Long-suffering fans of the Chicago Cubs often find themselves needing that last-minute ticket to a ballgame or find themselves looking to unload a couple of tickets. For example, let’s say Bob has family coming to Chicago and needs tickets to the Cubs. Meanwhile, Sam’s son made the soccer finals and Sam can’t use his Cubs tickets. Historically, Sam would waste his tickets and Bob would have to watch from the couch.
All that changed when online auction sites like eBay and StubHub came into the market and began matching-up all the Bobs and Sams of the world. Suddenly, more families were making it to Cubs games while others had more money in their pockets.
Unfortunately, the City of Chicago is attempting to return Bob and Sam to the old days by passing a law that will prevent Bob and Sam from using online auction sites to buy and resell their tickets. In an attempt to stop Chicago’s efforts, NetChoice and eBay filed an amicus brief challenging the validity of the Chicago law.
In 2002 and 2005, the state of Illinois enacted laws to aid residents in the sale of their tickets through online auction sites like eBay. These laws provide online auction sites the option to either collect the amusement tax on ticket transactions or notify the seller of his obligation to pay the tax.
The state law makes sense. Suppose Bob and Sam found each other at a flea market. Would the flea market be expected to collect amusement taxes? Not likely. The same is true of online auction sites that simply provide a venue for people to meet each other.
However, the City of Chicago decided in 2006 to go after additional tax revenue and force online auction sites to collect amusement taxes. Under the Chicago law, for just helping Bob and Sam get in contact, online auction sites would need to: (1) get the tickets from Sam, (2) verify Sam’s tickets are real, (3) identify the ticket face value, (4) get a signed bill of sale from Sam to verify the price, and (5) collect the amusement tax and give it to Chicago. If the flea market had to do this, it would not bother opening up, and online auction sites might not find it worth their while to help sell Cubs tickets anymore.
NetChoice and eBay are now trying to make sure that Bob and Sam can continue to buy and resell their tickets through online auction sites.
In an amicus brief filed February 15, NetChoice and eBay explained to the Illinois Supreme Court that the Chicago law is:
- unduly burdensome to online auction sites resulting in significant harm to businesses and consumers
- the Chicago law violates the supremacy of the 2005 Illinois state law.
Now the Illinois Supreme Court must decide whether to help Bob and Sam, or instead, force online auction sites to collect Chicago’s amusement tax.
A Court ruling for the city of Chicago would upend the online auction system for tickets. That would strip consumers of the ability to easily buy and sell tickets, which would make Bob and Sam even more unhappy than most Cubs fans already are.