Scalping Super Bowl Tickets on the Internet

When the National Football League (NFL) sells tickets to the Super Bowl, it establishes face values (the prices printed on the tickets) that are far below the market prices. The NFL understands that there will be a large excess demand for tickets sold at face value. It therefore accepts requests for tickets a year in advance of the event and then chooses the recipients of the tickets in a random drawing.

One week before Super Bowl LIII, hosted by Atlanta, Georgia, on February 3, 2019, tickets with face values between about $1,000 and $5,000 were sold on several Internet sites at prices ranging from $2,500 to $20,000, with the average resale price exceeding $6,000.8 In other Super Bowls, markups have been even higher, with market prices as much as 10 times the face value.

The winners of the random drawing are indeed lucky. They can use the tickets themselves or resell the tickets at a handsome profit. The existence of an easily accessible, active resale market helps move the tickets ultimately into the hands of people who most highly value the opportunity to see the game in person.

Two types of transactions costs affect the possibility of resale. First, in some states resale ("scalping") is illegal. A law prohibiting resale is likely to be more effective when the penalty for a violation is high and when the probability of being caught reselling is high. Even though resale is illegal in many areas, it may nevertheless be common where penalties are low or there is little risk of being caught. Second, resellers incur transactions costs in searching out supplies of tickets and locating buyers.

In recent years, the Internet has lowered both types of transactions costs considerably. Buyers and sellers can conduct business from the comfort of home or the office. With a website, scalpers can widely advertise tickets at a very low cost and with less risk of being caught than would be the case if the transactions took place in the shadow of the stadium.

If resale involves low transactions costs, total surplus will be close to the maximum possible, as assumed in Case 1 of Figure 10.7 in the discussion of price ceilings. Part of the surplus may go to middlemen (scalpers and brokers) instead of the final holders of the tickets, but the net benefits do not disappear from the economy.

Of course, scalping typically involves a certain amount of risk, including the possibility that the tickets are not as desirable as advertised or perhaps are not valid at all. Those supporting laws against scalping often cite examples of fraud. If the original sellers of tickets or governing authorities are willing to impose very strict conditions, it may be possible to reduce resale greatly. For example, the seller could put the buyer's picture on the ticket (as is often done with monthly passes on urban transport systems) or write the buyer's name on the ticket and require the buyer to produce a picture I.D. when she uses the ticket (as airlines often do). However, these measures add significant costs to businesses and to law enforcement efforts and are often difficult to implement.

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