Psst, did you hear? Ticket scalpers are going legal

02/26/2007

Free-market forces finally catch up with the ticket trade in Minnesota, which is about to repeal its ban on reselling tickets.


By Conrad Defiebre,
Star Tribune
Last update: February 25, 2007


Former Vikings coach Mike Tice paid a $100,000 fine to the NFL for doing it. Ten lesser lights pleaded guilty in Minneapolis last year for doing it.

But in a remarkable reversal, Minnesota is poised to repeal its law against ticket scalping. Even the state's pro sports teams and police leaders have dropped their outspoken opposition to scrapping the law, which has been in effect in various forms for nearly a century.

A bill to legalize a long-standing brisk trade in marked-up admissions to sporting events and other attractions is breezing through the Legislature with hardly a whimper of debate, and the 1913 law is likely to be stricken from the books as of Aug. 1.

"Adam Smith would be proud of us now," state Rep. Phyllis Kahn, DFL-Minneapolis, said last week as a committee sent the measure to the House floor for a final vote that is expected within two weeks.

"Finally," she might have added. Kahn has pressed for the change since 1987, when tickets for Twins World Series games at the Metrodome fetched up to $500 for out-of-state brokers.

But it has taken nearly 20 years for most other lawmakers to embrace the free-market principles laid down by economics pioneer Smith centuries ago -- at least when it comes to a hot ticket to a must-see game.

Why the change of heart?

Beyond the softening of opposition from teams and law enforcement, reselling tickets at any price has become legal in all but about a dozen states. And the emergence of online ticket brokers has made Minnesota's ban increasingly irrelevant.

"That's where the business is heading," said Brian Obert, co-owner of Ticket King, which has built a thriving Internet trade in Twin Cities pro sports admissions from the scalping-safe haven of Hudson, Wis., where the practice is legal. With legalization in Minnesota, Obert added, "we expect more competition, but we also hope the market expands as it becomes more of a mainstream thing."

Obert, who lives in St. Paul, now employs 10 people across the St. Croix River out of reach of Minnesota law, but said if the law changes "we would want to move closer to our customers in the Twin Cities."

'Ticket brokers'

Despite the law, an intrepid band of several dozen scalpers -- or ticket brokers, as they prefer to be called -- regularly works games at the Metrodome, Target Center and Xcel Energy Center. They even have a gentleman's agreement with the Twins to stay across the street and out of ticket lines, said Matt Hoy, the team's vice president of operations.

"I see a lot of cash changing hands out there," Hoy said.

Don't look for shady characters in sharp-lapeled checkered coats, though. One scalper who attended a House committee hearing on the repeal bill last week showed up in a preppy pastel sweater. Interviews with a few showed them to be opinionated and outspoken, at least off the record (none wanted to be named in the newspaper), but not overly inclined to rock the boat.

They said decriminalization would probably hurt their business rather than help it and might not end their periodic run-ins with the law. That's because they might still be denied city peddlers' licenses, without which they can't legally work the streets.

In a joint letter to a legislative chairman last week, officials of the Twins, Vikings, Timberwolves, Wild, Lynx and Swarm lacrosse team offered no opposition to the repeal but called for municipal licensing of ticket resellers to discourage the passing of counterfeits. They also asked for cities to enforce "scalping-free zones," requiring resellers to stay "a reasonable distance from facilities."

But that's a far cry from the teams' lobbying to derail previous efforts to legalize the practice. "We understand legislators who believe this is not a priority for the police and the courts," said Pam Wheelock, executive vice president of the Wild and Swarm.

The Minnesota Chiefs of Police Association also fought earlier repeal moves but is staying on the sidelines this time, at least for now. Executive director Harlan Johnson said that position could change, adding: "I can see big operations coming in and buying up all the tickets."

Victimless crime

Minneapolis police counted 22 scalping cases last year involving 28 individuals, 19 of them during the Twins' brief playoff run. The city attorney's office said 25 cases were referred to it for prosecution of the scalping crime, a misdemeanor carrying maximum penalties of 90 days in jail and a $1,000 fine. The results: 10 guilty pleas, five cases dismissed, three diverted without a plea and seven still pending.

In 2005, when the Twins didn't make the playoffs, Minneapolis police recorded only four scalping cases.

Timothy Taylor, a St. Paul economist who has taught at Macalester College and the University of Minnesota and is now managing editor of the Journal of Economic Perspectives, said repeal of the scalping law may well cut into individual resellers' livelihoods.

That's because now "you have to worry that you might get arrested," he said. "It limits the market to people who are ready to break the law."

Tice, the former Vikings coach, apparently was in that group. He admitted selling Super Bowl tickets in 2005 for as much as $1,900 apiece after buying them for $500 to $600. The NFL fined him heavily for violating its rules -- reportedly a common but unpunished infraction by many coaches and players. But Tice didn't face criminal prosecution.

Taylor wonders what that furor was all about.

"It's as close to a victimless crime as you're ever going to get," he said. "And the possibilities for reselling have gotten so easy. People are more willing to pay high prices for highly desirable seats. Once you've gotten used to that, the whole notion of scalping becomes somewhat archaic."