The Future of Event Ticket Reselling: Price Caps, Taxes and Venue Control

by on July 29, 2008 · 6 comments

Tickets, Baby, Tickets: that was the mantra of the ticket broker and reselling crowd at the Ticket Summit last week in Las Vegas. I was there to present on the legal and public policy issues of ticket reselling (with a focus on Internet sales).

The resale market for tickets is a great example of how markets work, because with event tickets it’s truly a case where supply and demand reigns supreme. But still, government regulation and the primary market have a large influence on how the resale secondary market operates.

I discussed three major influences — price caps, taxes and venue control.

Price caps–the amount you’re allowed to resell your ticket over face value — are on their way out, as legislators pretty much understand the economics of supply/demand.

Taxes are a different story, and are on the way in. A North Carolina bill (SB 1407) is the wave of the future I think – as states deregulate, they’ll think they need tax sales over face value. But general income tax laws still apply, so states and cities shouldn’t think they need a special tax (in North Carolina they call it a 3% “privilege tax”) just for tickets.

Venue control is also a growing force, and I discussed the legislative, licensing and technological ways venues can assert control over how a ticket is resold:

  • Legislative – pass a bill that gives venues the statutory ability to prohibit resale of tickets for prices above face value (North Carolina had this in SB 1407).
  • License – place resale restrictions on the back of a ticket (New England Patriots do this).
  • Technology – institute electronic tickets that make it difficult or impossible to resell a ticket (see my post on how electronic tickets are not so convenient)

Overall, a free market in tickets is free of special taxes and allows consumers the ability to resell their tickets at any price. That’s the future I’m advocating for.

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