Donald Jeremiah Trella Ticket scalping is so ubiquitous, sometimes people are surprised to learn it is illegal in certain states. There’s no federal law...

Donald Jeremiah Trella

Ticket scalping is so ubiquitous, sometimes people are surprised to learn it is illegal in certain states. There’s no federal law against scalping, and moreover, sometimes scalping can be perfectly legal in a given state but prohibited in certain counties or specific towns within that state by local ordinances, where it may be enforced haphazardly and inconsistently, if at all. To say this messy state of affairs is not exactly ideal is to put it mildly – citizens who wish to operate within the law may have a lot of difficulty figuring out exactly what the law is. And somewhere in his grave, the tyrannical Roman Emperor Nero is smiling …

Arkansas is one state in which scalping is currently illegal. Yet, when 15 people were arrested for scalping tickets at an LSU-Arkansas football game a few weeks ago, there’s a reason why it made news – arresting 15 people for this activity seemed out of the ordinary enough to merit its reporting.

This news also prompted Arkansas State Rep. Nathan George (D) of Dardanelle, AR to propose the repeal of the statute prohibiting scalping. George argues that police already have lots of other higher-priority issues to deal with at major sporting events in Arkansas. “It’s extra work for our police force that’s not really necessary,” George said. “I think they have plenty to do when [University of Arkansas] games go to Little Rock or come to Fayetteville, such as security and traffic.” (The Razorbacks play games in both Little Rock and Fayetteville).

Prefiled on December 1 for the upcoming 2007 legislative session, the bill, if passed, would hardly make Arkansas an exception to the rule – only 15 states have laws prohibiting ticket resale for prices above the face value, and 7 of those states still have exceptions allowing state-licensed ticket brokers to do so.

George also points out that scalping is uniquely targeted among other types of similar economic activity. “It doesn’t apply to anything else in our society. We’re allowed to buy other items and resell them for a profit,” he said. Anticipating the argument that there have been instances in which people have purchased counterfeit tickets from scalpers, he also added he would fully support increasing the penalties for producing and/or selling counterfeits.

These days, sports and entertainment fans often avoid the risk of being defrauded with fake tickets by a stranger working the crowd outside an event venue by getting on the Internet prior to the event and purchasing tickets on a credit or debit card from the websites of licensed ticket brokers.

Gary Adler, general counsel for the NATB (National Association of Ticket Brokers), says the NATB is fully in agreement with the proposal. “We have always supported a free market, as well as measures that remove any anti-competitive restrictions on ticket purchasing,” he added.

While some claim that this law change might open the door for individuals or brokers to buy up the best seats at a show and mark them up exorbitantly for resale, Rep. George believes this concern is unfounded because of the uncertainty of how well a show will sell. “Absent great demand, ticket brokers would lose serious money,” he has stated.

So does this legislation actually serve the interests of all? Critics might still argue that there are some events where that certainty of high demand does indeed exist, in which case brokers could extort ticket purchasers. When people worry about proportionally large markups, however, they rarely question what “face value” actually means in the first place, and why that is automatically presumed to be somehow more fair than letting the free market run its course.

Adopting an economic perspective seems to indicate that no matter what the face value, brokers are still a necessary part of the ticket purchasing equation. Theoretically, sports teams or entertainers would charge far more for their tickets if they believed fans would pay a higher price. So why don’t they? Why are they content to let brokers get profits that could be in their own pockets? The answer economists would give is that the brokers are not running an arbitrage, but rather a service – no different from a car wash or a consulting firm, because a person who buys a ticket via resale is not only paying for the ticket, but also paying to avoid certain less attractive aspects of the ticket acquisition process.

For instance, if tickets for a very popular event go on sale at the venue, getting a ticket might require waiting in line overnight, something certainly not unique to event tickets, as we witnessed last month when Sony did not ship enough PS3s to the U.S. for the holidays. The next day, PS3s were selling for upwards of $10,000 on eBay. If we do not think the government should interfere if, as opposed to keeping the PS3 he/she just purchased at Toys R Us for $600, a person would prefer receiving $10,000 for it today and waiting a few months to purchase a PS3 when there are more in stock, then it follows that the resale of tickets for greater than face value similarly should not trigger government interference.

If the tickets are put up for sale online or via telephone, it might require the buyer to stay at his/her computer or phone all day. If a person really wants to go to an event, but they simply cannot give up the day and sit at home because they have to work or their child has a doctor’s appointment, it does not follow that someone else deserves to be at the event more simply because he/she was lucky enough to have nothing scheduled that day. At the end of the day, allowing individuals and brokers to freely engage in buying, selling, and trading after the initial ticket sale appears to let more people spend their time and money in the ways they most prefer.