Scalping can be explained with high school textbook economics. When ticket prices are set too low to balance demand against the supply of seats, any person holding a ticket can find a sea of buyers willing to pay more than asking price for the seat.
Increasingly, that ticket holder is not a guy at the theater door with an extra ticket. It’s a person employing sophisticated software, a so-called ticket bot, to buy a huge number of tickets moments after the theater releases them. In the time a human buyer can find the calendar feature on a ticket site, a scalper’s network of hundreds of bots has already bought the maximum limit of tickets for multiple days of shows.
With the speed of the internet, scalpers have greater reach into ticket purchasing than ever before. The professional tier of scalpers buys and sell thousands of tickets a year, and leverages millions of dollars of inventory. Some scalpers use custom-written software to manage their inventories and adjust their prices based on real-time market analysis, much like traders on Wall Street. (It should come as no surprise they prefer to be called brokers.)
For those of you thinking, wait a minute, this doesn’t seem fair that so much of the profits are going in the buying/selling of tickets instead of the producer of the show…
In April, the New York State Attorney General, Eric Schneiderman, issued a comprehensive report looking at current law and abuses, ultimately concluding changes are needed to fight the persistent use of bots. Subsequent lawsuits extracted settlements and penalties from some nonlicensed or bot-using scalpers.
Want a deal when it comes to buying Hamilton tix (or other high-demand performances), read on:
Fans can still get a seat at “Hamilton” for less than a thousand dollars, if they are willing to wait for it — either buying months in advance from the theater or just hours before a performance, as scalpers drop their asking price.