It is a massive pile of ****, but unfortunately it is becoming more and more common. I don't really know exactly why they do it, (though I expect lazy promoters/venues may be a factor), but it makes playing gigs a proper ballache.
It is very common around Reading/Slough, so my last band had to do it just to play gigs at all! Sometimes we were given tickets, and told "Bring 20/30 people if you want to play here again", other times we were asked to buy the tickets then sell them on to others.
If you have absolutely any choice, then avoid this stuff at all costs. If no-one does it, maybe they will remember that it's actually their f***ing job to sell the damn tickets! This sort of stuff really infuriates me.
/rant