Ticket Fraud: Its Impact and the Cost of Market Regulation

Introduction

The UK remains one of the world-leaders in hosting events. Despite the industry facing significant challenges, such as the increasing cost of transporting goods and services, venue running, and insurance premiums, and a shortage of skills, it remains one of the UK’s most valuable and culturally important sectors. In 2023 alone, the direct value of the events industry was estimated to be £61.65 billion to the UK economy. The industry saw a 17% growth between 2022 and 2023 with further growth forecast. An estimated 85 million people attend events each year in the UK, supporting 775,000 jobs.

In autumn 2024, the government introduced a proposal to regulate secondary ticket markets in the UK, primarily through the use of a price cap. Following the public backlash to the controversially high pricing of resale tickets for the recent comeback tour of Oasis, it is the government’s hope that introducing such a measure would prevent sellers from being able to charge such high prices and thus get a better deal for consumers.

The effectiveness of this kind of measure relies on second-hand ticket vendors not having options outside of the regulated second-hand resale platforms for them to go to to connect with customers. With nowhere else to go, these second-hand ticket vendors would of course have to comply with the price cap. 

There are, however, a number of unregulated avenues that ticket sellers could easily use in order to avoid the price cap and thus maintain their profits under the new regulatory regime. The most notable route here would be through social media sites such as Facebook Marketplace, X (formerly Twitter) internet forums, etc. There are plenty of other options for unregulated sales.

There will therefore be strong incentives for resale ticket sellers to migrate to these unregulated marketplaces, restricting the supply of tickets on regulated platforms and forcing many consumers to search on unregulated platforms, especially when it comes to more sought after tickets.

The problem is not just the high likelihood of the proposed regulation being ineffective in keeping second hand ticket prices to an acceptable level. In pushing more sellers (and therefore buyers) into unregulated markets, the vulnerability of UK consumers to ticket fraud will likely increase.

This is not the first time a government has attempted to introduce a price cap to second hand ticket markets. In Victoria, Australia, The Major Events Act 2009 made it illegal to sell or advertise for resale tickets for more than 10 per cent above face value. In Ireland,  the Sale of Tickets Act in 2021 prohibited the resale of tickets or ticket packages for a price exceeding their original sale price for designated events and venues.

This report uses a comprehensive and novel dataset to compare ticket fraud rates across the UK and these two regulated markets in order to test the hypothesis of whether the introduction of price caps to secondary ticket markets does increase the exposure of consumers to the risk of ticket fraud and by extension, whether the legislation proposed by the UK government will deliver the gains for consumers it promises.

Headlines

The findings show that ticketing fraud rates are almost four times higher in Victoria and Ireland than the UK, with this result holding across essentially all ticket types, from sport events to concerts to exhibitions. While it is not possible to use data to establish a direct causal relationship between the introduction of the regulations and fraud rates, the remarkably robust results here should be seriously concerning to those proposing a price cap.

Figure 1: proportion of respondents reporting having been victims of ticket fraud over the past two years

Were rates of ticket fraud in the UK to increase to those seen in Victoria or Ireland, we estimate that the cost to consumers would total £1.2bn. 

Figure 2: total loss to UK consumers under current fraud rates and fraud rates seen in markets with price caps

It is not just consumers who would lose out - VAT is paid on ticket purchases made on regulated platforms. Were a greater number of tickets sold by fraudsters, it could see the Exchequer’s losses from ticket fraud balloon to £213m a year. Increased fraud rates will not be the only challenge for the Exchequer, as will be discussed later, the price cap poses a notable threat to the financial viability of regulated second hand ticket platforms in the UK. Were these platforms to be forced to withdraw from the UK market, it would cost the exchequer a further £150m per year.

Finally, there are the impacts on the events industry itself. The results of this research have shown that even a single experience of ticketing fraud has the potential to have a notable effect on the willingness of victims to buy tickets for future events. Modelling undertaken as part of this report shows that over the course of a decade, this could mean £2.5bn worth of foregone ticket sales - a huge blow to one of the UK’s most culturally important industries and one which is already purportedly struggling.

Price caps and black markets

While often implemented to protect consumers from exorbitant prices, price controls are often associated with a number of knock on impacts, many of which can undercut consumer welfare. One of the most serious of these is the pushing of buyers and sellers towards unregulated black markets.

If a price ceiling is set below the equilibrium market rate for a good or service, a number of the sellers who would be willing to sell at the market rate will leave the market, taking their products with them. Where there are avenues to continue the sale of goods outside the regulated market, there will be strong incentives to do so, especially in cases where the risk of prosecution is relatively low (as is the case for fraud, incidences of which are notoriously underreported and are therefore less often prosecuted). The incentives to move towards unregulated platforms will be greatest in the cases where potential markups are highest.

In the case of second hand tickets, there already exist a number of well established unregulated pathways to making sales - social media platforms being among the most notable.

Where supply, especially of scarce goods, migrates to unregulated marketplaces, consumers with a high enough willingness to pay will be incentivised to migrate with it, pushing potentially significant shares of transactions away from places where price caps are enforceable. Importantly, these marketplaces also see much less in the way of broader consumer protections, leaving the consumers which leave regulated marketplaces much more vulnerable to fraud and other risks.

There are countless studies demonstrating these risks. Many have focussed on the impacts of wartime price controls, with it demonstrated that black markets for food and fuel thrived during wartime Germany and Malta, often leading to measurable declines in the quality of produce, exacerbating public health concerns. In more recent studies, evidence from the Energy Sector Management Assistance Program has shown that recent introduction of fuel price controls in India and Ukraine have boosted black market activity.

Perhaps more concerningly for the context here, a study undertaken as a collaboration between the Financial Conduct Authority and Stanford University showed that the risks associated with the introduction of price controls are most pronounced in less concentrated markets. Given the sheer volume of potential second hand ticket sellers, the results of this study would imply the introduction of controls to the market would be subject to more risks than we might expect elsewhere.

Some special considerations are required for the case of the second hand ticket market in the UK. There are a number of official platforms, such as Stubhub or Viagogo, which allow people wishing to sell their second hand tickets to do so on a regulated platform. The existence of these kinds of platforms immediately provides government a direct route to the regulation of a large swathe of the market.

These companies, however, derive their revenues in large part, by taking a cut of the value of the tickets sold on their platforms. The introduction of a price cap on second hand tickets would, of course, cut into those revenues. At present, the margins made by firms on any given ticket are relatively thin. As a result, the loss of notable revenues either through the direct impacts of price controls or via the loss of sellers to unregulated platforms would pose a notable challenge to the financial viability of the platforms in the UK.

The loss of these platforms would quicken the migration of second hand ticket sales to unregulated markets and make the job of attempting to regulate second hand ticket sales at all much more difficult in the future.

Approach

Measuring the impact of the introduction of legislation of the kind outlined above in three different jurisdictions is, in theory, fairly straightforward. We would simply need access to a set of treatment markets (those where legislation is introduced) and control markets (those where legislation is not introduced), with data for each market both before and after the legislation is introduced. By comparing absolute rates of fraud in each market and looking at how those rates change after the introduction of legislation, it would be possible to come up with an estimate of the causal impact of the legislation on fraud rates through what is known as a ‘difference in differences’ estimator.

In practice, things are much more difficult, notably due to the poor quality of publicly available data on fraud rates, the even worse quality of data on ticketing fraud specifically and the fact that data on historical instances of ticketing fraud (pre-legislation in Ireland or Australia) is impossible to collect.

First, the problem of fraud data. The proportion of fraud events which are actually reported is extremely low. The Home Office multiplier, which allows for a transformation of the number of instances of a particular crime which have been reported to an estimate of the true number of crimes, for fraud data stands at 53.6, by far the highest of any crime category (the next highest multiplier stands at only 16.5). Given that such a low proportion of fraud events in general are reported, the amount of real data available on ticketing fraud in particular is even lower.

Finding accurate and detailed information on ticketing fraud across three separate jurisdictions from official or publicly available data sources is essentially impossible.

Representative public polling offers a useful solution to this problem. By conducting large-sample polls of consumers in each of the markets in question, it is possible to derive high quality estimates of ticket fraud rates in each market, most notably because polls allow us to actively reach out to ask whether people have been victims of ticketing fraud, rather than waiting for them to voluntarily report their experiences. In doing so, such an approach sidesteps the problem of the low reporting rates for fraud.

Polling, if samples are large enough, it can also allow for more specific analyses on how that fraud is carried out. For example, how much ticket fraud is carried out in official secondary marketplaces compared to social media marketplaces.

While polling does have notable advantages over official or other publicly available data sources, it does not offer a perfect solution to the predicament of assessing the impact of legislative changes on ticket fraud rates. Without access to a time machine, it is impossible to collect accurate data regarding fraud rates prior to 2009 in Victoria, Australia or prior to 2021 in Ireland, making comparisons of ticket fraud rates over time.

This particular hurdle is essentially insurmountable, making genuine causal inferences impossible. However, comparisons of the three markets are still extremely constructive.

The cultural and economic structures of the UK, Ireland and Victoria are not wildly different, nor is the structure of their events markets. Given this, there would be relatively few a priori reasons to expect wildly different rates of ticketing fraud between the three markets. One of the few genuine differences between the three ticketing markets is the price cap legislation in place in Victoria and Ireland, compared to the relatively less heavily regulated UK. 

With this in mind, it could be expected that a significant proportion of the differences in ticket fraud rates between the UK and the price-capped markets could be attributed to the effects of the legislation. Inferences can be made even more robust by comparing more granular results across the three markets. For example, fraud rates among tickets for specific events types such as concerts or sports events can be compared, or rates seen across different ticketing platforms. In comparing granular ticket types in a like-for-like manner, the potential for explanatory factors, other than the legislation in question, to be a source of differences shrinks notably.

Results

Rates of ticketing fraud are notably lower in the UK than in either Ireland or Victoria. Within the UK sample, 3.8% of correspondents reported having experienced ticket fraud within the past two years, compared to 13.7% in the sample from Victoria and 13.6% in Ireland. These rates are extremely similar across demographic groups - in each market, roughly 60% (63% in the UK, 56% in Ireland, 58% in Victoria) of fraud incidences were experienced by men, compared to around 40% among women. Young adults also make up a lion’s share of fraud instances, with the under-35s making up 71% of cases in the UK, 65% of cases in Ireland and 58% of cases in Victoria.

Figure 3: fraud victims by age group

While the entirety of this variation may not be attributable to the different regulatory environments for ticket sales. But, as discussed above, the similarity of the markets themselves gives credence to the argument that the different regulatory environments, the core difference between the three markets, may be a major factor in these differences. As will be set out below, the consistency of the results over various different axes significantly strengthens this argument.

The markets differ quite significantly when it comes to the value of tickets consumers are defrauded for. In the UK, the average value stands at £331, while in Ireland and Australia, figures are much lower - €118 and $155 respectively. This is likely down to two factors.

Some of this is likely due to higher average ticket prices being paid by UK consumers. The second effect may be one of composition - if, indeed, the introduction of a price cap on second hand tickets does push more sales onto unregulated platforms, this in turn makes fraud easier, implicitly cutting its costs. As the implicit cost of fraud falls, it could be expected that fraudsters would be willing to target cheaper tickets than they would be in environments where the implicit cost of fraud is higher.

There is a notable consistency across markets in terms of the kinds of tickets respondents were defrauded for. In all three areas, around one third of fraud cases were for paper tickets compared to two thirds for digital tickets. 

Figure 4: share of fraud instances across paper and digital tickets

Results across event types were also somewhat consistent, with concerts being the most common event type to experience fraud in each market, followed in all cases by sport events. This is largely driven by these event types simply being the most popular in each jurisdiction. 

To see if fraud rates for different event types meaningfully differ, it is important to take into account how well represented each event type is in overall ticket sales and how that differs from their representation among our sample of defrauded tickets. 

We see that in the UK, concert tickets make up a 26% higher share of our fraud sample than they do of overall ticket sales, that number is much higher in Victoria, standing at 54%, but drops to just 4% in Ireland. That is, Irish concert tickets are subject to roughly the same rates of fraud as those for other events, whereas concert goers in the UK and Victoria appear more vulnerable to fraud than other ticket buyers.

While there are some compositional differences of the kind highlighted above between the different markets, what remains clear is that fraud rates are notably higher across event types in both Ireland and Australia - see figure 5. This implies that the cross country differences in fraud rates cannot be explained by differences in the composition of the different ticket markets, adding further credence to the argument that the different regulatory regimes in place are major factors in the high rates of ticket fraud seen in Ireland and Australia.

Table 1: ticket fraud instances broken down by event type

Figure 5: estimated fraud rate by event type

A notable result across all markets is that in most cases, fraud occurs away from official platforms or regulated second hand markets. This was the case for 63% of fraud cases in the UK, 64% of cases in Ireland and 56% of cases in Australia. By far the most common place to be defrauded for tickets was on social media platforms, accounting for 27% of UK fraud cases, and 30% of cases in Ireland and Australia - in all cases, more than double the share made on any other form of marketplace.

While it is not possible to estimate precise fraud rates for each kind of ticketing platform, given that accurate data on sales for unregulated platforms is unavailable, the continued consistency of results across markets further points to their robustness.

Costs to the economy

According to the results of the research, the costs of ticket fraud to UK consumers stands at £340m per year. Around 60% of those who reported being defrauded in the UK said they were not able to attend the event they were attempting to purchase tickets for, this means foregone revenue for venues be that for food and drink and merchandise. Were we to assume a conservative average spend on refreshments and other purchases at events per person of £20 , this would mean a loss in revenues of £12.4m per year.

Were we to see the rates of fraud in the UK begin to mirror those experienced in Australia and Ireland, potentially as a result of new legislation pushing sellers onto unregulated platforms the £341m cost to consumers would balloon to £1.23bn per year, the equivalent of £23 per adult in the UK. The cost to venues in terms of lost revenues from sales of refreshments would increase to £44.7m.

Lost revenues from beverages is unlikely to be the only cost to venues, a large proportion (65%) of those surveyed suggested that, after having been made victims of ticketing fraud, they were less likely to attend events in the future. Were only 10% of those who reported being strongly discouraged from attending events in the future to leave the events market, an increase in fraud rates to Irish or Australian levels would see a loss of over 135,000 potential customers for the UK events industry in a single year. Were we to assume that these people would have purchased only a single ticket each, this would cost the industry £46m in ticket revenues.

Were we to see these higher rates of fraud and higher rates of discouraged consumers over the course of a decade, this lost revenue figure could rise as high as £2.5bn. This already comes after an incredibly troublesome period for the events industry, and could negatively impact the industry’s forecasted growth.

It is well established that the direct financial losses of fraud, like with any crime, only make up a fraction of the true cost of such events for both the victims and society more widely. There are, of course, the wider costs to the victims, including both the stresses caused by the event and the potential costs of avoiding its repeated occurrence in the future, as well as the wider costs to society, through the costs imposed on the criminal justice system.

Based on methodologies developed in the Home Office, we estimate that the average total cost of an instance of ticket fraud in the UK in 2024 stands at £1329.40. This covers the direct financial cost of the incident, defensive expenditures, insurance administration, emotional harm and subsequent health costs, lost individual economic output, costs to the police and the wider criminal justice system.

With the rates of ticketing fraud derived from the sample in question, we estimate that the total costs of ticketing fraud in the UK stand at £1.37bn per year. Were we to see the rates of ticketing fraud increase to the rates seen in Ireland or Australia, that figure would increase to £4.9bn - an increase in the cost to society of £3.53bn.

Figure 6: full costs to society of ticketing fraud under current UK fraud rates and fraud rates seen in markets with price caps

Finally, there is the matter of the costs to the exchequer. Tickets, whether from their original sellers or on resale markets, should incur VAT when made via reputable vendors. Increases in rates of ticketing fraud will naturally mean foregone VAT for the Treasury. With the present rates of ticketing fraud, the Treasury currently loses out on £59m per year in revenues as a result of fraudsters. Again, if these rates were to increase to those seen in Ireland or Victoria, we would see these losses increase to as much as £213m per year.

These direct losses from a greater share of tickets being advertised by fraudsters do not capture the full picture when it comes to potential costs to the Exchequer. As outlined above, given the relatively narrow margins enjoyed by the larger operators in the regulated second hand ticket market, many are extremely vulnerable to the introduction of a price cap, both through the direct impact this price cap would have on their bottom lines, as well as via the migration of a number of buyers and sellers towards less regulated marketplaces. 

These operators currently contribute many tens of millions to Treasury coffers each year, the loss of even one of the major operators in the space could lead to further substantial costs to the Exchequer.

Conclusion

There is a long literature demonstrating the potential risks of the introduction of price controls, ranging from supply shortages to deteriorating quality on markets. Among the best documented of these risks is the pushing of commercial activity towards black markets, where transactions are able to occur at equilibrium market prices, but often with the notable loss of safety for consumers. The literature points to these risks being even more severe in cases of second hand goods, which already carry inherent risks.

The introduction of price controls to the UK’s second hand ticket market carries many of these risks, with a poor implementation of the policy likely to push ticket buyers and sellers away from regulated platforms to unregulated marketplaces, risking significant increases in ticket fraud, as well as the erosion of the financial viability of regulated second-hand ticket marketplaces.

Were such an outcome likely, we would see that in markets similar to the UK which have seen the introduction of price controls, measurably high rates of ticketing fraud. This is exactly what has been observed in the cases of Ireland and Victoria, Australia, which introduced price controls for second hand event tickets in 2021 and 2009, respectively. 

According to the large and representative polls carried out of the two markets, we see ticket fraud rates four times higher than those in the UK.

The results across the different markets are extremely consistent, with similar demographic victim profiles and close similarities in the kinds of platforms and ticket formats used by fraud victims. While the event composition of the markets diverge somewhat, with the UK, for example, having a larger sporting events market, we see that across major event types, Australia and Ireland see notably higher fraud rates.

While we cannot claim that the entirety of the differences in these ticket fraud rates are down to the introduction of price controls, they should be of serious concern to any policy makers hoping to deliver a good deal to consumers in second hand ticket markets. Risking the UK’s ticketing industry looking more like the Victoria or Irish ones would not come cheap to consumers or the government, with consumers set to lose an extra £890m per year to fraudsters. Not only this, but the events industry more widely could face a potential loss of £2.5bn over the course of a decade as increased fraud risk drives victims away from events.

That is to say, a measure which intends to get a better deal for British consumers could end up costing them and the Exchequer dearly.

Appendix: Methodology

The Office for National Statistics publishes regular reports on crime in England and Wales based on two main sources, the Crime Survey for England and Wales (CSEW) and police recorded crime data. The CSEW is a long-running household survey that captures the public’s experience of crime and police recorded crime data contains incidences of crime recorded by police forces across England and Wales. The Ministry of Justice also provides statistics on crime outcomes, including court cases, convictions and sentencing.

Action Fraud is the UK’s centre for reporting fraud and cybercrime. Run by the City of London Police, it collects reports from individuals and businesses, which are then analysed by the National Fraud Intelligence Bureau (NFIB) to spot patterns and trends. For a rolling 12-month period they report over 10,000 reported incidents of ticket fraud with reported losses of £9.7m. 

However, crime reporting data is notoriously unreliable when estimating instances of crime as only a small percentage of crimes are ever reported. This is especially true for crimes such as ticketing fraud where the victim may feel the financial loss is not worth pursuing via the criminal justice system, or may even feel embarrassed to report the crime. 

Whilst there exists some granular data in the UK, collated by Fraud Action, which estimates the cost and frequency of ticket fraud on a rolling 12 month basis, no such data exists for the Republic of Ireland or Victoria, Australia. 

In order to understand the scale and impact of ticket fraud in each of the UK, Ireland and Victoria, Australia, Bradshaw Advisory have conducted large representative polls of consumers across each of the above jurisdictions, asking respondents whether they have been victims of ticket fraud, the circumstances of the fraud, where it has occurred (e.g. what sort of event the ticket was for, the kind of seller and marketplace where they were defrauded), the source of their fraudulent ticket, an estimate of the amount of money they lost as a result of the incident, and the impact the experience has had on their intention to attend live events in future.

Each poll was conducted with quotas set to ensure that samples were representative of the given markets across gender, age and region. Post stratification weights were applied in addition to the quotas so as to ensure that final results were as representative as possible of the populations they were set to represent.

Given the size of the samples required in each case, several different pollsters, drawing respondents from different panels, were used for the Irish and Australian samples. During the process of interrogating the initial results, a sample provided by one pollster for the Irish survey was dropped, given that it returned results, with notably higher rates of fraud reported by those from other data providers. Results tables for both the samples used in the final analysis and the dropped samples can be found alongside this report.

Estimations and modelling

Estimates of the losses to consumers from ticketing fraud were derived from combining the reported fraud rates and average ticket values found in the polling. Average ticket values were calculated using the midpoints of each of the value bands for question three. To come to estimates of consumer losses were the UK’s fraud rates to match those in Victoria or Ireland, it was assumed that average ticket values would remain constant - while we might expect that these could change, the data available does not provide a strong enough basis for any assumptions to be derived as to how exactly these figures might change.

To calculate the wider costs of discouraged attendees to the event industry, it was assumed that 10% of those who said they had been strongly discouraged from attending future events (to question eight) would stop attending events in the future. It was assumed that these discouraged attendees would attend one event per year and that the value of the foregone ticket would equal that of the average ticket value reported by victims of fraud. The final figure is the cumulative sum of the value of tickets for events missed by these discouraged persons, over the course of a decade - note that the number of discouraged people increases year on year as more people are subjected to higher fraud rates.

To estimate the full societal costs of ticket fraud, Home Office guidance, provided in the 2018 report ‘The Economic and Social Costs of Crime.’ Estimates of the wider costs e.g. police time were assumed to be the same for ticketing fraud as in other instances of fraud, though the direct financial costs of a crime instance were updated to reflect the responses to question three in the polls. The estimates provided in the Home Office guidance were uprated in line with inflation.

To derive estimates of the costs to the Exchequer of tickets lost to fraud, it was assumed that tickets lost had values equal to the average implied by responses to question three and that in each case, the standard VAT rate of 21% was included in that value and was thus lost to HMT in instances of fraud.

Ticket fraud data tables are accessible here.