October 4, 2016

Scalping Isn't Scamming

Tracy C. Miller

Senior Policy Research Editor
Summary

Laws to prevent scalping are unnecessary and prevent mutually beneficial transactions. 

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The cost of tickets to the Broadway musical "Hamilton" skyrocketed at one point over the summer as scalpers charged $1,000 or more for tickets to the show, when the average ticket's face value was $189. In response, Sen. Chuck Schumer (D-NY) is proposing federal legislation that would prohibit the use of software to facilitate ticket scalping. Do we really need legislation to curb this practice?

Scalpers are using bots to buy up a large share of tickets online before the public gets a chance to purchase them. Then they resell those tickets for much higher prices. This a modern twist on a practice that has long been demonized by the public and legislators.

Scalping certainly results in some consumers paying higher prices than they otherwise would. But in exchange for high prices, consumers can get the tickets they want, when they want them, without waiting in line or competing to be among the first to buy them online at a given time. Opponents mistakenly conclude that high prices are the fault of scalpers, when in fact prices are high because of a large demand and a limited supply.

At present, no federal laws limit scalping, but 15 states have laws that prohibit scalping in at least some circumstances. Another seven states require a seller to have a license to broker a ticket, and some limit how much ticket brokers can mark up the price of tickets. Some states don't allow scalping within a specified distance of the venue where an event is held. Others allow reselling tickets purchased for personal use, while prohibiting anyone not registered as broker from buying and selling tickets for a profit.

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