Ticket resale is a form of arbitrage that arises when the amount demanded at the sale price exceeds the amount supplied (that is, when event organizers charge less than the equilibrium prices for the tickets).
In British English, one who resells tickets is often called a tout, and in American English, Canadian English, and Australian English, such a person is often called a scalper, and the practice is called scalping. However, these are colloquial terms used to refer to individuals selling tickets on the street or other nearby public places outside a venue or event. Established companies in the business of reselling tickets refer to themselves as ticket brokers. Registered businesses reselling tickets to popular events are bound by laws, such as local and state laws in the United States, and must operate within those laws to maintain their status as a legitimate business. Like the scalpers of old, however, there are no restrictions on how much ticket prices can be marked up.
Ticket resellers use several different means to secure premium and previously sold-out ticket inventories (often in large quantities) for events such as concerts or sporting events. Established resellers often operate within vast networks of ticket contacts, including season ticket holders, individual ticket resellers 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; recently, obtaining tickets through special presales has become more common. These presales often use unique codes specific to an artists fan club or venue. The advent of presales has allowed more individuals to participate in reselling tickets outside of a brokers office.
Scalpers also may attempt to use automated software to get hundreds of tickets in the first moments of internet sales, getting an advantage on fans trying to buy the same tickets. Ticketmaster filed a lawsuit against a company that manufactured and sold software designed to get around Ticketmaster's security measures. At present, however, the larger venue- or team-affiliated sellers such as Ticketmaster and Tickets.com now use session-specific, human-eye-readable prompt strategies such as reCAPTCHA in an attempt to prevent such automated reservation of tickets.
Ticket scalpers work outside events, often showing up with unsold tickets from brokers' offices on a consignment basis or showing up with no tickets at all and buying extra tickets from fans at, or below face value with their own money on a speculative basis hoping to resell them at a profit. There are many full-time scalpers who are regulars at particular venues and even have a pool of loyal buyers. These full-time scalpers are often sought out by fans hoping for a last minute deal and are comfortable buying from a familiar face, expecting that they are less likely to be ripped off (i.e. with counterfeit or stolen tickets) than they would be by a stranger. However, there are plenty of scam artists that sometimes follow a concert tour from city to city selling fake tickets to unsuspecting buyers for whatever they can get. Another common practice is that scalpers would 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 would have no way of telling if a ticket had been used or not.
Ticket brokers operate out of offices, and use the internet and phone call centers to conduct their business. They are different from scalpers in that they offer a consumer a 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 often able to offer additional services such as hotel accommodation and airfare to events. Other brokers partner with online providers that run independent e-commerce sites. These sites act as portals that allow users to purchase tickets from a large network of brokers. They also serve to validate the identity of individual brokers and provide additional service guarantees about the authenticity of tickets purchased through their networks.
A notable recent example of re-selling occurred at the 2004 Glastonbury Festival. Tickets, initially offered for sale online, were sold out within the first few hours of availability; however, afterwards, large numbers of tickets started appearing on eBay and other online marketplaces. Not only professional ticket resellers were involved; many ordinary concert-goers had, apparently, purchased twice the number of tickets they required then sold the unused tickets at double the original price, thus effectively getting their own tickets for free and further clouding the already fine line between ticket reseller and concert-goer.
Although it was a practice in use mostly in the 1980s most often for concerts more than other events, some ticket brokers offer tickets even before the tickets are officially available for sale. In such scenarios, those ticket resellers 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. This presale practice has fallen out of favor as ticket buyers are now accustomed to viewing online available inventory on broker sites and receiving their purchases the next day via overnight delivery.
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". This "sold-out" status increases the ticket's potential market value. 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. Corporate ticket reselling firm Ticketmaster developed a strong online presence, dominating the online market. But by 2006, Ticketmaster's stranglehold on the industy loosened with the emergence of other online ticket brokering companies, such as StubHub, who in 2007 contracted with Major League Baseball to become the exclusive official ticket resale marketplace for all MLB teams. As a result, MLB teams could no longer host any other official resale marketplace for their tickets (such as Ticketmaster's TicketExchange).
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." Ticketmaster recently launched fan to fan secondary ticket reselling site TicketExchange in November of 2005 to compete with Viagogo.com, Seatwave.com, See Tickets, TheOnlineTicketExchange, and StubHub. Ticketmaster acquired former rivals GetMeIn and TicketsNow, whilst eBay bought StubHub.
Eric Baker, founder and CEO of Viagogo.com, a European ticket resale website, has described the loosening of Ticketmaster's grip on the market as "the equivalent in the ticketing industry of the fall of the Roman Empire".
By 2008, Internet ticket fraud had emerged as global problem, when fake ticket websites defrauded millions of dollars from sports fans by selling Beijing Olympics tickets which they had no intention of delivering.
Individuals who genuinely wish to attend a popular event may find themselves unable to get tickets, as they have already been sold to ticket resellers. This practice enables the ticket resellers to sell the tickets at market value, with no effective loss because they had no intention of attending the event in the first place. Resellers argue that there is a fine line between the individuals who genuinely wish to attend a popular event (and decide to sell on their tickets later) and those that buy tickets in large quantities in order to resell their tickets for a hefty profit. The practice of reselling tickets may be defended on "free market" principles although some countries have outlawed the unauthorized resale of tickets (usually with exceptions where the reseller doesn't profit from the transaction).
Resale of tickets at sold-out events can also encourage those without tickets to turn up at the venue, in the hope of purchasing one. This can cause crowd control problems, with numbers in excess of the venue's limits approaching it, and the access of those with tickets being hampered by a sizeable number of those without.
A concern when buying tickets on the street from a ticket scalper or via an online auction, is that the tickets sold by ticket resellers 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 law to legally resell tickets on the secondary market.
It is controversial whether tickets are a good which can be privately resold. Some parties argue that the money paid to the organisers is actually paid for the service of attending the event, which a buyer cannot resell because the buyer does not have the service to sell. Other parties argue that tickets are paid for by consumers and should be transferable just like any other good. Typically private resale will contravene the original conditions of sale, but it's legally questionable whether the original conditions of sale are even enforceable.
In the United Kingdom resale of football/soccer tickets is illegal under section 166 of the Criminal Justice and Public Order Act 1994 unless the resale is authorized by the organizer of the match, such as what viagogo is doing through its partnerships with Chelsea FC, Manchester United, and Everton FC.
A similar situation is applicable in the Netherlands where resale of football tickets is illegal unless through the official reseller Skelper.nl an official partner of clubs like Feyenoord, PSV, FC Groningen en NEC. The first official secondary ticketing internet platform launched in the Netherlands in 2007 and by now there are several like viagogo, seatwave and skelper.
In the United States, ticket resale on the premises of the event (including adjacent parking lots that are officially part of the facility) may be prohibited by law, although these laws vary from state to state and the majority of U.S. states do not have laws in place to limit the value placed on the resale amount of event tickets or where and how these tickets should be sold. Ticket resellers may conduct business on nearby sidewalks, or advertise through newspaper ads or ticket brokers. Some U.S. states and venues encourage a designated area for resellers to stand in, on, or near the premises, while other states and venues prohibit ticket resale altogether. Resale laws, policies and practices are generally decided, practiced and governed at the local or even venue level in the U.S. and such laws and or interpretations are not currently generalized at a national level.
Another issue in the United States is that since ticketing laws vary by state to state, many ticket resellers use a loophole and sell their tickets outside of the state of an event. Therefore, a ticket reseller who is reselling tickets to an event at New York's Madison Square Garden is not subject to New York State's markup laws as long as the sale takes place outside of New York. The majority of ticket brokers in the New York metropolitan area have their offices in bordering states New Jersey and Connecticut for this reason. Many states such as California limit their definition of scalping to the resale of event tickets at the venue for above face value only. Note, however, that many state and local laws prohibiting peddling on public property or local thoroughfares can effectively prohibit scalping of any kind.
Depending on the Ticketing body's conditions of sale, tickets may be cancelled, or the ticket holder refused admission, if tickets are resold at a premium (for a profit). This is so with Ticketek tickets (Ticketek is an Australian based ticketing company). Efforts to clamp down on ticket resale have included labelling tickets with the name or a photograph of the buyer, and banning people without tickets from the near vicinity of the event (where they might otherwise congregate hoping to buy a ticket from a ticket reseller at the last minute).
Online auction sites like eBay only enforce state ticketing laws if either the buyer and/or seller resides in the state where the event is taking place. Otherwise, there is no resell limit for tickets.
Some promoters have ceased selling tickets in the traditional first-come-first-served manner, and require prospective ticket holders to enter a "ballot" — a competition with random winners — with the prize being the opportunity to purchase a small number of tickets. The ballots are intended to discourage re-selling by making it harder to purchase large numbers of tickets because being at the front of the queue does not guarantee the holder a ticket.
A similar practice used among ticket resellers is to list an item as an online auction (such as eBay) - most commonly an innocuous item such as a collector’s card - and give the tickets as a bonus to the winning bidder; thereby not actually selling tickets in order to circumvent ticket laws. It should be noted that this does not actually get around eBay's selling rules, as they effectively state that the goods that the buyer receives are what the seller is selling, including any free bonuses.
In September 2003, Ticketmaster announced plans to sell tickets in online auctions, which will bring the sale price of tickets closer to market prices. The New York Times reported that this could help the agency determine demand for a given event and more effectively compete with ticket resellers. As of 2007, Ticketmaster still sells tickets at auction in the United States.