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Ticket Scalping in Missouri – Now It’s Legal

2007 November 28
by Phil Miller

In Missouri, ticket scalping at prices above face value is now legal..

And there was some rejoicing (and economic development???).

To wit: Hal Wagner, owner of Ace Sports & Nationwide Tickets at Oak Park Mall, already has opened a location at Independence Center.

“We’ve been waiting for that ridiculous law to be repealed,” said Wagner, whose company buys and resells tickets at prices that exceed face value. “This is a great, great thing for Missourians.”

But ticket scalping was still illegal last weekend when the University of Missouri and the University of Kansas met in Kansas City to determine the Big XII North champion in football. But you wouldn’t have known it had you looked at the vigorous secondary market in tickets around Arrowhead Stadium.

Before the Border War on Saturday night at Arrowhead, there was the Price War in the parking lot.

“Tickets! I got tickets!” a man named Bill yelled as cars crept by him on the way to the MU-KU game. “Two tickets, $600!”

One week before a new Missouri law will kick in legalizing ticket scalping at sporting events, scalpers like Bill, who declined to give his last name, combed their way through the crowd. Tickets with a face value of $30 to $55 sold from $100 to as much as $400.

“This is a day to make money,” he said.

Underpriced tickets create opportunities for scalpers. As I’ve written before, event tickets are priced with an eye towards expected demand and are oftentimes set months in advance. No one can throw anyone under the bus for underpricing this particular event. Who’d have thought, coming into this game, that MU and KU would have been ranked 4th and 2nd respectively in the BCS ratings with one loss between them and with both schools sporting national championship hopes? Not I, said the fly. The Missouri Tigers, with all their returning talent, had not had many Novembers to remember recently. The Kansas Jayhawks were coming off a 0.500 season in which they were not invited to a bowl.

The beauty of legalized scalping is that it allows tickets to go to the people who value them the most and it allows more information to be used in the setting of ticket prices. But the first article notes that scalping today has some new problems.

Missouri Attorney General Jay Nixon recently cracked down on ticket brokers, suing three of them for scalping tickets to an upcoming Hannah Montana concert at the Sprint Center. Nixon later asked for a temporary restraining order against an Illinois broker who was selling tickets to the recent Missouri-Kansas football game at prices well above face value.

“Unfortunately, the elimination of this consumer-protection tool has come at a time when the ability to take unfair advantage of consumers has grown significantly through the Internet,” said Nixon spokesman Scott Holste.

If he’s talking about the ability of scalpers to snap up loads of tickets when they first go online, what amounts to butting into a virtual line, that’s not the fault of scalping per-se. You can argue that legalizing scalping increases the benefits from butting-in, but it’s not scalping that is the root cause of this problem. It’s the butting-in.

If you are cooking a turkey and you realize you might burn your hand, you don’t throw away the food to keep from getting burned. You take other precautions to keep from getting burned. Why ban an activity where people engage in voluntary trade when the problem lies elsewhere?

Why not ban computers? Technology has lowered the cost of butting in, so if you make an argument that scalping should be banned because of the butting in, you can make a similar argument about banning computers.

Of course banning computers is not the optimal solution, but neither is banning the secondary resale of tickets above face value.

(Cross-posted at Market Power)

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