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Ticket brokers see lost business, uncollected taxes from auction law (AP)

06/15/2005

SPRINGFIELD, Ill. - Legislation meant to help consumers by letting them sell unwanted sports and concert tickets on the Internet could end up hurting small business and weakening consumer safeguards, ticket brokers argued Monday.

"They're putting Illinois business at an unfair disadvantage. ... It's all baloney," said Barry Fox, president of the Central States Ticket Brokers Association.

Until now, it has been illegal for people to resell their tickets for more than face value. Only registered ticket brokers could do that. But lawmakers voted to change that and let people auction off their tickets on sites such as eBay.com and StubHub.com.

Gov. Rod Blagojevich plans to sign the bill into law.

"This will help bring more competition to the market, bring down ticket prices and give people the freedom to make their own arrangements," Blagojevich said in a statement. "If you can buy and sell all kinds of products online and get a fair price or make a reasonable profit, you should be able to do the same thing with tickets for events in Illinois."

Several ticket brokers said they don't object to the new competition so long as everyone plays by the same rules. That won't happen under the new law, they said.

Brokers say they must charge an amusement tax on tickets for events in Chicago, such as Cubs and White Sox baseball games or concerts at the United Center. The tax is generally 8 percent of the price above a ticket's face value.

But people selling tickets on the Internet almost certainly will ignore the tax, giving them more room to sell for less. Sites like eBay are not required to collect it; they simply have to remind buyers that they may owe tax on the ticket.

"It puts us at a disadvantage in the Chicago market," said Michael Gallagher, president of All About Tickets in Orland Park. "The jury is still out, but in the end it could devastate our business."

Fox, from the brokers association, said registered brokers pay the city of Chicago about $2 million a year. If more tickets are sold privately and brokers go out of business, that revenue will dry up, he said.

Chicago Mayor Richard Daley's office did not return a call seeking comment.

Fox also argues the new law will weaken protection for consumers.

Brokers have been required to maintain a $100,000 fund - at least half in cash - to reimburse customers for fraud and canceled events and to offer a toll-free hot line for Illinois customers.

The new legislation does not require Internet companies to have an Illinois-only hot line, and it lets them maintain an insurance policy instead of a cash fund to cover refunds - an arrangement that Fox predicts will create hassles and delays for customers.

Supporters, however, say eBay and its competitors will be required to offer full refunds. Most other states already permit this kind of ticket auction, they point out.