California law would ban Ticketmaster’s scalper program

Investigative Reporters Robert Cribb and Marco Chon Oved, The Star

Ticketmaster is the target of proposed legislation in California that would ban its scalper program for doing the same thing that bots do — help resellers buy and sell vast quantities of tickets and make it harder for fans to get in the door at face price.

TradeDesk, a service the world’s largest ticket seller quietly markets to its high-volume customers, was the subject of an undercover investigation by the Star and CBC at a Las Vegas scalping convention last year that revealed how it allows scalpers to link dozens or hundreds of Ticketmaster accounts to gather vast quantities of seats in breach of ticket purchasing limits.

A proposed California consumer protection law draws parallels between ticket-harvesting software, which is already illegal there, and Ticketmaster’s TradeDesk program.  (CBC)

“The article in the (Star/CBC Investigation) definitely prompted a look into this,” said Nathan Little, a senior legislative aide to Assembly Member Bill Quirk, who proposed the legislation.

“It’s the goal of the state in enacting consumer protections in this area to make sure that average Californians have equitable access to tickets,” he said.

Quirk’s bill equates TradeDesk with bots — ticket-harvesting software which is already illegal in California and many other jurisdictions — and seeks to expand existing anti-bot laws to include TradeDesk.

“While it looks and acts like what we would consider a bot, the distinction may be drawn that TradeDesk is actually a service, which allows a ticket scalper to more effectively skirt the law against use of bots,” reads a committee analysis prepared for the California legislature. “According to the Toronto Star, Ticketmaster employees have advertised TradeDesk in a way that is functionally indistinguishable from bots.”

So far, the bill has passed three committees unanimously. It is now slated for a floor vote this week before moving to the state senate for final approval.

Ticketmaster did not respond to multiple requests for comment on the new law.

“When Ticketmaster takes advantage of its position and lets scalpers drive up the prices people pay to attend shows — that is unacceptable. It is important we protect our consumers, and not let big companies abuse their power,” said Quirk, who has tabled consumer protection legislation in the past, in a written statement.

“It shouldn’t matter if scalpers are using custom-made bots or if Ticketmaster is letting them use TradeDesk ... These practices should not be allowed.”

Reg Walker, a London-based security consultant for artists, concert venues and festivals in the U.K. called the proposed legislation “groundbreaking.”

“If primary ticket sellers actually made some real effort to control who they sell tickets to, ordinary hard working men and women would not be being priced out of the ability to see their favourite artists or sports teams,” he said. “I’ve personally examined several million ticket sales by primary ticket companies and many seem incapable of enforcing something as simple as a six-ticket limit per household. Legislators need to hold them to account in order to protect consumers.”

When reporters from the Star and CBC, posing as small-time scalpers from Canada, approached senior sales staff pitching Trade Desk software in Las Vegas last year, one said, “I have brokers that have literally a couple of hundred Ticketmaster accounts … I think the last thing we want to do is impair your ability to sell inventory. That’s our whole goal here on the resale side of the business.”

A senior U.S. industry executive in competition with Ticketmaster, speaking on condition of anonymity for fear of reprisals, said many in the industry welcome the California legislation.

“If the fight’s fair, that’s fine. But (by) connecting to Tickemaster’s back-end system, they’re giving brokers an unfair advantage against consumers. They never disclosed to consumers, who didn’t know until your stories came out. And when they learned of it, they were up in arms.”

Even scalpers — or “brokers” as they are referred to in the industry — are wary of what is coming, he said.

“The brokers feel like they’re playing with the devil, but they have no other option because they have such a strategic advantage by using the primary sale monopoly in the second market. (Ticketmaster has) a virtual monopoly on tickets, and when you use one monopoly to create another monopoly, that’s when you come into violation of anti-trust law,” the ticket industry executive said.

The anti-TradeDesk legislation, if passed in the U.S.’s largest state, would be influential across the country, say experts.

“There could be a ripple effect across the U.S. as politicians line up to take advantage of changing views on these types of activities,” said Richard Powers, associate professor at University of Toronto’s Rotman School of Management. “Hopefully some pressure will be levelled at the current Ontario government who promised to look at this again.”

But Powers is doubtful the current Progressive Conservative government in Ontario will act.

“As ticket purchasers, we can expect a lot more of the same — limited access and high prices as the Ticketmasters and StubHubs of the world continue to ply their unethical trade practices unimpeded by a government who believes that a buck a beer will solve everything,” he said.

Ontario’s previous Liberal government proposed legislation aimed at protecting ticket buyers from price gouging by capping resale prices at 50 per cent above face price. But the legislation died when Premier Doug Ford took office, with his government saying it was unenforceable.

“In a way we’re fighting economics,” said Little. “The supply for tickets is relatively inelastic. When there’s a great deal of demand, there’s going to natural economic forces to increase the ticket price.”

But he rejects the Ontario approach of killing legislation based solely on enforcement challenges.

“I understand the problems around enforcement (but) if we get caught flat footed and can’t take action, that’s not better,” he said. “In cases where there has been an egregious violation, I think it’s better for a government to be prepared for that and say, ‘We wrote laws to prevent abuse by entities that might have a lot of power. You guys violated that and we can take action.’”

The proposed law in California isn’t the only way that TradeDesk is being targeted. Courts across Canada and in the U.S. will soon have to consider the issue.

Following the Star/CBC investigation, Sotos Law Group filed a class-action suit in Ontario alleging Ticketmaster was “wilfully blind to the use of ‘bot’ software ... (to) obtain tickets.”

Meanwhile, Regina-based Merchant Law Group modified an existing class action to include the TradeDesk platform. In January, when the Competition Bureau ruled TradeDesk did not breach federal competition law, the lawsuit was forced to switch direction.

“It would have been better if the competition officials had pursued it as well,” said lawyer Tony Merchant. “But they haven’t said, ‘We think this doesn’t have substance.’ They’ve just said, ‘We’re not going to pursue it,’ and left it to be pursued provincially.”

Merchant now has class action lawsuits filed in Saskatchewan and Quebec.

“We still think that what TradeDesk does — ignoring bots and synchronizing multiple accounts to game the system — is wrong,” he said. “We intended to pursue it and will pursue it.”

Meanwhile, back in California, another class-action lawsuit was filed days after the undercover investigation was published.

That lawsuit, filed by Hagens Berman Sobol Shapiro LLP, alleges that in developing and marketing TradeDesk, Ticketmaster is “secretly facilitating a shortage of its product.”

“Ticketmaster hasn’t wanted to rid itself of scalpers because, as it turns out, they have been working with them,” the statement of claim says. “This is unfair to consumers who typically pay more on the secondary market for the tickets themselves, of which a percentage kicks back to Ticketmaster.”