The Bad Economics of the Government’s War on Ticket Touts

Last week Lisa Nandy, the culture secretary, announced a consultation for a clampdown on ticket reselling for sports, entertainment and live events. Her proposals include price caps on secondary ticket markets and a review of “dynamic pricing” — those algorithms that make primary ticket prices fluctuate as consumer demand changes. All done in the name of helping fans, of course, but the consequence will be less efficient markets overall.

Let’s pull off the plaster. Touts and resellers are widely loathed as parasitic middlemen, but in economic terms, they provide a valuable service. They buy from platforms or ticket holders at a price both parties are happy with, take on the hassle and risk of finding new buyers, and resell tickets —usually at higher prices. The function they play is to help ensure that events are attended by more people who place a higher monetary value on being there — whether it’s a coveted Taylor Swift concert or the FA Cup final.

The government sees this as exploitative to final buyers, but the higher prices simply reflect the basic economics of ticket scarcity. Big events have limited seats, and organisers often underprice tickets on purpose to guarantee sell-outs and avoid looking greedy. The result? Excess demand, endless online queues, crashed websites and disappointed fans. Resellers step in to reallocate tickets, taking a cut for their trouble. It’s not perfect, but it’s more efficient than a first-come, first-served system that leaves tickets with whoever clicked fastest.

Naturally, secondary ticket buyers (like everyone) would prefer to pay less than they do. Yet the government’s claim that resellers “cost music fans an extra £145 million per year” is nonsense. These purchases are voluntary. Buyers stump up those higher prices precisely because they value the ticket (the benefit) more than the price touts charge (the cost). The alternative isn’t those buyers getting tickets at face value — it’s not getting tickets at all.

Economists have long understood this. In a 2012 Kent Clark survey, 68 per cent agreed that laws limiting ticket resale made audiences worse off, while just 8 per cent disagreed. Why? Well, regulations like Labour’s plan to cap secondary ticket prices at 30 per cent above face value don’t alter the underlying scarcity problem. Instead, price controls entrench shortages that push more transactions underground, encourage counterfeits, and force venues to dream up “true fan” schemes to ensure a better allocation. More casual fans willing and able to splash out for one-off special occasions suffer most.

Admittedly, economists’ views on this aren’t widely held. Labour’s plans will sound great to frustrated users who balk at high resell prices. Yet no ticket allocation method is universally loved. Non-transferable tickets sound fine until you realise fans can’t resell if plans change. And price discrimination between customers has sparked backlashes, too.

Dynamic pricing, for example, adjusts prices in real-time according to demand levels, letting platforms capture some of the value touts currently pocket by pricing more closely to customers’ willingness to pay. It even signals when adding more dates could be profitable. Yet Labour hates this approach, too. While officially the party’s concern with it is a lack of “transparency”, Sir Keir Starmer slammed Ticketmaster’s dynamic pricing for Oasis tickets last year, vowing: “We’ll grip this and make sure tickets are available at a price people can actually afford.” As if politicians can magic up more Wembley stadium seats!

Thomas Sowell, the economist, famously said: “The first lesson of economics is scarcity. The first lesson of politics is to disregard the first lesson of economics.” Labour seems intent on proving him right. Starmer promised us that regulators would prioritise growth, yet his government is wasting its scarce time regulating football and capping ticket resale prices — misguided distractions from the real reforms needed to deliver a stronger economy.