The Secondary Event Ticket Market

The Internet has become a major playing field for buyers and sellers of event tickets in the extremely competitive $10-$12 billion event ticket market -- particularly for sold-out sports games and very popular music concerts and plays. Called the secondary event ticket market, this is the part of the event ticket market that includes tickets bought by professional brokers as well as extras that season ticket holders can't use. People estimate the size of the secondary event ticket market to be at about $2 billion although the estimates of its size vary widely.

A huge market with tons of small players, the pre-Internet event ticket market was a perfect match for the Internet around 1999, and as we fast-forward to 2006, hundreds mom-and-pop electronic storefronts, auction-based websites and online destinations now resell secondary event tickets. While many of these are smalltime operators, a few major players also exist. As one would expect, eBay members are also in on the act and in a big way. In fact the biggest players of all in the secondary event ticket market are the members of eBay, which as a group sell more than $300 million in event tickets annually and boast by far the biggest community of buyers and sellers.

But members of eBay also offer the biggest potential for fraud. Like everything else sold on eBay, stories abound of people getting ripped off by buying fake event tickets. Although buyers can check out how others have rated a given seller, eBay is largely operated on an honor system and offers fertile ground for fraud.

To work around this event ticket fraud problem, some secondary event ticket sellers offer 100% guarantees. If you get a bad ticket, they replace it for free. Other secondary event ticket sellers take possession of the event tickets and verify them before listing the event tickets as being available for sale.

Online event ticket sales are growing as consumers become more comfortable shopping on the Internet. One source estimates that online event ticket sales will grow by 27 percent this year.

Even professional sports teams are involved in the secondary event ticket market. The demand for Chicago Cubs tickets is so high that the team set up their own secondary event ticket market with a team-owned ticket broker.

Reselling event tickets, otherwise known as "scalping," is not against the law. Selling event tickets, however, is often against the law where the event tickets are sold in the immediate vicinity of an event.

Thirty-eight states, including California, have no meaningful restrictions on the resale of event tickets. In twelve states, the resale of event tickets is regulated. In about half those states, ticket brokers who take inventory must register with the state. In the remaining six states, event tickets cannot be resold above a maximum price premium. In these states a broker might be allowed to charge 20 percent more than the event ticket's face value at a maximum.