GOVERNMENT OF SASKATCHEWAN MINISTRY OF JUSTICE AND ATTORNEY GENERAL DISCUSSION PAPER

Transcription

1 GOVERNMENT OF SASKATCHEWAN MINISTRY OF JUSTICE AND ATTORNEY GENERAL TICKET SELLING AND RESELLING IN SASKATCHEWAN DISCUSSION PAPER March 2009

2 TICKET SELLING AND RESELLING IN SASKATCHEWAN DISCUSSION PAPER 1. PROBLEM DEFINITION Consumers, both in Saskatchewan and elsewhere in North America, have recently raised issues about whether members of the public have fair access to tickets for desirable sporting and entertainment events. In fact, as of March 3, 2009, four lawsuits have been commenced in Canada concerning the issue. Many consumers have written to the Premier and the Minister of Justice, complaining about on-line ticket selling and especially, reselling. Other consumers have expressed delight that they are able to access tickets from the comfort of home instead of being required to stand in line. The definition of fair access to tickets is not always clear. Is it: Equal opportunity to purchase tickets for an event when they go on sale to the public (primary ticket sales)? Assurance that all tickets for an event will be available when tickets go on sale to the public? Control of the resale market (secondary sales)? And if so, is the control over the numbers of tickets that can be sold by any particular vendor, or the price at which those tickets can be sold? Or both? Or is it the perceived relationship between primary sellers and secondary sellers that breeds suspicion among consumers? Consumers recognize that there are a limited number of tickets that could ever be available. They are limited by the seating capacity of the venue. The expectation may be that the entire number of seats, other than those sold as season tickets, will be available when the tickets go on sale to the public. They might also expect that everyone should have access to those tickets, and that they will be accessible to consumers who can afford them at face value but possibly not otherwise. Price is an issue for many. The face value of the ticket (that is, the price at which the venue and/or promoter is selling the ticket) is perceived to be the fair price, and anything above that amount is gouging. Sports fans want to be able to enjoy themselves without paying an arm and a leg to the Premier of Saskatchewan Finally, there is a significant portion of the population that is suspicious that ticket resellers are able to acquire large numbers of tickets before they go on sale to the public.

3 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 2 There is no doubt in my mind that internet ticket sellers and a select group are able to obtain all the tickets they want before any offering is made to the general public. Scalpers are making mega profits and enjoying tax free income. Letter to the Premier of Saskatchewan The purpose of this paper is to obtain the views and opinion of the general public and parties to the selling of tickets, to help inform the actions of government. 2. BACKGROUND Tickets to entertainment and sporting events can be sold in a variety of ways, such as in person or by phone, but one of the most common methods is through internet sales. There are several companies that are primary internet ticket sellers, including Ticketmaster, Tickets.com, Showare Ticketing System and Admission.com. They should go back to the way they used to do it, where you had to go down there to get em ; Quote in Saskatoon Star Phoenix, December 15, 2008 Tickets are also made available to consumers through resellers, who have acquired tickets and are subsequently selling them. Resales of tickets can be accomplished through newspaper classified advertisements, on-line classified advertisers such as Kijiji, on-line auction sites such as ebay, and through on-line ticket brokers such as TicketsNow and StubHub. I was shocked [that the consumer was bounced to the website of a secondary ticket seller once the tickets were sold out] Letter to the Minister of Justice Although the issue of ticket reselling has been around as long as tickets to entertainment and sporting events have been sold, the issue was raised in Saskatchewan in the summer of 2008 when tickets to three Elton John concerts (a rarity in Saskatchewan) went on sale in June. Tickets were sold via an online ticket seller, Ticketmaster, and the three events were sold out in approximately 6 minutes. Consumers were provided with a link to a secondary seller, TicketsNow, which already had tickets for sale at a price well above the face value. In addition, tickets were immediately available at on-line auction sites at prices above the face value. Several weeks later, additional tickets were released for sale through Ticketmaster. This incident was followed by the sale in early November of tickets to a Saskatchewan Roughrider football team home playoff game. The tickets were made available to season ticket holders before going on sale to the public, and then were sold online and at the ticket office. Tickets sold out in 35 minutes. The online ticket vendor was Tickets.com. The sale prompted some controversy, especially over the number of tickets that were

4 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 3 available for resale immediately following the close of ticket sales. The Roughrider organization responded about precautions that had been taken; for instance, no purchaser was allowed to purchase more than four tickets, and the organization said that it monitors purchases to ensure that nobody is making repeated purchases of four tickets with the same credit card, address and name. Finally, in December 2008 it was announced that the Eagles would be playing two concerts in Saskatoon. Tickets went on sale online and were sold out in 11 minutes. Again this generated controversy, although in fact there were only 28,000 tickets available to be sold. Demand for these tickets was so high that the Eagles subsequently announced a third concert. Ticket Sales Actual reasons that the entire number of available seats is not available to the public on the sale date include: Advance sales ( presales ) to subscribers of various organizations, such as fan clubs, credit cards, radio stations. It should be noted that the numbers of tickets available for presale can be limited by the promoter for the event and/or the performer. Blocks of tickets are provided to tour operators and corporate sponsors by the promoter. Tickets are held back by the promoter and released closer to the event. Some venues and primary ticket sellers have instituted precautions to reduce volume purchases of tickets for the purpose of reselling. For example, the Saskatchewan Roughriders, as noted above, limited the number of tickets for any purchaser. Ticket Reselling Ticket reselling has obvious legitimate purposes. For instance, if a purchaser obtains tickets to an event for the purpose of attending, but suddenly discovers that the tickets cannot be used for one reason or another, that person might want to recoup the purchase price by reselling the ticket. As well, season ticket holders or subscribers may not be able to attend every game or performance, but still want the assurance that they have the seats available for the ones that they are able to attend. Those persons may want to be able to sell the unusable tickets. Ticket reselling above face value may cause more concern to the public. Should the season ticket holder be permitted to make a profit, merely because that person cannot attend the game? Even more vexing to the public are people who buy tickets, never intending to use them, for no other reason than to sell them for a profit. The practice of reselling also has its flip side. If the event is not as popular as the muchpublicized one, the ticket reseller may be selling the ticket for less than face value, just to

5 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 4 get rid of it and recover some losses. Consumers who find themselves with tickets they cannot use may end up giving them away. One problem that has become more prevalent, particularly with the onset of electronic internet ticketing, is the practice of reselling fraudulent tickets. It is well-known among venues, including those in Saskatchewan, that customers will show up at an event with a ticket that has already been used for entry. These tickets will almost without fail have been purchased through an on-line reseller. Some of the reputable on-line resellers will refund the money if this occurs. They may also attempt to locate the broker of the fraudulent ticket to prevent that person from using the service in the future. Ticket brokers are organizations, often on-line, that offer tickets for sale for others. Some of them do not inquire into the validity of the tickets or how they were obtained. Some of the more reputable ones will guarantee that if the ticket is fraudulent or the event is cancelled, the purchaser will receive a refund of the full purchase price. Most music fans would agree that it s unfair for scalpers to get away with buying up blocks of tickets for resale. Saskatoon Star Phoenix, July 12, 2008 On-line auction sites do not offer guarantees. Refunds are an issue between the purchaser and the seller. Another issue that has arisen is the use, by some professional resellers, of software that allows them to circumvent the security features of a primary ticket seller s website. For instance, a primary ticket seller may require the customer to reproduce a series of random letters and numbers to enter the site. This security feature was designed to allow only humans to access the tickets. Recently software has been developed that allows automated programs to purchase large numbers of tickets by breaking the security features. The software also allows the purchaser to mask its IP address and the tickets are recorded as being sold to separate IP addresses and separate credit cards. Use of this type of software can quickly make a large number of tickets unavailable to single users, resulting in popular events being sold out in very little time. These purchasers allegedly will attempt to resell these tickets through on-line brokers or secondary sellers. 3. OTHER JURISDICTIONS Canada Three Canadian jurisdictions have legislation that deals with the resale of tickets for sporting and entertainment events: Ontario, Manitoba and Alberta. The Ontario Ticket Speculation Act makes it an offence to resell tickets at higher than the face value of the ticket or to purchase tickets for the specific purpose of reselling them. The fine on conviction is a maximum of $5,000.

6 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 5 On March 2, 2009, the Canadian Press reported that the Ontario Attorney General is looking into the sale and pricing of tickets for entertainment and sporting events. The Attorney General confirmed that his ministry is investigating what options might be available. The Amusements Act of Manitoba prohibits reselling a ticket for a price or consideration greater than that paid or given for it to the owner of the place to which it authorizes admission. Alberta s Amusements Act, which contains the same provisions as Manitoba s legislation, was repealed by Bill 18 (The Film and Video Classification Act) in This followed a research project and consultations to explore reactions to changing the law respecting ticket resale. The repealing legislation has not yet been proclaimed. United States Many American jurisdictions once had legislation aimed at the resale of tickets. Many of these laws were aimed at prohibiting the practice of reselling tickets at or near the venue where the event was taking place. These latter laws seem to be designed to provide security around the venue and crowd control. Many states have repealed their legislation in recent years with the advent of internet sales. Several states have now enacted laws that license or otherwise control resellers, including internet resellers, requiring them to comply with a strict code of practice. Some states now have legislation that prohibits software programs being used to automatically purchase large quantities of tickets without human intervention. Typically, this legislation makes it an offence to use software to circumvent security measures on a ticket seller s website that would allow one purchaser to buy large numbers of tickets very quickly. The states of Minnesota, Tennessee, Colorado, New Jersey and North Carolina have such legislation. In February 2009, during the sale of tickets to two Bruce Springsteen concerts in New Jersey, purchasers were provided with a link from the Ticketmaster website to TicketsNow, Ticketmaster s secondary ticketing site. Following a public outcry from fans and Springsteen himself, the Attorney General for New Jersey announced an investigation into the matter. The issue was settled by Ticketmaster agreeing to remove the link to TicketsNow from its website for a year, paying the state of New Jersey $350,000 to cover the costs of the investigation, and offering a random draw for 1,000 tickets among fans who filed complaints.

7 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 6 Australia The state of Victoria has implemented The Sports Event Ticketing (Fair Access) Act, Under this legislation, for certain sporting events, the responsible Minister must make written guidelines setting out requirements for ticket scheme proposals and approved ticket schemes. The state of Queensland prohibits resale for profit, but allows resale for legitimate purposes provided the sale price does not exceed 10% above the face value of the ticket. 4. ARGUMENTS FOR AND AGAINST CONTROLLING TICKET RESALE The classic economic argument against controlling ticket resale has to do with the laws of supply and demand, and the corresponding prices of items that are in high demand. The economic theory holds that the value of the ticket is the amount that will be paid by a willing purchaser. Although the owners/promoters may establish a lower face value for People in Saskatchewan have the right to attend those concerts at reasonable prices. to the Minister of Justice the ticket, the face value is not the true value. This is supported by the fact that events such as the recent ones in Saskatchewan will be sold out notwithstanding the fact that consumers must purchase the ticket from resellers at a premium. The counterargument is that the owners/promoters establish the face value in an effort to maintain the good will of the average fan, who can afford the occasional game or concert at face value, but would be prevented from attending if the tickets were offered for sale at the higher, or market value. Another argument in favour of controlling or prohibiting resales is the fact the profits made on the resale of tickets do not benefit the performer, team, promoter or the venue operator. The profits go to resellers, many of whom are conducting the transaction electronically from outside the province. 5. LEGISLATIVE OPTIONS Price controls on resold tickets (e.g. cannot be more than 20% above face value) o This would allow tickets to be resold by, for example, season ticket holders or individual ticket purchasers who cannot attend the event, but would eliminate the large premiums on ticket prices that are seen at online auctions or ticket brokers. o This has been tried in several American jurisdictions but is very difficult to enforce. o The Alberta, Manitoba and Ontario statutes prohibit reselling at higher than face value. The Alberta legislation is being repealed and the

8 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 7 Manitoba and Ontario legislation is reported to be ineffective with respect to on-line ticket resellers. Prohibition on reselling o This approach prevents casual resales of tickets as well as professional reselling. o One variation is to ban professional resellers but allow casual resellers. This presupposes that casual resellers do not engage in fraudulent practices. It also presupposes that the professional resellers can be distinguished, in law and in fact, from casual resellers. o Experience in the United States has demonstrated that this prohibition cannot be enforced against resellers who are out of the jurisdiction. Disclosure of the numbers of tickets sold through the primary seller, presold, held back by the promoter, or otherwise not made available for sale through the primary seller on the day the tickets became available for public sale o This approach would allow for complete transparency of ticket sales. o It would disclose if, in fact, there was preferential treatment of insiders or ticket resellers. o Presumably, it would encourage the reduction or elimination of preferential treatment, in order to avoid the negative publicity resulting from the disclosure. o This option has the potential to discourage events from being held in Saskatchewan events that are successful can sell out anywhere without the additional red tape, while events that are less successful may not be willing to risk disclosing their lack of success to the public. Limit the number of tickets purchased on any particular credit card o This approach would reduce the numbers of tickets that can be purchased by any particular reseller on a single credit card, making it more difficult to obtain high volumes of popular tickets. o This is already being done voluntarily by many primary ticket sellers. The limits are set by the promoter of the event. Control the number of tickets that can be sold to out-of-province IP addresses o Since many professional resellers do business outside of Saskatchewan, this would eliminate sales to those resellers. o The technology to do this is available. o It may result in resellers (or additional resellers) obtaining IP addresses in Saskatchewan to achieve compliance. o This would prevent consumers from neighbouring states and provinces from purchasing tickets to events in Saskatchewan.

9 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 8 Prevent the primary ticket seller from selling to or having arrangements with secondary sellers o This option would remove any opportunity for the primary ticket seller to divert tickets to a secondary seller, as well as eliminating the public perception that this is happening (even if it does not occur). o It would not likely prevent secondary ticket sellers from acquiring tickets for sale through other means. Licence ticket resellers and require them to provide refunds in the event of fraudulent tickets or event cancellation. o This is the approach that has been taken in several states. o Instead of prohibiting the practice, it would set some controls on it. o It is not yet known how effective this is as a method of consumer protection. Prohibit use of software to circumvent primary ticket sellers security software. o This would make more tickets available to the purchaser who is not in the resale business. o It is questionable whether this would be enforceable, particularly for outof-province and out-of-country purchasers.

10 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 9 6. QUESTIONS FOR DISCUSSION Is there a need to regulate ticket selling and reselling in Saskatchewan? Please explain your reasons for saying that. If you think that regulation is required, what form would the regulation take? Should the government require promoters to make any public disclosure following sales of tickets? Please explain your reasons for saying that. If there should be disclosure, should it be in every case or only in high profile, high demand situations? Would public disclosure have any drawbacks? For instance, would it prevent attractions from coming to Saskatchewan? If there is disclosure, to whom would the disclosure be made and how? What would be the remedy for failing to disclose? Who would be responsible for enforcing it? Should Saskatchewan implement legislation to prevent software programs that are used to buy large quantities of tickets automatically without human intervention? Please explain your reasons for saying that. Are there users of such software in Saskatchewan in any significant number? How would such legislation be enforced? Should Saskatchewan pass legislation to limit the number of tickets that can be bought for any given event on any particular credit card? Please explain your reasons for saying that. If so, what number of tickets should be the limit? Would this apply to ticket sales or resales or both? How would such legislation be enforced? Describe your experiences with purchasing tickets on-line. Have you ever bought tickets from a reseller, either on-line, through a newspaper advertisement, in person or otherwise? Have you ever bought a ticket that was a duplicate of a ticket that had already been used (resulting in your being denied admission)? If so, were you able to recover the purchase price from the vendor? Have you ever purchased tickets for someone else to give as a gift? Have you ever purchased tickets for an out-of-province event? Do you have season tickets for a sports team or a subscription to an artistic series? If so, have you ever been unable to use your tickets? If so, what did you do with them? If you sold them, did you sell them for face value or above or below face value?

11 TICKET SELLING AND RESELLING IN SASKATCHEWAN Page 10 Have you ever bought tickets through presales, for example as a member of a fan club, a radio station listeners club, a credit card holder, or as staff or associate of a venue or promoter? Please provide details of how you qualified for the presale(s).