“The American people will never knowingly adopt Socialism. But under the name of ‘liberalism’ they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.”

Socialist Party presidential candidate Norman Thomas


Tuesday, December 18, 2007

Ticket scalping---OK for "ticket brokers", but I go to jail

As you've probably heard, Hannah Montana tickets whose face value is from $100-$200 are selling for $2-3thousand each in the after market. Scalping tickets is supposed to be illegal but ticket brokers do it all the time. Now as if NFL tickets aren't expensive enough....

LOS ANGELES (AP) -- Ticketmaster plans to launch a Web site next year where people can resell tickets to pro football games, the latest push by the event ticketing company into the lucrative secondary ticket market.

The company signed a multi-year deal with the National Football League that includes branding and promotion for the site, Ticketmaster said in a statement being released Tuesday. Financial terms were not disclosed.

West Hollywood-based Ticketmaster already operates separate, so-called ticket exchange sites for 18 NFL teams, which allow ticket holders to resell their game tickets online.


Understandably, if ticket scalping were legal, scalpers would buy up most of the tickets in the first hour of selling and then make a fortune unloading them on people dumb enough to pay $2000 for a concert or game ticket. Regular people would never have access to face-value tickets. My question, if it's illegal for me to scalp a ticket, then why is it OK for Ticketmaster, or StubHub, or other broker to do it? Those guys buy up the best tickets before they're available to the public and sell them for 2-4 times their face value, claiming that the profit is an "operating" or "convenience" expense.

Why can't I buy a ticket and sell it at whatever the prevailing market will bear? That's a rhetorical question. I know why I can't, but why can the brokers?

10 comments:

Joe Camel said...

'Cause they wrote the law before you did

Kevin said...

One reason might be that normal ticket scalpers wouldn't pay taxes on it, while StubHub and Ticketmaster would pay taxes.

Joe Camel said...

Stub Hub nor Ticketmaster pay taxes. As a business, they charge taxes to the purchaser on all tickes, etc. sold and then pass it along to the government with the appropriate form. Illegal scalpers obviously don't, but this has little if anything to do with the regulations in this business and has absolutely nothing to do with Ed's question. Now, Kevin, these 2 establishments do have business licenses and will pay cities, states, and the feds for those, so in effect there is a money issue. The issue at hand is simple. Brokers are willing to pay backside money (some under and some over the table)to the different events/ leagues for the rights to sell. This gives no guarrantee of profit, only a limited market.(Supply and Demand). Ed, you can apply and get a brokers license, not expensively either, and go into business tomorrow. Your problem will be ticket cost and turnaround. Ticketmaster sells events to the public up front, and also sells after market tickets at higher prices. I have a real problem with their duality. Pick a fence side and stand on it.

Bobby T said...

Ed: I know many "licensed ticket brokers" in our area. These guys pay a fee for the right to conduct a cash business that cannot be tax regulated. In effect, the license is their tax. It is easy to buy and sell Ala-Aub football tickets. The supply is low, so vitrually any normal price can return a small profit. The trick is when these guys buy a season ticket book and must dump the also-ran games or lose money. Another cost factor for them. The best deal is that the major corporations use this system to transavte tickets for customers/clients and maintain some deduction ability. Imagine your tax return with a line item showing $100 for Aub-Ala tickes (for a client) and no receipt. IRS- not gonna happen.

Kevin said...

Joe, they don't pay taxes? You mean to tell me that they are running their business without paying taxes? How have they not been audited yet?

Joe Camel said...

Kevin: You waver back and forth between "out-to-lunch" and "long gone". Ed brought up the idea of him being able to scalp tickets (this is a sales function). You indicated that the ticket brokers pay taxes. I pointed out that all sales taxes are payed by the ultimate consumer and that the business just funnels the tax collected to the government. Now you ask if business' pay taxes. We both know that they do, but not as it pertains to the original line of thinking. When you shop for a Christmas present, does the seller add tax to the cost of the good you buy- Yes. He collects it and then forwards it to the appropriate federal/state/local tax agencies. He pays nothing. He is only passing along what he has collected. Income taxes are always there. The nominal amount of money earned from scalping, however is of no threat to the feds or the IRS. This function solely rests at the local/state level. If one checks, it would be noted that not all states operate this way. In some states there is a fair market mentality and ticket brokering can be done without the license. Alabama has its law because a few big time players felt it protected them from ticket holders altering the price fix thats in. Ever notice how all the scalpers are in the same $ range at events. You think this is a random act or that collusion is in play. They help each other make money by keeping prices inflated. Learn to comment on the question a hand or bring up your own question.

Kevin said...

Ok, well my next question for you is do scalpers pay taxes on the tickets they sell at the games? No they don't. And to stay on topic, this is why it is illegal for them, and legal for Ticketmaster and StubHub. Yes they may forward the sales tax, but the taxes are still getting paid by them. This is the basic reason I can think that it is legal for them.

Brandon said...

Thanks for this nice post. I know about "licensed ticket brokers" but most of them don't any tax . Can you please let me know why are you talking this?

Ed said...

The tax on the ticket was already paid when it was purchased the first time. When I sell a microwave oven at a yard sale, does the buyer pay sales taxes on it? What if I bought a baseball rookie card and sell it for 100 times it's face value, do either one of us pay taxes to anybody on that transaction? Hell no!

Elena Smithson said...

Thanks for sharing this nice post.