sales via auction sites like eBay.


But when Albany took up the issue last spring, the governor ultimately blinked. So instead of trading freely, online brokers can mark up prices no more than 45% for events at venues seating more than 6,000 and only after paying a $5,000 registration fee to set up shop. Opponents of Internet sales billed this as an anti-gouging victory. Instead, as baseball buffs from the Land of Lincoln would point out if they weren’t too busy buying peanuts and crackerjacks, the real losers were New Yorkers who won’t be able to attend popular concerts or profit from the desire of others to do so.


The New York Sun

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