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JAY GOLDBERG: Capping ticket resale prices would be a big mistake

This year’s World Cup games in Canada will set the stage for additional live events where prices will surely surge into the thousands

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As the Toronto Blue Jays made a historic run for the World Series championship last year, coming within inches of winning it all, one of the stories that emerged during the final two games in Toronto had to do with ticket prices, especially on the resale side of the market.

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Ticket prices for games six and seven at the Rogers Centre were jaw-dropping, with the average resale price for game seven coming in just shy of $3,000.

JAY GOLDBERG: Capping ticket resale prices would be a big mistake Back to video

While those sky-high prices were part of a Cinderella story quest from a team that hadn’t been to a World Series since 1993, this year’s World Cup games in Canada will set the stage for additional live events where prices will surely surge into the thousands.

Ontario Premier Doug Ford responded to the sky-high resale of Blue Jays tickets by musing about rethinking his government’s decision to repeal legislation — enacted by the previous Liberal government — that capped the price of resale tickets at 50% over cost, going so far as to say that resellers were “gouging” Blue Jays fans. Both of Ontario’s major opposition parties, the NDP and the Liberals, have called on the Ford government to bring the cap back.

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Price caps not that simple

But, while a resale price cap might sound like a quick fix to high prices, it’s not quite that simple. The biggest worry here is that price caps tend to simply drive ticket resales away from safe and regulated platforms and onto unregulated platforms that are ripe for fraud. The U.S. Government Accountability Office studied this exact issue and found that price caps simply push consumers toward unregulated markets with high risks of fraud.

A recent study looking at Australia and Ireland, two countries with price caps, and the United Kingdom, a country that doesn’t have a price cap, found that resale fraud was four times lower in the U.K. compared to countries that have price caps. And speaking about fraud, the study found that in Ireland, 14.1% of concert tickets and 10.7% of sporting event tickets were fraudulent.

Evidence shows that when folks who want to sell their tickets face price cap laws, they simply turn to unregulated platforms on social media, like Facebook Marketplace, to sell their tickets. That’s precisely what happened in Australia during Taylor Swift’s Eras Tour, when more than $260,000 was lost in ticket scams by fans seeking tickets on unregulated platforms fueled by price caps.

Cap would further monopolize market

There’s also an economic argument to be made against capping resale prices. Research from the U.K. found that a face-value ticket price cap would cost the U.K. economy 183 million British pounds in lost economic activity and an estimated 25% of potential resellers would just decide not to resell their tickets in a capped environment, with many simply not attending events at all, leaving empty seats that hurt revenue for concessions, travel and hotels.

Finally, the push for resale caps would further monopolize the market for ticket sales, because it is currently overwhelmingly occupied by LiveNation/Ticketmaster. And, according to the Progressive Policy Institute, a price cap essentially locks in that monopoly status. The Institute has argued that “legislation to cap resale ticket prices and fees targets the only market with competition, leaving the monopolized and broken primary ticket market to operate unfettered.”

Given that 80% of all major venues sell through LiveNation/Ticketmaster, a resale price cap would all but guarantee that the “monopolized” and “broken” primary ticket market would be cemented in place, if not worsened.

LiveNation/Ticketmaster actually supports resale price caps, precisely because they would allow it to expand its market share. And, when ticket resale prices are capped, that makes it even more likely that the original ticket prices, over which Ticketmaster has a virtual monopoly, will increase. Although the governments of Ford and B.C. Premier David Eby will likely face pressure to introduce resale ticket pricing caps ahead of World Cup games in Toronto and Vancouver, going in that direction would be a mistake. It would only increase fraud, hurt economic activity and work to benefit a monopoly that already dominates the ticket sale system.

Ford should stand firm on his decision back in 2019 and reject calls to reintroduce price caps, while Eby should resist introducing similar legislation in his province.

Jay Goldberg is the Canadian affairs manager at the Consumer Choice Center  

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