Ticket resale

Ticket resale (also known as ticket scalping or ticket touting) is the act of reselling tickets for admission to events. Tickets are bought from licensed sellers and are then sold for a price determined by the individual or company in possession of the tickets. Tickets sold through secondary sources may be sold for less or more than their face value depending on demand, which tends to vary as the event date approaches. When the supply of tickets for a given event available through authorized ticket sellers is depleted, the event is considered "sold out", generally increasing the market value for any tickets on offer through secondary sellers. Ticket resale is common in both sporting and musical events.

Ticket resale is a form of arbitrage that arises when the number demanded at the sale price exceeds the number supplied (that is, when event organizers charge less than the equilibrium prices for the tickets).

During the 19th century, the term scalper was applied to railroad ticket brokers who sold tickets for lower rates.[1]

Purchase and re-sale methods

Ticket re-sellers use several different means to secure premium and previously sold-out ticket inventories (potentially in large quantities) for events such as concerts or sporting events. Established re-sellers may operate within networks of ticket contacts, including season ticket holders, individual ticket re-sellers, and ticket brokers. They make a business out of getting customers hard-to-find and previously sold-out tickets that are no longer available through the official box office.

A ticket scalper at work

Ticket scalpers (or ticket touts in British English) work outside events, often showing up with unsold tickets from brokers' offices on a consignment basis or showing up without tickets and buying extra tickets from fans at or below face value on a speculative basis hoping to resell them at a profit. There are many full-time scalpers who are regulars at particular venues and may even have a pool of loyal buyers.

One common concern with resale is with scam artists selling fake tickets to unsuspecting buyers. Another common practice is scalpers that sell tickets that have already been scanned at the venue gate since entry is typically allowed only when a ticket is scanned for the first time. Since the tickets were authentic, buyers do not have a way of telling if a ticket had been used or not.

A concern when buying tickets on the street from a ticket scalper or via an online auction is that the tickets sold by ticket re-sellers may themselves be stolen or counterfeit. For many major sporting events, counterfeit tickets are auctioned off in the months leading up to the event. These criminals and their activities are not to be confused with legitimate ticket brokers and individuals who abide by the law to legally resell tickets on the secondary market.

In 2009, TicketMaster started adoption of a "paperless" restricted ticketing, in which tickets could not be resold. Under this system, customers prove their purchase by showing a credit card and ID.[2] The measure was taken in response to ticket scalping and resale markup of tickets on secondary markets and adopted during Miley Cyrus (2009) World Wonder Tour, although Ticketmaster first experimented it with AC/DC's Black Ice World Tour (2008–10).[3][4] TicketMaster has since changed the name of the system to "Credit Card Entry". The system requires large groups to enter together with the person who purchased tickets. Some events have Ticket Transfer which allows the tickets to change ownership and allow for tickets to be transferred through Ticketmaster's proprietary systems. These cannot be later resold or transferred via ticket exchanges such as StubHub.[5]

Ticket presales

Obtaining tickets through special presales has become more common. These presales often use unique codes specific to an artist's fan club or venue. The advent of presales has allowed more individuals to participate in reselling tickets outside of a brokers office.

Although derivatives was a practice in use mostly in the 1980s, some ticket brokers offer tickets even before the tickets are officially available for sale. In such scenarios, those ticket re-sellers are actually selling forward contracts of those tickets. One example is a company called TicketReserve, which is making money by selling "options" on future sporting events. This is often possible if the reseller is a season ticket holder. Season ticket holders generally receive the same exact seat locations year after year thus they can enter a contract to deliver on tickets that they own the rights to, even if those tickets have not even been printed or sent to the original ticket holder.

Automated scalping bots

In recent years, fraudsters have started to use more complex methods by which they obtain tickets for resale on the secondary market. Similar to the technology used to snatch up rare shoes and sneakers,[6] automated bot attacks have become a common way to acquire large numbers of tickets only to resell them for higher profits. What fraudsters will do is deploy thousands of bots from untraceable IP addresses in a brute force attack as soon as a venue or ticket seller first makes them available for sale. In 2017, one of the largest online ticket sellers Ticketmaster filed a lawsuit against Prestige Entertainment for their continued use of scalper bots despite paying $3.35 million to the New York Attorney General’s Office just a year prior.[7] Ticketmaster claimed that Prestige Entertainment was able to lock up 40% of available tickets for performances of the hit Broadway musical Hamilton, as well as a majority of the tickets Ticketmaster had available for the Floyd Mayweather and Manny Pacquiao fight in Las Vegas in 2015. In an effort to curtail such behavior, Congress moved to pass the Better Online Tickets Sales Act of 2016, more commonly referred to as the BOTS act.[8] The legislation was signed into law in December 2016 by then President Barack Obama. The BOTS act enforces several penalties and fines for parties found guilty of using bots or other technology for undermining online ticket seller systems with the hopes of selling them on the secondary ticket market.

Ticket brokering

Ticket brokers operate out of offices and use the internet and phone call centers to conduct their business. They are different from scalpers since they offer a consumer-facing storefront to return to if there is any problem with their transaction. The majority of transactions that occur are via credit card over the phone or internet. Some brokers host their own websites and interact directly with customers. These brokers are able to offer additional services such as hotel accommodation and airfare to events. Other brokers partner with online ticket exchanges. These sites act as marketplaces that allow users to purchase tickets from a large network of brokers. Some brokers offer advice on the best way to buy tickets starting with the box office and working with a broker if tickets aren't available through the box office.[9]

Online ticket brokering is the resale of tickets through a web-based ticket brokering service. Prices on ticket brokering websites are determined by demand, availability, and the ticket reseller. Tickets sold through an online ticket brokering service may or may not be authorized by the official seller. Generally, the majority of trading on ticket brokering websites concerns itself with tickets to live entertainment events whereby the primary officially licensed seller's supply has been exhausted and the event has been declared "sold-out". Critics of the industry compare the resale of tickets online to ‘ticket touting’, ‘scalping’ or a variety of other terms for the unofficial sale of tickets directly outside the venue of an event.

The late 1990s and early 2000s saw the emergence of online ticket brokering as a lucrative business. U.S. corporate ticket reselling firm Ticketmaster developed a strong online presence and made several acquisitions to compete in the secondary markets. Securities analyst Joe Bonner, who tracks Ticketmaster's parent company New York-based IAC/InterActiveCorp, told USA Today: "You have to look at the secondary market as something that is a real threat to Ticketmaster. They missed the boat. StubHub has been around a few years now already. They weren't as proactive as they probably should have been."[10] Ticketmaster launched fan to fan secondary ticket reselling site TicketExchange in November 2005. Ticketmaster acquired former rivals GetMeIn and TicketsNow,[11] while eBay bought StubHub.[12] In 2008, the Boston Red Sox chose Ace Ticket over StubHub to sell their tickets.[13] There are also independently owned online ticket re-sellers such as viagogo and SeatMarket.

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