New York takes a stand against unauthorized ticket resellers

Stuart Fuller

At 10.29pm EST on Monday 28th November 2016, the fight against the illegal resale of tickets in New York State took a new direction when Governor Andrew Cuomo signed a bill that criminalizes the use of ‘ticket bots’. Ticket bots are machines that run scripts on ticketing websites that can complete transactions faster than a human can, and thus capture tickets for popular events almost instantaneously. For anyone left scratching their head, empty handed after failing to secure just-released tickets for sporting events, theatre shows or concerts – ticket bots are the reason.

The software isn’t even hard to find. A quick visit to Google and for just $900, you can buy software that will allow you to use a bot on the most popular ticketing website online today. The return on investment on that software can be huge – tickets for some of the biggest and most in-demand products are listed on that site. For instance, based on a report, Obstructed View: What’s Blocking New Yorkers from Getting Tickets, issued by the Office of the New York State Attorney General earlier this year, one bot managed to buy 1,012 tickets for U2’s 2015 world tour concert in Madison Square Garden in just one minute. On the same day, two different bots managed to grab over 15,000 tickets for the wider tour. The average retail price for tickets for the Madison Square event was $302. A few weeks before the concert, the average price on the secondary market was $532 – a mark-up of over 70%. Tickets for the forthcoming UFC 205 event at the same venue are being listed on the secondary market for up to $25,000, whilst the original top-price ticket was just $1,500.

The use of ticket bots had already been subject to fines in New York State but it was classed as a civil offence, with penalties limited to fines that hardly made a dent in the potential profits of the infringers, if the resources were in place to investigate and catch the perpetrators in the first place. The new law will carry a fine of up to $1,000 or twice an individual’s gain from a crime, as well as one year in jail.

Although those penalties will still not deter the individuals and organizations that have multi-million-dollar operations, a second part of the law may have a significant impact on their business model. As of 28th November 2016, anyone knowingly reselling tickets that were purchased through a ticket bot can also be prosecuted under the bill.

According to the Attorney General, Eric T. Schneiderman, the average fan has no chance to buy tickets at face value for events in New York State. The New York Times reported in 2013 that Ticketmaster estimated “60% of the most desirable tickets for some shows” on the secondary market had been bought by bots. Despite the addition of CAPTCHA software (Completely Automated Public Turing test to tell Computers and Humans Apart) and regulations on how many tickets a user can buy, the problem hasn’t gone away. Bots are clever enough to work around these obstacles.

The economic impact of the use of ticket bots goes deeper than people may think. With fans desperate to see their favorite act or team, event organizers will continue to increase the retail prices of tickets in the knowledge that they will sell out. That will then lead to fans to look at alternative ways of getting tickets, potentially moving into the black market where they’ll be exposed to individuals and organizations that have no intention of supply genuine tickets, irrespective of the price they charge.

The fact that ticket technology has moved on significantly since the days when paper tickets were posted to the buyer has compounded the problem. Today, e-ticketing, QR codes and instant downloads are common delivery mechanisms, and have led to a huge growth in counterfeiting – by selling the same ticket multiple times, or even by creating fake tickets using genuine ticket templates, with the ticket holder only finding out when they try to enter the venue.

The law will only be applicable in New York State, but it is hoped that other states will follow suit. In the United Kingdom, the issue of secondary-market ticket sales is still a major concern. Back in May this year, Michael Watson, economics professor at Warwick University, published a report on behalf of the government that reviewed the protection measures applicable to the online resale of tickets in the UK. One of his recommendations was that the ticket vendors should do more to guard against the use of bots within their system. In November 2016, Conservative MP Nigel Adams presented his amendment to the House of Commons Public Bill Committee for the Digital Economy Bill, which included wording that would make it illegal to use bot technology within the ticketing sector. His amendment so far has won unanimous cross-party backing from Labour and SNP members of the committee.

Although the bill is a step in the right direction in terms of protecting consumers, the authorities need to show their teeth in enforcing the new law. Unless this happens, counterfeiters and resellers will continue to be motivated to enter the secondary market, and ticket prices will continue to be inflated, causing anger and frustration for fans increasingly locked and priced out of events.

Ticketing, like most other economic models, works on the principal of supply and demand. However, it is an imperfect market in terms of supply being finite for any particular event, and thus intervention is essential to ensure that the market price equilibrium is not falsely maintained through illegal and immoral activities.