Why the lotto helps scalpers.

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Why the lotto helps scalpers.

Postby Green Giant » Mon Nov 14, 2011 5:17 pm

Lets be honest here. IT IS SIMPLE MATH.

If I am a scalper, I normally agree to buy tickets, and then sell them at a higher price. The price is set by demand and initial costs.

Normally, demand is made by a short supply. With a lotto, demand is created by random chance, independent of supply.

If I am a scalper, I can plan to buy several tickets, using several low limit credit cards, and expect most of those tickets that I apply for.

Because I am a scalper, in this hypothetical context, I apply for many low cost tickets.

Because I have a chance of getting those tickets, and I use multiple credit cards, my tickets will make a lot of money being sold to people who aren't called on by the lottery.

Because no amount of waiting in line, or applying for tickets, will help those who don't get called, a scalped tickets value is increased independently of demand.

Please blow some holes in this, or support it, or give your own thoughts on how the lottery will help or harm the relationship between scalpers and burners.
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Re: Why the lotto helps scalpers.

Postby Nipple » Mon Nov 14, 2011 5:20 pm

Your post contains the promise of, but lacks the existence of math.
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Re: Why the lotto helps scalpers.

Postby Nipple » Mon Nov 14, 2011 5:20 pm

I'm at risk of repeating myself.
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Re: Why the lotto helps scalpers.

Postby Green Giant » Mon Nov 14, 2011 5:22 pm

Thats because I'm too lazy to dig into my stats book and spend several days using my marginal knowledge of statistics to create a hypothesis test.

Let me put it this way though: Joe is a scalper. Joe buys tickets for 260/280/320/ whatever. A set price. Joe sells those tickets, and makes a hundred bucks a pop because his target is people that waited too long to buy tickets.

Now with a lottery: Joe is a scalper. Joe devises a scheme to apply for fifty tickets using friends/family's/alias' credit cards. Now Joe's target audience is desperate burners who got shafted.

Who do you think will pay more for a ticket? People who got wronged by the lottery, or people who said,"Oh, I forgot to buy a ticket during the first few months they were around!"

People that are desperate do stupid things, like pay a lot for tickets!
Last edited by Green Giant on Mon Nov 14, 2011 5:27 pm, edited 1 time in total.
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Re: Why the lotto helps scalpers.

Postby Nipple » Mon Nov 14, 2011 5:24 pm

You said it was simple math...

WHY MUST YOU LIE TO ME! I can't go on like this Green Giant.

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Re: Why the lotto helps scalpers.

Postby trilobyte » Mon Nov 14, 2011 5:26 pm

Two important things to point out - you use the word lotto, which is different from a ticket lottery (it's an important distinction). And second, the details of the Burning Man ticket lottery have not yet been made available.

Scalpers can certainly profit from gaming the results of a ticket lottery, but it is far easier for them to profit from first come/first served traditional ticket sales (which are easier to game, and easier to secure tickets). So I'm not seeing your argument that a lottery somehow helps.
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Re: Why the lotto helps scalpers.

Postby mamacedge » Mon Nov 14, 2011 5:31 pm

Okay, I get the logic behind your argument. However, I am not sure why a scalper would risk the long wait on return. If tickets are not being distributed until early summer, the scalpers are going to have massive amounts of money tied up for months. I'm not saying that some people will not be willing and/or able to do this, but I think that many others will not.
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Re: Why the lotto helps scalpers.

Postby Eric » Mon Nov 14, 2011 5:38 pm

mamacedge wrote:Okay, I get the logic behind your argument.


There can be no logic to an argument made on pure speculation- The LLC hasn't announced how the lottery will work yet. Everything you are hearing (like the above) is based on the authors assumptions about the form it will take, not reality.

Once they release the details you can freak out if needed, until then it's kind of pointless.
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Re: Why the lotto helps scalpers.

Postby theCryptofishist » Mon Nov 14, 2011 5:44 pm

Eric wrote:
mamacedge wrote:Okay, I get the logic behind your argument.


There can be no logic to an argument made on pure speculation- The LLC hasn't announced how the lottery will work yet. Everything you are hearing (like the above) is based on the authors assumptions about the form it will take, not reality.

Once they release the details you can freak out if needed, until then it's kind of pointless.

What if I;m practicing. I may need to have a REALLY BIG FREAKOUT and that takes working up to.
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Re: Why the lotto helps scalpers.

Postby capjbadger » Mon Nov 14, 2011 5:47 pm

Eric wrote:
mamacedge wrote:Okay, I get the logic behind your argument.


There can be no logic to an argument made on pure speculation- The LLC hasn't announced how the lottery will work yet. Everything you are hearing (like the above) is based on the authors assumptions about the form it will take, not reality.

Once they release the details you can freak out if needed, until then it's kind of pointless.

NOW look who's trying to talk sense to the herd... ;) lol

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Re: Why the lotto helps scalpers.

Postby mamacedge » Mon Nov 14, 2011 6:20 pm

I didn't realize that I sounded freaked out. I was simply stating that I think that scalpers will most likely not benefit from a system where they will have to wait so long on a return. I assure you, my panties are NOT in a wad.
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Re: Why the lotto helps scalpers.

Postby bradtem » Mon Nov 14, 2011 6:30 pm

This return is not particularly long if it is like last year -- spend $300 sell for $500 and sometimes much more. You don't want to be stuck holding tickets by the time of the event. I asked elsewhere, but I am very curious if anybody stopped at the trailers of the scalpers on the way to the playa to see what their prices where, buy and sell.

There are a few scalper strategies:

1) Definitely get any low tier tickets you can. The return on them is close to certain.
2) Get modest numbers of higher tier tickets. Obviously not so many that you can't unload them
3) Wait for sell-out, and buy every ticket being offered for sale at face value, then flip it. Instant profit

Scalpers may wait and see to learn the dynamics of ticket pricing. When it comes to concerts, they have had a lot of time to study the market, how much people will pay, the probability of sell-out and the probability of selling all tickets they purchase. BM is a less certain quantity, and thus they may be more conservative this year. BMOrg has announced they will do multiple rounds. I presume that means they will do blocks, like 25,000 and then smaller blocks. As such, after they sell the first 25,000 and leave some number of people who lost the lottery, they are not "sold out" but you can't get a ticket. Harder for scalpers to sell because still a decent chance you will get a ticket in the next round. This is good. Once the last block sells and the event sells out, that's when scalping really begins. Though some people who lose the first or second lottery rounds may get desperate and pay well for a sure ticket, afraid the scalper price will be even higher if they lose the next round.

Nobody knows, which may keep the scalpers away -- this year at least.
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Re: Why the lotto helps scalpers.

Postby mamacedge » Mon Nov 14, 2011 6:47 pm

My impression was that the lotteries (and confirmations) would be held in the early part of 2012, but that the distribution of physical tickets wouldn't occur until early summer, 2012. That is what I meant by risk of no immediate return. I cannot imagine that many scalpers are willing to sit on their returns for 5 or 6 months.
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Re: Why the lotto helps scalpers.

Postby The CO » Mon Nov 14, 2011 10:34 pm

You want to talk math?

<activate ego machine>

Over a year ago I wrote:Lets do a little math.

50000 tickets at at average of $300 each =$15,000,000

In order to insure that they control the majority (2/3rds) of tickets, this mythical scalping conglomerate need ten million dollars. TEN MILLION DOLLARS.

Next, you can only by four (4) tickets per credit card. That means they need 8334 credit cards to purchase them, entering each number individually.

Then, they have to buy them all on the first day. Let's call it January 15th.

Now, they have to sit on a TEN MILLION DOLLAR ($10,000,000) investment for the next 8 months. If they try to sell before August, people will not buy them.

Scalpers do not work at long term investments. They want to get a ticket & turn it around @ a profit in the shortest amount of time possible. As in hours. Not days. Not weeks. Not months. Not three-quarters of a year.

Some one that can drop that kind of cash and sit on it for 8 months.... is not a scalper. It's the guy in the $200,000 custom motor coach.


Scale it up or down, the fact remains: scalpers profit on short turnaround. It was true then, it's true now. Lottery, 1st come 1st serve, better servers, it doesn't matter. Scalpers are a bogeyman. Worry about affording the trip to BRC. Worry about the wind load of your shade structure. Worry about if you have enough booze for the bar you want to run.

If you are worried about scalpers:
You're doing it wrong.
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Re: Why the lotto helps scalpers.

Postby portaplaya » Wed Nov 16, 2011 5:31 pm

Green Giant wrote:Lets be honest here. IT IS SIMPLE MATH.

If I am a scalper, I normally agree to buy tickets, and then sell them at a higher price. The price is set by demand and initial costs.

Normally, demand is made by a short supply. With a lotto, demand is created by random chance, independent of supply.

If I am a scalper, I can plan to buy several tickets, using several low limit credit cards, and expect most of those tickets that I apply for.

Because I am a scalper, in this hypothetical context, I apply for many low cost tickets.

Because I have a chance of getting those tickets, and I use multiple credit cards, my tickets will make a lot of money being sold to people who aren't called on by the lottery.

Because no amount of waiting in line, or applying for tickets, will help those who don't get called, a scalped tickets value is increased independently of demand.

Please blow some holes in this, or support it, or give your own thoughts on how the lottery will help or harm the relationship between scalpers and burners.


I contend that line three "With a lotto, demand is created by random chance, independent of supply." is purely made up. The number of people demanding tickets and the supply do not change because of the method of distributing chances to buy the product.

Also, line five "Because no amount of waiting in line, or applying for tickets, will help those who don't get called" is irrelevant, since Burning Man does not offer a "line" to stand in. And "a scalped tickets value is increased independently of demand." is also incorrect, since the people that did not get called on are the demand; that's what increasesd the scalped ticket value.

A lottery, however, does two things. It gets people who might previously postponed buying tickets to sign up, since this is the only chance. That actually puts more pressure on the scalpers because there is more competition against them in the lottery process. If you can't just buy them at a time convenient for you (possibly too late, as many found this last year), then you have to sign up with everyone else. That seems designed to specifically get the numbers of burners to work against the numbers of scalpers.

You know who else uses this system because they would also have day-one sell outs and have to deal with scalpers? The Super Bowl: http://cashmoneylife.com/how-to-buy-super-bowl-tickets/

Want to know more about the actual economics of scalping big ticket items: http://www.npr.org/templates/story/stor ... d=18599162
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Re: Why the lotto helps scalpers.

Postby theCryptofishist » Wed Nov 16, 2011 5:36 pm

And without that ticket on hand (they get mailed out approximentally six monthe later) there's less impetus to buy from a scalper, plus the scalper has to tie up money on the gamble, which means that for six months there's no gain from that money.
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Re: Why the lotto helps scalpers.

Postby portaplaya » Wed Nov 16, 2011 5:52 pm

As cryptofishist points out, engineering a sell out earlier actually makes it a disincentive for scalpers to become involved. The Super Bowl compares because of face-value ticket price and number of total tickets, but the turn around time is just weeks.
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