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Open ticket market benefits the fans

Posted by Marjorie Pritchard  September 20, 2011 04:30 PM

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By Chris Tsakalakis
Massachusetts sports teams continue to dominate in the regular season and during playoffs, leaving many fans begging for tickets to sold-out games like the recent Stanley Cup finals. Luckily, fans have been able to turn to the secondary market to buy and resell tickets to high demand games and events. Unfortunately, while not regularly enforced, this practice is sometimes technically illegal, due to a state law from 1924 that limits ticket resale to two dollars above face value.

While the current Massachusetts ticketing legislation attempts to regulate ticket pricing, what it is actually doing is limiting consumer ownership rights and allowing ticket prices to increase by limiting the supply of resold tickets, thereby increasing natural demand and market prices.

Think about buying tickets like buying shares of a stock. When you buy a share it becomes your property; you can hold it or sell it as you choose. In much the same way, when you buy tickets to an event, you should have the ability to control the resale and not be bound by price restrictions or other hurdles.

To ensure that fans are in complete control of their tickets, Representative Michael Moran proposed a ticket resale bill that would allow for a fair and open secondary ticket market by removing the current price cap on ticket resale and strengthening the power bestowed to individual ticket resellers. The bill would require both primary and secondary ticket sellers (except individuals reselling fewer than 80 tickets per year) to offer basic consumer protections to buyers, including toll-free numbers for complaints, and full refunds if an event or ticket is cancelled, or if seat location and other features were misleading or misrepresented.

This bill would also limit the use of restrictive paperless ticketing by companies such as Ticketmaster, which require the original purchaser to show a photo I.D. and matching credit card in order to enter the venue. Paperless ticketing makes it all but impossible for the ticket owner to sell or give away their tickets under any circumstances, meaning that if the purchaser cannot attend the event, the ticket must go unused.

While opposing parties argue that ticket prices become unrealistically expensive without a price cap, what is often overlooked is the stifling affect that regulating prices can impose on a free market and on consumer protection. Rather, an open online marketplace, with entrenched consumer protection, actually benefits consumers. Following the basic principles of supply and demand, as more consumers use the secondary market, the availability of tickets increases, competition rises and ticket prices often decrease. In fact, many tickets sold on StubHub—the world’s largest ticket marketplace, and my employer—are actually purchased at or below face value.

Kevin A. Hassett, director of the Economic Policy Studies in Washington, has found that anti-scalping laws actually increase ticket prices. His research found that ticket prices in resale-regulated states, where anti-scalping laws are enforced, are higher than in non-regulated states where a competitive marketplace defines ticket prices.

Moran’s bill ensures the secondary ticket market in the state continues to allow for the transfer of tickets between fans in a convenient, safe, legal and reliable environment. It protects consumers and guarantees that fans will enjoy a truly free market, unbound by price caps and restrictive paperless ticketing that encroaches upon personal property rights. I applaud the Massachusetts State Legislature for tackling this issue to protect fans’ rights by allowing them to remain in control of their property.

Chris Tsakalakis is president of StubHub, an online marketplace for buyers and sellers of tickets.

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