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 ANTI-SCALPING LAWS:

SHOULD THEY BE FORGOTTEN?

By: Jonathan C. Benitah*

Introduction ............................................................................... 56
I.History Behind Ticket Scalping .............................................. 57
A. What is a Ticket Scalper? ................... .. ... .. .. .. .. .. ... .. . . . . . 57
B. History of Anti-Scalping Laws ................................... 57
C. What is a Ticket Broker? .................... .. ... .. .. .. .. ... .. .. . . . . 59
II.Why Current Legislation is Failing ....................................... 60
A. Interests Behind Anti-Scalping Legislation .............. 60
B. The Laws are Unconstitutional .................................. 61
1. Custom er Goodwill ................................................ 61
2. Prevent Fraud ........................................................ 64
3. Prom ote Safety ........................................................ 65
4. Reim bursem ent ...................................................... 66
C. Laws Simply Do Not Work .......................................... 67
III. Arguments in Favor of Legalizing Ticket Scalping ............... 69
A. America has a Free Economic Market ....................... 69
B. Why is There a Need for Ticket Scalpers? .......... . .. ... .. ... 70
C. Equal Protection ............................................................ 74
IV.Recent Trends Involving the Secondary Market .................. 74
V .Proposal for Change ................................................................ 77
C onclu sion .................................................................................. 78

. Nova Southeastern University, Shepard Broad Law Center, J.D., 2005;

University of Central Florida, B.S.B.A., 2002. This article is dedicated to my
incredible wife and best friend, Estee, for her endless love and support, as well as
to my family for always being there for me.
56 TEXAS REVIEW OF Vol. 6:1
ENTERTAINMENT & SPORTS LAW

Introduction

When an individual attends any sporting event, one of the

most common sights is presence of ticket scalpers. The scalper
displays a fan of tickets to the game, while standing by his or her
partner who is waving a cardboard sign reading "I need tickets."
To some they are an annoyance, getting in their way while
walking to see their favorite sports team. To others they are a
reminder of what this country was built on, a capitalist society in
which someone will be willing to sell whenever someone else is
willing to buy. But everyone agrees that what these scalpers are
doing is illegal in many places across the country.
Although anti-scalping laws are extremely prominent across
the country, not everyone supports these laws. New York's
Attorney General, Eliot Spitzer, stated that he believes the free
market should dictate the price of tickets, and that the real
problem in ticket sales is the number of promoters who are
holding blocks of the best tickets back from sale, and then selling
them directly to brokers at a higher price.1 Like others, he has
asked: "Can you name any other product for which the
government doesn't set the initial price but then tries to control
the secondary market?"2 Rocco Landesman, who is the president
of Jujamcyn theaters in New York, has publicly called the laws
"useless and stupid." He feels that the laws do not do anything to
actually prevent ticket scalping, and instead just move scalping
out of state. 3
This paper looks at the current legislation trying to cure the
harms of ticket scalping, and discusses how these attempts are
not only failing, but are no longer necessary. Part I examines the
history of ticket scalping, anti-scalping legislation, and the

1 John Tierney, The Big City: Scalping Law May Be Ready for Execution,
N.Y. TIMES, May 18, 2001, at B1, available at 2001 WL 21728848 [hereinafter
Tierney]; see generally Bureau of Investor Protection and Securities, Why Can't I
Get Tickets? Report on Ticket DistributionPractices (May 27, 1999) available at
http://www.oag.state.ny.us/press/reports/scalping/full-text.html.
2 Tierney, supra note 1 at B1.
3 Id.; Yael Schacher, Ticket Scalping, THE GOTHAM GAZETTE, June 6, 2001,
at 1-2, available at http://www.gothamgazette.com/article/issueoftheweekl
20030112/200/165.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

emergence of the ticket broker. Part II discusses the intended

goals of anti-scalping laws, their failure under the rational basis
test, and their lack of enforcement. Part III explains some
benefits of legalizing ticket scalping in a free market society and
equal protection issues. Part IV analyzes recent trends involving
the secondary ticket market. Finally, Part V of this paper
suggests a proposal for change.

I. History Behind Ticket Scalping

A. What is a Ticket Scalper?

Ticket scalpers first emerged in the late nineteenth and early

twentieth century as people who would sell railroad tickets
without authorization.4 The railroad would offer a discount when
an individual purchased a round-trip ticket, so scalpers would
resell the unused portions.5 Soon after, similar entrepreneurs
began to scalp tickets to the theatre.6 At the time, these sellers
were known as ticket speculators, which was another common
name for scalpers.7 They would purchase large qualities of
tickets and then attempt to sell them outside the venue at a
premium.8 Today, the term 'ticket scalper' refers to someone who
buys a ticket face value, or even below, and then tries to resell it
at a higher price.9

B. History of Anti-Scalping Laws

Although most people immediately think of the harm ticket

scalping causes to consumers, a significant reason for passing

4 See generally, Fry v. State, 63 Ind. 552 (Ind. 1878); Burdick v. People,
149 Ill. 600 (Ill. 1894).
5 See Illinois Cent. R. Co. v. Caffrey, 128 F. 770-771 (C.C.E.D. Mo. 1904).
6 See William 0. Logan, Ticket ScalpersArrested, availableat
http://www.buffalonian.com/history/articles/1851-
1900/1899TICKETSCALPERS.html, quoting Ticket Speculators, BUFFALO
EXPRESS, Dec. 26, 1899.
7 Id.
8 Id.
9 See BLACK'S LAW DICTIONARY 1520 (8th ed. 2004).
58 TEXAS REVIEW OF Vol. 6:1
ENTERTAINMENT & SPORTS LAW
anti-scalping legislation is to prevent harms to the promoters.
Event promoters most fiercely lobby for anti-scalping
legislation.10 Opponents argue that scalping undermines the
business goals of the promoterii in situations where the
promoters intentionally set ticket prices low to continue goodwill,
ensure sell-outs, and to stimulate demand. 12 The basic argument
is that promoters have the right to control the distribution of
tickets to their events. 13
One of the first laws in the United States that specifically
addressed scalping emerged in the early twentieth century,
dealing with theater tickets.14 As far back as 1905, the
legislature passed acts prohibiting the resale of tickets to places
of amusement for an amount greater than the original price
charged.15 Scalpers immediately challenged new statutes on
constitutional grounds, and courts initially agreed and struck
down the regulations. 16 However, modern courts use the rational
basis test and uphold these laws when they are rationally related
to a legitimate public concern. 17 Under this test, they find most
anti-scalping laws constitutional and within the State's police

10 See http://www.libertyhaven.com/theoreticalorphilosophicalissues/
economics/freeenterpriseandentrepreneurship/singingticket.html.
11 Id.
12 See Tierney, supra note 1.
13 John D. Tishler, Ticket Scalping: An Economic Analysis and Proposed
Solution, 33 SANTA CLARA L. REV. 91, 96 (1993), at 117-18.
14 See People ex rel Cort Theater Co I.C. Thompson, 119 N.E. 41 (Ill.
1918).
15 Act March 18, 1905, St.1905, p. 140, c. 140, quoted in Ex parte Quarg,
84 P. 766, 766 (Cal. 1906).
16 See Tyson & Brothers v. Banton, 273 U.S. 418 (1927) (holding that New
York's prohibition on the sale of tickets to places of amusement for more than fifty
cents above face value was a violation of the Due Process Clause of the Fourteenth
Amendment of the Federal Constitution).
17 See Nebbia v. New York, 291 U.S. 502 (1934) (holding that a state is
free to adopt any economic policy it deems necessary to promote public welfare);
Gold v. DiCarlo, 235 F. Supp. 817 (S.D.N.Y. 1964), aff'd, 380 U.S. 530 (1965)
(holding that the 'Rational Basis test' is the correct test of constitutionality for
anti-scalping cases); see generally Phyllis L. Zankel, Wanted: Tickets-A
Reassessment of Current Ticket Scalping Legislation and the Controversy
SurroundingIts Enforcement, 2 Seton Hall J. Sport L. 129, 129 (1992).
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

power.18 Since that time, many states enacted anti-scalping

legislation, 19 and some also created a type of legal scalper called
the ticket broker. 20

C. What is a Ticket Broker?

Although ticket brokers are fairly new to the legal world, they
have been around since the turn of the century. They first
emerged in the early 1900's as remote outlets for theaters and
ballparks, where customers could purchase tickets without
having to walk across town to get seats in advance.21 In those
times, brokers worked with the promoters in unison and they
would return any unsold tickets to box office, retaining only a
small service charge.22 Once computers became more prevalent,
large companies such as Ticketmaster became the primary
sellers, and brokers moved to the secondary ticket market, which

18 Jon Michael Gibbs, Comment: Cyberscalping: On-Line Ticket Sales, 31

U. TOL. L. REV. 471, 476 (2000).
19 See ALA. CODE § 40-12-127 (2004); ARIZ. REV. STAT. § 13-3718 (2004);
ARK. CODE ANN. § 5-63-201 (Michie 2003); CAL. PENAL CODE § 346 (West 2004);
CONN. GEN. STAT. § 53-289 (2003); DEL. CODE ANN. tit. 11, § 918 (2004); FLA. STAT. §
817.36 (2004); GA. CODE ANN. § 43-4B-25 to -30 (2004); 720 ILL. COMP. STAT. § 375/1
to /4 (2004); IND. CODE ANN. § 25-9-1-26 (Michie 2004); KY. REV. STAT. ANN. §
518.070 (Michie 2004); LA. REV. STAT. ANN. § 4:1 (West 2004); MD. CODE ANN. Bus.
REG. § 4-318 (2003); MASS. GEN. LAWS ch. 140, § 185A to 185D (2004); MICH. COMP.
LAWS § 750.465 (2004); MINN. STAT. § 609.805 (2003); MiSs. CODE ANN. § 97-23-97
(2004); MO. ANN. STAT. § 578.395 (2004); N.J. STAT. ANN. § 56:8-33 to -38 (West
2004); N.M. STAT. ANN. § 30-46-1 (Michie 2004); N.Y. ART & CULT. AFFR. LAW §
25.03 (McKinney 2004) (repealed 2007); N.C. GEN. STAT. § 14-344 (2004); N.D.
CENT. CODE § 40-05-01 (2003); OHIO REV. CODE ANN. § 715.48 (Anderson 2004); 4
PA. STAT. ANN. § 201-215 (2004); R.I. GEN. LAWS § 5-22-26 (2004); S.C. CODE ANN. §
16-17-710 (Law. Co-op. 2003); S.D. CODIFIED LAWS 7-18-29 (Michie 2004); VA. CODE
ANN. § 15.2-969 (Michie 2004); WIS. STAT. § 42.07 (2003).
20 See ALA. CODE § 40-12-127 (2004); COLO. REV. STAT. § 31-15-501 (2004);
GA. CODE ANN. § 43-4B-26 to -29 (2004); 720 ILL. COMP. STAT. 375/1.5 (2004); MASS.
GEN. LAWS ch. 140, § 185A (2004); N.J. STAT. ANN. § 56:8-26 to -27 (West 2004);
N.Y. ART & CULT. AFFR. LAW § 25.03 (McKinney 2004); 4 PA. STAT. ANN. § 202
(2004).
21 See National Association of Ticket Brokers: About Us, available at
http://www.natb.org/consumer/.
22 See id.
60 TExAS REVIEW OF Vol. 6:1
ENTERTAINMENT & SPORTS LAW
is what they do today. 23

II. Why Current Legislation is Failing

A. Interests Behind Anti-Scalping Legislation

While ticket scalpers merely fill a void between supply and

demand, and act on their capitalistic instincts, many people
oppose their actions. One of the most prominent arguments
made against ticket scalping is that they charge exorbitant prices
that are unfair to the true fans and poor people who want to see
an event.24 By keeping prices "low," promoters try to retain
goodwill with customers.25 Proponents of anti-scalping laws
make the second argument that scalping leads to fraud.26 They
claim that scalpers will produce fake tickets that will be deemed
worthless when brought to the stadium by innocent purchasers
trying to gain entrance to the event. A third issue raised is that
ticket scalpers are a nuisance in the area surrounding the
venue.27 Many contend that the presence of scalpers at the arena
creates physical dangers, traffic problems, and leads to
harassment.2s An additional problem is that purchasers of
scalped tickets are unlikely to be properly reimbursed if the game
is cancelled.29 In that situation, the purchaser can most likely
return the ticket to the box office to receive a refund of the face
value of the ticket, but he or she would lose any money paid
above that price.

23 See National Association of Ticket Brokers: About Us, available at

http://www.natb.org/consumer/.
24 See http://www.libertyhaven.com/theoreticalorphilosophicalissues/
economics/freeenterpriseandentrepreneurship/singingticket.html.
25 See Scott D. Simon, Note, If you can't Beat 'Em, Join 'Em: Implications
for New York's Scalping Law in Light of Recent Developments in the Ticket
Business, 72 FORDHAM L. REV. 1171, 1179 (2004).
26 Tishler, supra note 13, at 114.
27 Id.
28 Id.
29 Id.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

B. The Laws are Unconstitutional

In order for anti-scalping laws to be upheld when challenged,

they must pass the "Rational Basis test," which proscribes that
the law must be rationally related to a legitimate government
interest.30 It is the author's belief that all of the mentioned
governmental interests behind these laws are invalid, and as a
result the laws are not rationally related to a legitimate
government interest. For that reason, anti-scalping laws violate
the due process clause of the Fourteenth Amendment of the US
Constitution. The following briefly analyzes why each of the
stated interests behind anti-scalping legislation is illegitimate.

1. Customer Goodwill

When discussing anti-scalping legislation, proponents always

claim that ticket prices are set low to allow everyone to be able to
attend the games and retain customer goodwill.31 This argument
wrongly assumes that everyone who wants to go to the events
will be able to afford tickets if it was not for scalpers buying all
the tickets and selling them at exorbitant prices. Although
promoters set prices below the market clearing price, they are
still too expensive for most people in the United States to afford.
The real median household income in the United States for 2003
was $43,318.32 While that might not seem like a low amount, it
is once the price the current of sporting events is taken into
consideration.
According to Team Marketing Report, 33 ticket prices increased
steadily in all of the major sports over the past ten years.34

30 See supra note 17 and accompanying text.

31 See Tierney, supra note 1.
32 See Carmen DeNavas-Walk, Bernadette D. Proctor, and Robert J. Mills,
U.S. Census Bureau, Current Population Reports, P60-226, Income, Poverty, and
Health Insurance Coverage in the United States: 2003, U.S. Government Printing
Office, Washington, DC, 2004.
33 Team Marketing Report (TMR) is the leading publisher of sports
marketing and sponsorship information. See Team Marketing Report Online,
available at http://www.teammarketing.com.
34 The average ticket to an NFL game has increased over 60% ($33.63 in
the 1995 season to $54.75 in the 2004 season); the average ticket to an MLB game
62 TEXAS REVIEW OF Vol. 6:1
ENTERTAINMENT & SPORTS LAW
Currently, out of the four major sport leagues, baseball games are
the biggest bargain with the average ticket being only $19.82.35
Not all baseball games are cheap; the average price to a Boston
Red Sox game, for instance, costs over $40.36 The most expensive
sport to watch live is football, which has an average ticket price of
$54.75.37
As many sports fans know, one does not usually attend a
game alone, and there are always additional expenses that must
be taken into account whenever going to a game. Team
Marketing Report created the Fan's Cost Index (FCI), which
tracks the cost of attendance for a family of four.38 This
calculation includes two adult average price tickets, two child
average price tickets, four small soft drinks, two small beers, four
hot dogs, two programs, parking, and two adult-size hats.39
Taking the additional costs into consideration, the cost of
attending a sporting event increases dramatically. For example,
a family attending a baseball game can expect to pay over $155,
which is still the least expensive of the four major sports.40
Football, on the other hand, will cost a family of four $321.62.41

has increased almost 85% ($10.73 in the 1995 season to $19.82 in the 2004
season); the average ticket to an NBA game has increased almost 49% ($30.03 in
the 1994-1995 season to $44.68 in the 2003-2004 season); and the average ticket to
an NHL game has increased 33% ($33.49 in the 1994-1995 season to $44.57 in the
2003-2004 season). See generally Team Marketing Report Online: TMI's Fan Cost
Index, availableat http://www.teammarketing.com/fci.cfm.
35 See Team Marketing Report Online: TMI's Fan Cost Index - MLB 2004,
availableat http://www.teammarketing.com/fci.cfm?page=fci-mlb2004.cfm.
36 Id.
37 See Team Marketing Report Online: TMI's Fan Cost Index - NFL 2004,
availableat http://www.teammarketing.com/fci.cfm?page=fci-nfl-04.cfm.
38 TMR is most known for its Fan Cost Index (FCI), which not only
displays the average price of tickets for each team in every major sport, but also
calculates the cost of attendance for a family of four. This includes four average-
price tickets, four small soft drinks, two small beers, four hot dogs, two game
programs, parking, and two adult-size caps. See Team Marketing Report Online:
TMI's Fan Cost Index, available at http://www.teammarketing.com/fci.cfm.
39 Id.
40 See Team Marketing Report Online: TMI's Fan Cost Index - MLB 2004,
available at http:/www.teammarketing.com/fci.cfm?page=fcimlb2004.cfm.
41 See Team Marketing Report Online: TMI's Fan Cost Index - NFL 2004,
available at http://www.teammarketing.com/fci.cfm?page=fci-nfl-04.cfm.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

It is extremely doubtful that many families earning under

$45,000 a year can afford to take their family to an event costing
over $300 that only lasts for a couple of hours. So even when
ticket prices are set below the market clearing level, they are still
too high for most people to afford.
Notably, many ticket scalpers and brokers actually get their
tickets from the promoters themselves.42 Promoters participate in
"icing" because it allows them to maintain goodwill while still
getting a profit.43 These deceptive methods only promote
goodwill because of the customers' ignorance of their existence.
Teams work hand-in-hand with the exact group from which they
claim to protect fans. If the general public knew what was going
on behind their backs, they would undoubtedly lose faith in the
promoters and any goodwill would be destroyed.
Lastly, although teams claim to keep ticket prices low to
promote goodwill, and ensure that the average fan can afford to
attend a game, it seems that they are not targeting people who
buy tickets to individual events. Teams try to sell as many
season tickets as possible even though most people cannot afford
them. To prevent a sell-out to season ticket holders, some
leagues and teams have adopted policies requiring a number of
tickets to be reserved for individual sale. The NBA requires that
teams set aside some tickets for individual sale, and the Miami
Heat reserves 500 seats to each game.44 While this might seem
generous, it does not appear so honorable when one compares the
amount of tickets reserved to the total number of seats available.
The American Airlines Arena, where the Heat play their home
games, holds 19,600 people for basketball games45, meaning that
they are only reserving a little more than 2.5% of the total
available tickets. Whether such a policy promotes goodwill by

42 See Tishler, supra note 13, at 100 citing Michael Goldberg, Ticket Rip-
Off, ROLLING STONE, Nov. 1, 1990, at 21 (according to an inside source, concert
promoters of a Rolling Stones tour withheld a total of 150,000 tickets from normal
sale).
43 See Tishler, supra note 13, at 100-102.
44 Sarah Talalay, The O'Neal Effect: Fans Scoop Up Tickets, Gear, SUN-
SENTINEL (Ft. Lauderdale, Fla.), July 16, 2004, at 7C, available at 2004 WL
86072729.
45 Arena Information: FAQ, availableat http://www.aaarena.com.
64 TExAS REVIEW OF Vol. 6:1
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ensuring that "everyone" can attend the games is questionable, at

best.
Nevertheless, as bad as that policy is, it is still better than
some of the others seen in the industry. Unlike the NBA, the
NFL has no such ticket reserve policy, meaning that teams can
sell every seat in the entire stadium to season ticket holders,46
leaving nothing to fans who can only afford single-game tickets.
This has even a greater effect, when one considers the immense
size and capacity of modern football stadiums. For example,
FedEx Field, where the Washington Redskins play their home
games, is completely sold out to season ticket holders,47 despite
having a capacity of 91,655 people48 with plans to further
expand.49 By requiring fans to purchase season tickets to go to
games, the teams are alienating the exact demographic they are
claiming to be protecting: lower income individuals who cannot
afford expensive tickets.

2. Prevent Fraud

Fraud can be an issue, like when selling any type of good, but
most likely it will not be a major one. Scalpers do not have the
incentive, or the means, to forge tickets. Just like any other
business when someone is selling goods that are priced greater
than their inherent value, such as antiques or baseball cards,
there is the temptation to fraudulently produce the goods, and
sell them to the general public. Not everyone has the means to
manufacture the product, and even if they could make them, they
would ruin their reputation by doing so. With tickets, those made
on a home computer will not pass as authentic, and the average
person does not have the money to purchase a machine on the

46 Linda Dums, Out of Town Games Give Green Bay PackersFans Reason
to Get Away, THE POST-CRESCENT (Appleton, Wis.), Sep. 12 2004, at 1A, available
at 2004 WL 88070895.
47 Id.
48 The NFL Stadium Guide: FedEx Field, available at
http://www.stadiumsofnfl.com/nfc/FedExField.htm.
49 Eric Fisher, More Seats for FedEx Field, THE WASHINGTON TIMES, April
6, 2004, available at http://www.washtimes.com/sports/20040405-115340-
6142r.htm.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

black market similar to those owned by Ticketmaster. If a

wealthy ticket scalper decided to do so, it would still not be
beneficial because, like other retail businesses, reputation and
goodwill are very valuable. Once a scalper is known to be selling
counterfeit tickets, word will spread and everyone will know not
to purchase from that seller.5o Although he might make money
that one time by selling fake tickets, it would not be worthwhile
in the long run because his status within the industry and among
consumers will be destroyed.51

3. Promote Safety

Although safety is a legitimate concern of event promoters,

that concern alone is not sufficient to warrant the restriction of
an otherwise legal product. Not all patrons of entertainment
events find scalpers so disturbing. The sight of scalpers has
become so familiar that it is a non-issue when the fan already has
tickets. On the other hand, when the patron has not procured
seats to the sold-out event, the sight of a scalper will be one of the
most relieving and happiest sights he or she can see. Assuming
that scalpers are a nuisance and a safety issue for fans, many
things can be done to limit these negative effects. One possible
solution, although the most drastic, is to require street scalpers to
stay a certain distance away from the event venue. This strategy
is already being used by a number of states in their current anti-
scalping legislation. 52
Another possible solution to the potential nuisance problem is
to confine street scalpers to a particular area surrounding the
venue, perhaps even in their own selling booths. This solution
has numerous positive effects. First, it reduces the safety concern
because the scalpers will be limited to a particular area where
they can be monitored. It eliminates the nuisance effect because

50 Simon, supra note 25, at 1211.

51 Id.
52 See ARIZ. REV. STAT. § 13-3718 (2004) (prohibiting ticket sales within
200 feet of an entry to the stadium); GA. CODE ANN. § 43-4B-25 to -30 (2004)
(prohibiting ticket sales within 1,500 feet from the venue); N.Y. ART & CULT. AFFR.
LAW § 25.03 (McKinney 2004) (prohibiting ticket sales within 1,500 feet from the
venue).
66 TExAS REVIEW OF Vol. 6:1
ENTERTAINMENT & SPORTS LAW

anyone who does not need to purchase tickets from scalpers will
simply not walk by their booths. Second, it promotes competition
and reduces scalpers' ticket prices because customers can easily
compare prices being offered. Third, it produces extra revenues
for the stadiums, since they will be able to rent the booths out to
the scalpers. Venues will be able to charge a fee, whether a
standard rental fee or on a contingency basis, therefore receiving
extra money from this plan. Lastly, it reduces the possibility of
fraud even further, since once a person purchases a ticket and is
denied entry, he can immediately return to the vendor who sold
him the ticket.

4. Reimbursement

Although reimbursement might be a concern for some people

purchasing tickets from scalpers, it is not so significant to call for
the prohibition of scalping altogether. This concern is in fact so
trivial, that a policy of "tough luck" could be acceptable. If a
person purchased a ticket from a scalper and the event was
cancelled, he or she could return the ticket to the box office for a
refund of the face-value, and will be forced to take the loss for
whatever premium he paid. However, the number of times this
might happen will probably be very small. If scalping was
permitted, then sellers would most likely open offices, much like
legal ticket brokers do now. In that case, customers will be able
to obtain a receipt and return their purchase, just like with a
purchase from any other store.53 Since street scalpers do almost
all of their business on the day of the event, and sometimes even

53 Like any store, scalpers would have the ability to set their own return
policies. The author's attempt to discover the custom for ticket brokers lead to four
different options: No refund, full refund, store credit, or the option of refund of
face-value or a full store credit. See generally Telephone Interview with Michael,
Customer Service Representative, StubHub (Oct. 13, 2004) (stating its policy is to
offer no refunds at all); Telephone Interview with Customer Service
Representative, Tickets2Seat.com (Oct. 13, 2004) (stating its policy is to offer full
refunds); Telephone Interview with Customer Service Representative, Todd's
Tickets (Oct. 13, 2004) (stating its policy is to offer full store-credit for amount
paid); Telephone Interview with Lance, Customer Service Representative,
National-Events (Oct. 13, 2004) (stating its policy is to offer a refund of face-value
of ticket or full store-credit for amount paid).
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

after the event itself has started, the odds of someone buying a
ticket from a scalper and then going up to the venue only to find
out that the event was cancelled is very slim. Upon arrival at a
venue, such as a stadium for a football game, it will immediately
be apparent that the game is scheduled as planned: there are
people walking to get to the stadium, food and merchandise
vendors are all around, people are trying to get cars to park on
their lawns, thousands of tailgaters are hanging out by the
stadium, not to mention the hours of traffic to even get to see
these spectacles. If someone is buying a ticket on the street and
is not seeing any of these things, then he or she should already
know that something is wrong.

C. Laws Simply Do Not Work

Another major argument against anti-scalping laws is that

they do not prevent ticket scalping. First, enforcement of these
laws is difficult.54 For one, states do not have the money
necessary to control scalping both surrounding the venue and
online.55 Security surrounding the stadium would have to be
significantly increased to look for sellers,56 not to mention the
cost of the undercover 'sting' operations required to actually
arrest and prosecute these individuals. The amount of money
required to monitor scalpers working through the vast reaches of
the Internet will prove to be an even more expensive and difficult
task. Police forces lack resources to pay an officer to sit at a
computer and search the Internet trying to find scalpers selling
tickets on websites, message boards, or auctions. Assuming they
do find these scalpers selling through the Internet, there is the
additional high cost of trying to apprehend the perpetrators.
Anti-scalping laws are also difficult to enforce because scalping is
a victimless crime. Scalping is a consensual act, where one party
willingly sells and another party willingly buys, with no victim to

54 See Paul J. Criscuolo, Comment, Reassessing the Ticket Scalping

Dispute: The Application, Effects and Criticisms of Current Anti-Scalping
Legislation, 5 SETON HALL J. SPORT L. 189, 214 (1995).
55 Id. at 214-15.
56 Id.
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report a crime being committed. 57

Anti-scalping laws are also ineffective due to the many
loopholes which permit the transactions to continue. For
example, Georgia law permits the resale of tickets at any price, so
long as they were originally purchased for personal use.5s In
addition, scalpers can circumvent anti-scalping laws by selling
tickets on the internet, to places, or from places where scalping is
not prohibited. Scalpers can also sell something other than the
tickets as the main transaction, and offer the tickets as a bonus.
For example, a scalper can sell an autographed photo of a sports
star, and then offer the tickets "for free" to whoever purchases the
autographed photo. Since the sale of sports memorabilia is not
regulated, the scalper will be able to complete this transaction
without fear of arrest. A further way a scalper might be able to
avoid prosecution under the anti-scalping laws would be to offer a
package with the tickets. For example, the scalper could arrange
for transportation to and from the event, and dinner for the
purchasers. By doing this, the ticket buyer could pay face value
for the ticket itself, but a large premium for the package. Under
current legislation, this would not be illegal, since these activities
are not regulated.
Also, it is easy for scalping transactions to occur on eBay since
they do not regulate the exchange of tickets when neither party
resides in the state where the event is occurring.59 For example,
as long as the seller and the bidder are not located in the state
where the event is taking place, there is no limit to how much the
bidder can bid, and the seller can accept.60 eBay determines the
location of the seller and buyer by looking at their registration
and billing information.61 With that in mind, if a person wanted
to open a large-scale ticket scalping operation, he could have
numerous eBay usernames, each with a different address in

57 Tishler, supra note 13, at 121.

58 See GA. CODE ANN. § 43-4B-29(2004) (permitted the resale of tickets at
any price, as long as the seller is at least 1,500 feet away from the venue).
59 See eBay Help: Event Ticket Resale Policy, available at
http://pages.ebay.com/help/policies/event-tickets.html.
60 Id.
61 Id.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

various states. Whenever he offers tickets to an event in a certain

state, he would use a username registered to a different state.
Likewise, a purchaser who wants to purchase tickets to an event
located in a state in which he lives could easily set up a second
eBay username with an address outside their home state. In
addition, eBay does not regulate ticket resales when they are part
of a ticket package, which can include transportation and lodging,
or an item or experience of value that was coordinated with the
promoter, such as a backstage pass, a meet-and-greet, or being a
ball-boy for a day.62 In light of the number of methods available
to scalpers to circumvent the current anti-scalping laws, it is
clear that these laws simply are not working.

III. Arguments in Favor of Legalizing Ticket Scalping

A. America has a Free Economic Market

One of the oldest arguments made in favor of allowing ticket

scalping is that in America there is free trade and people should
be permitted to sell whatever they want at whatever price they
can get,63 with a few exceptions, such as the sale of essential
goods in times of shortage.64 In a free economic market,
consumers are not entitled to a surplus.65 In general, when a
promoter chooses to sell tickets at a value less than the market-
clearing price and thereby not attaining additional profits, it does
not create an automatic privilege for the consumer to receive the
ticket at that price.66 It can and should be asked: Why tickets to
entertainment events are the only legal product that has a
prohibition on resale for profits? There are countless products

62 Id.
63 See Ex parte Quarg, 84 P. 766, 767 (Cal. 1906) (holding that "[t]he sale
of a theater ticket at an advance upon the original purchase price, or the business
of reselling such tickets at a profit, is no more immoral, or injurious to public
welfare or convenience, than is the sale of any ordinary article of merchandise at a
profit.").
64 See generally N.Y. GEN. Bus. § 396-r (2004); TEX. Bus. & COM. CODE
ANN. § 17.46 (2004).
65 Tishler, supra note 13, at 113.
66 Id.
70 TExAS REVIEW OF Vol. 6:1
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that are perfectly legal to resell at top market value such as art,
antiques, and sports collectibles. None of these items have any
prohibitions on their resale, even though a "true fan" of Pablo
Picasso or Babe Ruth will never be able to acquire anything with
their signature on it. If America is a free market, it should be one
across the board, and not place restrictions on the sale of just one
product.

B. Why is There a Need for Ticket Scalpers?

One of the first questions to ask when discussing the

legalization of ticket scalping is "why is ticket scalping a
profitable endeavor?" The answer to this question lies in a
number of various factors, all of which contribute to the demand
for scalpers. One of the main reasons why scalpers are so popular
is that demand simply exceeds supply, evident every time there is
a sell-out of an entertainment event. 67 When something sells out
quickly, that is automatic proof that demand has exceeded
supply.68 Whenever demand exceeds supply, individuals lucky
enough to obtain the product create a secondary market where
they are willing to part with it for something in return.69
Traditionally, or at least when dealing in goods other than
tickets, this was seen as a good thing because the person who
values the item the most will get it in the end.7o The person who
does not want to go that badly will sell it to a person who is
willing to spend a little more to attend.71 This is based on the
most fundamental economic theories of supply and demand.
Demand exceeds supply in so many instances because the
promoters set ticket prices far below what people are willing to
pay for them.72 They set prices low for a number of reasons.

67 See David N. Laband, Singing the Ticket Scalping Blues, 44 THE

FREEMAN: IDEAS ON LIBERTY, No. 9, (Sept. 1994), availableat
http://www.libertyhaven.com/theoreticalorphilosophicalissues/economics/freeenterp
riseandentrepreneurship/singingticket.html.
68 Id.
69 Id.
70 Tishler, supra note 13, at 117.
71 Tishler, supra note 13, at 117.
72 See Laband, supra note 67.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

First, they claim that they want to retain customer goodwill by

keeping prices low and ensuring that everyone can go to the
event.73 Promoters hope that when customers are happy with
low ticket prices they will return as repeat patrons, generating
more revenue.74 Another reason why promoters set ticket prices
below the market-clearing price75 is to ensure a sell-out.76 Sell-
outs generate more revenues from concession stands,
merchandise, and parking.77 These profits offset the money they
could have made by raising ticket prices to the market level. In
addition, sell-outs benefit the promoter because they generate
more excitement around their event.78 Large lines at the box
office and a sold-out game can lead to further media coverage,
advertising, as well as other beneficial outcomes.79 A third
reason why promoters set prices low is to stimulate demand for a
potentially unpopular event.80 Promoters usually offer tickets for
sale months in advance of the performance date when the actual
popularity of an event is uncertain.81 In that case, if the
promoters assume correctly that it will be unpopular, scalping
will be irrelevant since there will be no secondary market for the
tickets. If the promoters assume incorrectly, however, demand
will rise and scalpers will undoubtedly be abundant. Another
reason promoters may sell tickets at a lower price is to attract a
specific demographic.82 When marketing an event to a lower-
income group, promoters must set an economical ticket price to
get the proper demographic in the venue. Finally, promoters also

73 Tishler, supra note 13, at 100-01.

74 Id. at 100 n.73.
75 "The market clearing price for n identical tickets is the reservation
price of the nth highest bidder in a hypothetical auction for those tickets." Id. at
95 n. 34.
76 Stephen K. Happel & Marianne M. Jennings, The Folly of Anti-
Scalping Laws, 15 THE CATO JOURNAL, No. 1 (Spring/Summer 1995), available at
http://www.cato.org/pubs/journal/cj15nl-4.html.
77 Id. at 67.
78 Id.
79 Schacher, supra note 1.
80 See generally Simon, supra note 25.
81 Tishler, supra note 13, at 98.
82 Id. at 101.
72 TEXAS REVIEW OF Vol. 6:1
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choose to sell tickets below the market-clearing price to enable

"promoter insider trading."83 This practice, often referred to as
"icing," occurs when the promoters, or someone working for them,
take bribes to hold back the best seats.s4 This system appeals to
promoters because it allows them to hedge their initial price
analysis, and permits them to obscure their true pricing policy
from the public, retaining customer goodwill.85
Another reason why scalpers are necessary concerns different
individuals' opportunity cost of time. The traditional method of
ticket distribution among promoters has always been queuing.86
This system transforms the price of the ticket, making it
necessary to account for the time the customer spent waiting in
line to purchase the ticket in addition to the face value.s7
Obviously, the value of time greatly varies depending on a
person's wage rate. Someone who earns $5 per hour has a lower
cost of time than someone who makes $100 per hour. As a result,
usually more low-income purchasers of tickets than upper-income
purchasers wait in line, since it is less harmful for the person who
earns $5 per hour to wait for 2 hours than for someone who earns
$100 per hour.ss The additional inconvenience of waiting in line
with sometimes hundreds of other people raises an individual's
price of waiting in line even higher. Ticket scalpers play a role in
this situation because individuals with a higher cost of time are
willing to pay a premium to forego having to stand in line to
purchase tickets. Overall, the queuing distribution method helps
the poor and hurts the rich because it fails to account for a
person's value of time.s9
Often a person unable to purchase tickets at the time they go
on sale turns to scalpers for tickets. Ticketmaster is the world's
leading ticketing company, selling 119 million tickets worldwide,

83 Promoter insider trading is when the promoter withholds the best

tickets, only to sell them directly to scalpers to earn additional profits. Id. at 100.
84 Schacher, supra note 3; Simon, supra note 25, at 1210-11.
85 Tishler, supra note 13.
86 Queuing is the British term for waiting in line. Id. at 103 n. 88.
87 Id.
88 See Laband, supra note 67.
89 Tishler, supra note 13, at 104.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

valued at $6 billion, in 2005 and it has exclusive contracts with

hundreds of stadiums, arenas, performing arts venues and
theatres.90 Ticketmaster starts selling most of its tickets for big
events at 10 a.m. on Friday, Saturday, or Monday.91 Obviously,
most people work Monday through Friday, and as a result would
have to skip work to be able to purchase tickets when they first
go on sale on either Friday or Monday. But that is not to say that
the upper-income fans would be willing to wait in line on
Saturday, just because they are not losing time at work. At that
point, the individual must look to the value of their leisure time,
which might be more valuable to the individual that his value of
work time. Someone who works a full week might see the
weekends as "priceless," because they are the only time available
to spend with their family, friends, or to participate in hobbies.
In that situation they will be willing to pay maybe even a larger
premium to preserve those precious leisure hours. In addition,
some people simply may not be able to purchase tickets at all on
that day, and scalping would be the only means of obtaining seats
to the sold-out event. For example, because Orthodox Jews are
forbidden from touching money or using electricity on
Saturdays,92 they would have no opportunity to attend the game
if tickets go on sale on Saturday and sell out that same day.
Given the fact that the majority of Ticketmaster's sales begin on
Saturday morning,93 many true fans will be prevented from
attending the events.

90 See Ticketmaster: About Us, available at

http://www.ticketmaster.com/h/about-us.html?tmlink=tmhome i abouttm.
91 See Ticketmaster: Ticket Buying Tips, available at
http://www.ticketmaster.com/h/helptips.html.
92 Deuteronomy 5:12-15; see generally The Thirty-Nine Categories of
Sabbath Work available at http://www.ou.org/chagim/shabbat/thirtynine.htm#lb
(the prohibition of 'carrying' includes touching money on the Sabbath); and
http://www.ou.org/chagim/shabbat/thirtynine.htm#2 (the prohibition of 'burning'
includes using electricity on the Sabbath).
93 E-mail from Dan, Customer Support, Ticketmaster.com, to Jonathan
Benitah, author and law student, Nova Southeastern University Shepard Broad
Law Center (Oct. 11, 2004, 21:17:16 EDT) (on file with author).
74 TExAS REVIEW OF Vol. 6:1
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C. Equal Protection

As mentioned in the previous section, event promoters

currently do exactly what they push to be prohibited.94 They
resale, or facilitate the resale in return for a commission, tickets
to consumers willing to pay a higher price for the seat. This is no
different than what ticket scalpers are doing on the street: they
are taking tickets from people who value them low and getting
them into the hands of people who value them the most. By
enforcing anti-scalping laws against street scalpers but turning a
blind eye to teams and promoters who are doing the same thing,
the government discriminates against two groups acting in the
same manner. Much like the court in Washington decided, such
actions fail the rational basis test and are a form of selective
prosecution,95 which will be discussed further in the following
section. Legalizing ticket scalping would alleviate this double
standard. By pushing for anti-scalping legislation, promoters are
actually harming goodwill by preventing some people from
having the opportunity to see their events.

IV.Recent Trends Involving the Secondary Market

With the advent of the Internet, scalping has become a much

easier business.96 While there are no exact figures,
approximately 800 million people use the Internet.97 Unlike the
"olden days" when a scalper's sole method of sales was to stand
outside venues selling tickets, scalpers can now conduct business
sitting in the comfort of their own homes. Although the Internet

94 See supra Part III.B.

95 Doug Pappas, Sell Outs: Major League Baseball should tell its teams to
stop scalping their own tickets, LEGAL AFF., Aug. 2004, at 20.
96 Bruce Orwall, Online: Ticket Scalpers Find a Home on the Web, WALL
ST. J., Feb. 4, 1999, at Bi.
97 The author reached this figure by averaging the two most recent
estimates found addressing the issue. See Internet World Stats: Usage and
Population Statistics, World Internet Usage and Population Statistics (Sept. 30,
2004) (claiming the total world Internet users is 812,931,592), available at
http://www.internetworldstats.com/stats.htm; Global Reach, Global Internet
Statistics (Sept. 30, 2004) (claiming the total world Internet users is 801,400,000),
available at http://www.glreach.com/globstats/.
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

has not completely eradicated scalpers' presence at games, as

evidenced by the number attending these events, it does create a
second outlet for scalpers with much less risk of being caught
because of the difficulty in monitoring their activities.
One of the easiest ways for scalpers to sell tickets now is
through eBay. eBay is known as "The World's Online
Marketplace."s eBay currently has 114 million registered users,
more than 330 million listings in the second quarter of 2004
alone, and expects its consolidated net revenues for 2004 to be
greater than $3 billion.99 eBay is an extremely powerful channel
of sales that has only recently been established. With the ease of
selling through eBay, scalpers now have a means of safely selling
tickets to events without the threat of being arrested. While
eBay can remove auctions that violate local anti-scalping laws, or
report the sale to the proper authorities, loo its policies do allow
for some loopholes as previously discussed.
Another major change in the secondary market is that event
promoters are actually scalping their own tickets. Two Major
League Baseball teams, the Chicago Cubs and the Seattle
Mariners, have begun to offer fans seats at market prices.io
While the two teams are both making tickets available to the
public at a price higher than the face value, they each took a
different approach.
The Cubs decided to tap into the secondary ticket market by
creating Wrigley Field Premium Ticket Services (Premium). The
owner of the Cubs, the Tribune Company, created this wholly
owned subsidiary for the sole purpose of acting as a ticket
broker.102 The company would "buy" tickets from the Cubs, sell
what it could at a premium to the general public, and return
whatever it could not sell back to the team. 103 When the Yankees

98 See eBay, About eBay, Company Overview, available at

http://pages.ebay.com/community/aboutebay/overview/index.html.
99 See Financial Release, eBay Inc., eBay Inc. Announces Second Quarter
2004 Financial Results (July 24, 2004).
100 Amitai Aviram, A Paradox of Spontaneous Formation: The Evolution
of PrivateLegal Systems, 22 YALE L. & POL'Y REV. 1, 12 (2004).
101 See Pappas, supra note 95.
102 See Pappas, supra note 95.
103 Id.
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made their first-ever regular season visit to Wrigley Field in

2003, Premium was selling box seat tickets, with a face-value of
$45, for $1,500, despite the fact that the game sold out in
minutes. 104 This practice did not just upset ticket scalpers, who
argued Premium was doing exactly what the Cubs tried to
prevent scalpers from doing, but also upset Major League
Baseball. Under the League's revenue-sharing program, each
team must put a portion of its revenues into a common fund to be
divided equally among all the teams. 105 By allowing Premium to
"buy" the tickets from the box office for face value and then sell
them to the public for a much greater amount, Premium retained
the bulk of the profits while only contributing 34% of the face
value to the common fund. 106 A judge held that the anti-scalping
law was not violated, however, since Premium was receiving the
profits and the Cubs were not getting a "direct financial benefit"
from the resale, and she allowed Premium to continue
operations. 107
Instead of setting up a brokerage company to sell tickets like
the Cubs, the Mariners decided to act as a middleman between
sellers and buyers and collect a commission for completed
transactions. 108 Although the state of Washington does not have
an anti-scalping law, the Seattle Municipal Code prohibits the
resale of tickets for anything above face value. 109 As a result, in
Washington tickets can be resold at any price as long as it does
not occur in Seattle. In an effort to profit from the secondary
ticket market, the Mariners joined forces with LiquidSeatsio and

104 Id.
105 Id. at 21. See also Internal Revenue Service IRS.gov, Sports
Franchises, (Sept. 1, 2004) available at
http://www.irs.gov/businesses/page/O,,id=7095,00.html#RevShare.
106 See Pappas, supra note 95.
107 See id. See also Maureen O'Donnell, Cubs Prevail in Ticket Broker
Case, CHI. SUN-TIMES, Nov. 25, 2003, available at
http://www.suntimes.com/output/sports/cst-nws-tix25.html; James Janega, Cubs
get court OK on ticket business Judge says laws weren't broken, Nov. 24, 2003,
availableat http://www.wrigleyexpansion.com/art68.html.
108 See Pappas, supra note 95, at 21-22.
109 See id.
110 LiquidSeats was an online ticket vender, but recently changed its
2005 ANTI-SCALPING LAWS: SHOULD THEY BE FORGOTTEN?

created the Ticket Marketplace. Ticket Marketplace allowed

season ticket holders to offer their seats for any price, regardless
of whether it is below, at, or above face-value. For providing this
service, the Mariners charged the buyer 15% of the final
transaction price and also 10% from the seller. In 2003 alone,
Ticket Marketplace earned the Mariners more than $100,000.
During the time that the Mariners facilitated the sale of its
tickets at a premium on Ticket Marketplace, the team was also
vigorously trying to enforce anti-scalping laws outside the
stadium by hiring off-duty police officers to catch scalpers. When
two scalpers attempted to have their charges dismissed on the
ground of selective prosecution, a Seattle Municipal Court judge
held that only enforcing anti-scalping against street scalpers was
not rationally related to a legitimate government interest, and
that the police department was engaged in "disparate treatment
[that] is intentional, purposeful and deliberate." While this
ruling did not invalidate the current Seattle anti-scalping
ordinance, it did declare that the police acted wrongly in
enforcing the law against one group while ignoring it for another,
and, as a result, will make enforcement of the law surrounding
the stadium extremely difficult. 111

V. Proposal for Change

For all the reasons stated, the author believes that the current
anti-scalping legislation should be entirely eliminated. Each
state or local government should establish various provisions to
ensure that ticket scalping is a safe business. To relieve the
nuisance effects and possibility of counterfeiting among street
scalpers outside arenas and stadiums, scalpers can be restricted
to certain areas surrounding the venue, or even to booths within
the property.
At the very least, states should establish a system in which
scalpers can apply for broker status so that they can resell tickets
at a premium. Much like the current system set up for brokers,
they will have to register with the state, pay a fee, and obtain

name to 'StubHub'. See id. at 22.

111 See Pappas, supra note 95, at 21-22.
78 TExAS REVIEW OF Vol. 6:1
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licenses to sell tickets. Furthermore, sufficient penalties should

be implemented to deter criminal activities, such as the sale of
fraudulent tickets.

Conclusion

After looking at the history of scalpers and the law, it is clear

that scalpers, despite years of harassment and threats of
punishment, remain an important part of the ticketing industry.
The current legislation is simply not working and should not have
been enacted in the first place. The laws go against America's
history of capitalism and free trade. They are unconstitutional
since all of the government interests behind the laws are not
legitimate ones. The laws do not take into account the people who
are unable to purchase tickets on the date of sale, and leaves
them no alternative means to obtain tickets besides breaking the
law. The current legislation is ineffective, and the laws are a
violation of equal protection because the police are choosing to
enforce the laws against certain groups while ignoring the actions
of others.
For these reasons, something must be done to remedy the
problem. Current laws should be repealed, allowing scalpers to
sell tickets at whatever price the market dictates. To make sure
that no foul play occurs, state and local governments will have
the power to adopt regulations to police the industry. In addition,
criminal penalties should be implemented to prevent dishonest
actions.