| 1. The initial price of the ticket serves as advertisement to get more people interested in the event than if it was advertised at the scalped price. Some fraction of the people will end up paying the higher price anyways, even if it was more than they intended to spend. The chance of "getting lucky" and getting a ticket at the low initial price is a powerful draw, especially if each buyer gets lucky a few times. 2. Are you sure the scalpers and the agency selling the original tickets are independent? Even if they are on paper, in many locations there is evidence of a local cartel. 3. The initial sales provide revenue up front to pay for the costs of the event, vendors, etc. This reduces the amount of cash reserves the seller needs, sometimes very dramatically. 4. Many scalped sales (used to be, not as much anymore) were cash transactions. This used to be used as a pretty significant tax dodge: Sell tickets for $50 face value to your affiliated scalper, pay tax on this sale, scalper sells tickets for $200 and does not pay tax on this secondary sale, or underreports the number of secondary tickets sold. Lots of shenanigans here to make your profitable scalping business look like it's making a small loss on paper. 5. Especially in the context of a local or regional cartel, each ticket sale represents the opportunity to move capital between entities. Physical tickets can be an effective vehicle for small-medium scale money laundering: Dirty money/entity buys the tickets, clean entity resells them. Basically as soon as you drop the assumption that the ticket sellers and scalpers aren't related in some way, there are a lot more profitable reasons for the ticket sellers to "leave money on the table". |