In a stunning blow to the City of Chicago, U.S. District Court Judge Wayne R. Andersen ruled in favor of StubHub in a case that would have required the secondary ticket company to collect the city’s 8 percent Amusement Tax from its broker clients and resellers.
The nine-page ruling states that StubHub’s “sole obligation is to: 1) put a prompt on its website warning ticket sellers of their obligation to pay the amusement tax; and 2) provide certain information if requested by municipal authorities,” but does not also require the company to collect the tax, which would have been difficult logistically for StubHub.
Click here to read the decision
But, for Chicago-based ticket brokers, who are required to pay the tax, the decision upset them because they believe it places them at a competitive disadvantage.
“If we don’t pay the tax, then the city is going to come in and shut us down,” Dan Finkel, a principal with Gold Coast Tickets told TicketNews. “It’s grossly unfair. And in this case, the seller isn’t standing behind the sale, StubHub is. They’re the ones running a customer’s credit card. The customer doesn’t even know who the seller is, StubHub is who they’re dealing with.”
There was no dispute between StubHub and the city that the tax was legal, but it appears that different amendments to Chicago’s tax and ticket resale laws sunk the city because they appeared to contradict each other.
“In 1995, the Chicago Amusement Tax Ordinance was amended to extend the amusement tax to cover secondary ticket sales by persons who resell tickets above face value. Under the amended Chicago amusement tax, ticket resellers are required to pay the 8% amusement tax on the entire amount of any mark-up charged to the ticket purchaser, including any amount the broker may designate as a fee for its brokerage services,” the decision stated.
But later in the ruling, the judge wrote that an amendment carved out “reseller’s agents,” which StubHub is considered, as not being required to collect the tax.
StubHub spokesperson Sean Pate told TicketNews that the company was still reviewing the decision and would not comment at this time.
The City of Chicago is expected to appeal the ruling.