Ticket Scalping by Yael Schacher, Jan 12, 2003 TwitterSay you want to see Janet Jackson this summer, and so does your cousin. You live in Brooklyn; your cousin lives in Chicago. Tickets for concerts in both cities went on sale a couple of weeks back and there are no good seats left at the first places both of you usually go to buy tickets, the box office and the ticket-selling service Ticketmaster. Your cousin goes online to TicketsNow.com, a Web site she heard always has good seats available. Sure enough, the site has a great seat for the Chicago Janet Jackson concert, but it costs four times what it would have if your cousin had been able to get it at the box office. TicketsNow.com also has a similarly priced good seat for the New York concert. But when you try to buy it, this message pops up on the computer screen: "New York State statutes currently prohibit us from selling tickets for events taking place in New York State to New York residents." TicketsNow.com is a ticket broker that buys tickets in order to resell them. In New York State, reselling a ticket for more than 10 percent above its box office price is considered scalping and is prohibited, whether it is done online, from an office or on the street. It is also illegal to hawk tickets at any price within 1,000 feet from where the show is taking place. Though an anti-ticket scalping law governing the resale of tickets has been on the books, in one form or another, for 80 years, scalping for New York sports events, Broadway shows and concerts remains pervasive. So, if you really want a good seat to the New York Janet Jackson concert you have two options left: 1) Since Illinois law does not cap ticket resale prices, you can get your cousin to buy you the ticket to the concert at Madison Square Garden, assuming you can afford the exorbitant going rate. 2) Wait until the night of the concert and buy a cheaper ticket from one of the illegal scalpers on 34th Street. Clearly, New York's law -- designed to keep scalpers away from venues and insure ticket prices remain affordable to the average fan -- needs a tune up. But how to fix it as it comes up for renewal this month is unclear. Some advocate scrapping the price cap completely. Others claim eliminating the cap will not lower ticket prices. After all, your cousin from Chicago, where scalping is legal, paid a lot to see Janet Jackson there. IS SCALPING GOOD? The president of the League of American Theaters and Producers has called New York's anti ticket scalping law "unrealistic." Rocco Landesman, president of the Jujamcyn chain of Broadway theaters, has complained that the law does not stop the scalping of tickets to New York events, but just forces it out of state. Big venues like Madison Square Garden are most concerned about rampant street scalping and have pushed for increasing the no scalp zone from 1,000 to 1,500 feet. Attorney General Eliot Spitzer says the root of the ticket problem is "ice," a slang term for bribes given in exchange for tickets at the box office, and fraudulent promoters who divert the best seats to networks of connected brokers. He favors cracking down on this big time corruption but letting the free market dictate prices for scalped tickets. Others favor keeping the law until fraud and bribery are eliminated, arguing the free market is not really free if premium scalpers control the best seats and manipulate prices. Some economists and policy makers agree the free market approach is the right solution. They argue that box office prices are too low and that if fans were not willing to pay higher prices, there would be no scalping. Scalpers, they argue, are paid to wait in line by people who cannot do so. Ticket brokers and some legislators have added that uncapping New York's ticket resale price will bring brokers and their tax dollars back to New York, lead to an increase in ticket supply and lower prices. But supporters of a cap on the price of tickets being resold point out that tickets were neither cheaper nor more plentiful when New Jersey experimented with a free market in tickets between 1995 and 1997. Some economists argue the free market would hurt the long term economic growth of the entertainment industry as it steadily loses the fans who cannot afford scalped tickets. The affluent fans would stand to gain most. Consumer advocates believe average fans could not compete with the corporate accounts for good seats. The real consumer issue would be the unavailability of tickets for those who cannot afford the brokers' prices. And, since public tax dollars underwrite venues, it is important that there is a fair ticket distribution system, says advocate Russ Haven of New York Public Interest Group. COMPLEX DISTINCTIONS How do you craft a single anti-scalping law that can apply to the immense variety of events and ticket buyers in New York City? The diversity encompasses: A hit Broadway musical like The Producers A two night stint of Yo Yo Ma at Lincoln Center. The not-so-hot Mets at Shea. A one night only Britney Spears rock concert for preteens. A long-running show for tourists. A season of the opera for subscribers. Meetings with clients at the Giants game. Should limited run, super popular events be treated the same way as ongoing, more easily-accessed events? Should a distinction be drawn between sports and theater? What about between plays in Central Park and Mel Brooks' The Producers at the St. James Theater? For example, Broadway is having a hot year while sport ticket sales are in a slump. Scalped tickets for The Producers cost two to five times the box office price. Meanwhile, a March Wall Street Journal survey found that corporate types were practically giving away their prime seats to sports events and you could get Knicks tickets on Ebay auctions for less than the price listed on the ticket. Sometimes scalped tickets for less popular events cost less than the original price; some scalpers do not gouge consumers but deliver great deals. Finally, the distinction between scalpers on the one hand and entertainers, producers, and original sellers on the other is not always clear. Many performers feel scalpers have too much power and devise creative ways to make sure fans, not "diggers" hired by scalpers to wait in line at the box office, get tickets to their shows-- giving out bracelets, running lotteries, keeping lists of names and checking IDs. When Hootie and the Blowfish discovered that over 500 tickets for their 1996 Jones Beach concerts were withheld from public sale and then sold directly to ticket brokers, they voided those tickets and re-released them directly to the public. Alternatively, some entertainers work closely with ticket brokers, such as professional ball players who make money by selling their allotted seats. Though Ticketmaster says it prevents brokers from buying up blocks of tickets by limiting the number of tickets a person can buy for a given show, Ticketmaster plays the scalper in charging large convenience or service fees that raise ticket prices more than 10 percent above the original box office prices but are considered legal anyway. Ticketmaster kicks back a portion of these fees to theaters and promoters in exchange for exclusive rights to sell their tickets. Theaters also charge maintenance fees, which are tacked on to rising box office prices. Finally, scalping can even be good P.R. for producers of a Broadway show: brokers who buy up many tickets ensure shows are sold out. Long lines at the box office are great advertising. Plus producers and performers stay on the good side of fans by shifting all blame for high ticket prices to the scalpers. THE PUBLIC INTEREST The debate over ticket scalping legislation belies a more fundamental ideological debate over an industry that is at the heart of New York City's identity. Should going to a ball game be a protected right for all those who live in the entertainment capital of the world? Should all scalpers -- scrappy entrepreneurs, season ticket holders, and corrupt profiteers -- be treated equal? These questions are not new; they have been batted around since New York passed its first anti- scalping statute in 1920. The slang term scalping was originally used to refer to a killing, political or economic. Stock and grain scalpers of the 1880s were speculators who bought with the intention of making profits on resales. Street scalpers selling fake train tickets were the menace of the railroad companies and their passengers 100 years ago; in response, elaborate ticket seals and watermarks were devised. (Today, serial numbers are used.) In the theater, some ticket brokers played a role in underwriting performances. But by the 1920s legislators believed brokers were monopolizing the market of top theater tickets for popular shows and began regulating resale prices. Soon afterwards New York's cap on ticket resale prices was deemed unconstitutional by the United States Supreme Court on the grounds that price regulation was permissible only when the business to be regulated was "affected with a public interest" and the entertainment industry did not satisfy this criterion. This logic, however, was soon turned on its head and by the 1960s the federal court concluded that anti-ticket scalping legislation was designed to protect the public interest. In 1967 a woman bought two $20 tickets from the box office to "Die Fledermaus" at the Metropolitan Opera. Her husband refused to go with her so she placed an ad in the newspaper offering the tickets for sale. Plainclothes police officers purchased the tickets for $40 each and then arrested her for scalping. The New York State Court of Appeals ruled her not guilty and distinguished between those who are in the business of scalping and those who are just looking to unload a ticket they intended to use. The Court said that the purpose of the state's anti-scalping legislation was to eliminate speculation in the business of reselling tickets. Over the past 10 years, there have been plenty of stadium arrests; the stellar 1998 Yankee season ended with 242 charged with scalping. But the focus has been on organized ticket rackets. Members of the Consumer Affairs Bureau and investigators from the State Attorney General's office investigated the source of the confiscated 1998 Yankee tickets to see if blocks of tickets were being sold illegally to scalpers by box office workers. Last summer, an organized ring of bribery schemes that diverted Yankees and Mets tickets from ticket agents to scalpers was discovered by the Attorney General and Manhattan District Attorney's Office. An investigation into the 1994 Barbra Streisand concerts at Madison Square Garden revealed that approximately 50 percent of the seats never went on public sale; the tickets were held by promoters, producers and other insiders and eventually ended up in the hands of scalpers. Scandals like this one have prompted legislators to propose that ticket sellers be legally required to notify the public as to how many seats are held back from public sale. Some of the hardest rackets to track involve out of state brokers selling tickets to New York events. In 1995, an appellate court affirmed that the New York State's anti-scalping law could be applied to a Connecticut ticket broker who scalped in New York. Making sure that Internet scalping abides by New York State law is difficult. SOLUTIONS What do the fans want to do about scalping and ticket prices? Most think scalping should be legal but do not think it would be fair for a sport league to charge exorbitant free market prices for tickets (Click here and see lessons two and four for rationales). How to try to please the fans: Eliminate the middle man and let the entertainers arrange deals between season ticket holders and fans looking for tickets. Letting entertainers sell their own tickets, however, certainly is not guaranteed to lower prices. Get those freebie tickets for celebrities, politicians, and insiders back to the box office. Compromise: Raise the ticket resale price cap to 20 or 30 percent above the box office price -- enough to allow scalpers a fair profit, but not so much that fans get ripped off. In other words, treat scalping like securities trading: legal but regulated. Alternatively, raise the box office price a bit for popular events in order to try to stem runaway scalping. (This is what the producers of "The Producers" did when they raised the top ticket price to $100. It did not help much.) Allow venues to establish a designated area on site where tickets can be resold for their box office prices. These areas accommodate season ticket holders who may have extras they don't need on a game-by-game basis. Click here for an online equivalent of this idea. Tweet Editor's Choice Everything Dot NYC Council 2.0: Rules Reform Outlines Next Steps in Open Data Overdue & Over Budget, Capital Projects Roll On Comments Comment(s) The comments section is provided as a free service to our readers. 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