Ticketmaster reportedly has secret deals with scalpers that cheat other customers

Key Points
  • Ticketmaster has been quietly arranging deals with scalpers even while criticizing the practice in public, according to a new report.
  • The company offers software that helps scalpers resell tickets on their own sites.
  • Ticketmaster earns a second commission on resold tickets.
Ticketmaster tickets and gift cards are shown at a box office in San Jose, California.
Paul Sakuma | AP

Entertainment company Ticketmaster has been secretly setting up deals with scalpers even while publicly criticizing the practice, according to a new report from Canadian media groups The Star and Canadian Broadcast Company.

Ticketmaster essentially has a monopoly on the sale of tickets to all kinds of events, including sports, music and theater in North America and the United Kingdom.

The company has been deeply critical of scalpers — people or businesses who buy tickets and then resell them at higher prices for a profit. It limits the number of tickets per purchase to prevent scalpers from buying up large chunks of tickets for resale. It has even called for laws against the practice, the report said.

Yet reporters from the Star and CBC discovered that Ticketmaster is secretly cultivating a secondary industry with scalpers, in violation of its own rules.

The Live Nation and Ticketmaster monopoly
The Live Nation and Ticketmaster monopoly

The company uses software called Trade Desk, which allows resellers to buy tickets from Ticketmaster and then instantly post them to resale websites. Ticketmaster earns two commissions in the process, when the tickets are initially purchased and once they are resold on verified resale websites like StubHub or Vivid Seats.

University of Toronto business professor Richard Powers called the practice unethical and said it should be outlawed.

Ticketmaster parent Live Nation was not immediately available for comment to CNBC, but spokesperson Catherine Martin told the Star the law of supply and demand makes a secondary market in ticket selling inevitable.

"As the world's leading ticketing platform … we believe it is our job to offer a marketplace that provides a safe and fair place for fans to shop, buy and sell tickets in both the primary and secondary markets," she said.

Read the full story at the Star.