Ticket resale law leaves industry in limbo

A little-known state law allowing the resale of tickets for profit expired May 15, at least temporarily creating chaos and uncertainty for resellers and consumers doing business in New York.

After the law that took scalping tickets out of the shadows lapsed, ticket resale giant StubHub posted warnings that selling tickets in New York well above face value “may” be illegal and that vendors sell at their own risk.

TicketsNow listed only away games for New York teams, leaving consumers in the dark as to why seats seemed to dry up for home games.

Legislators scrambled to patch together an extension of expired regulations until a new law could be approved, leaving ticket sales in limbo with a ban on sales of tickets for more than $2 above face value.

“When listing tickets for sale on StubHub, users are informed that they must adhere to their state’s current ticket resale laws,” a StubHub spokesman said. “We are confident that the legislators in New York will do what’s best for consumers, which is preserving open, competitive marketplaces.”

The state Senate has passed a bill, sponsored by Sen. Craig Johnson, D-Port Washington, that would allow the resale of tickets and also ban the use of software to buy up blocks of tickets before the reach the public. But the Assembly has a separate bill to regulate ticket sales.

Johnson, chairman of the Senate’s Standing Committee on Investigations and Government Operations, scheduled a June 2 hearing for discussion of his bill. The governor’s office and members of the Assembly are seeking additional provisions

“He’s keeping an open mind on the issue, which was thrust on us by the governor,” Rich Azzopardi, a spokesman for Johnson, said. “We look forward to hearing what all the pa rties have to say.”

The sticking point regards the handling of paperless ticket technology, which Gov. David A. Paterson worries may create problems for consumers.

Instead of issuing paper or e-mail tickets, companies such as Ticketmaster sometimes issue “paperless tickets,” confirming purchase electronically and requiring purchasers to show identification at venues.
Supporters of paperless tickets argue they let artists channel tickets to fans rather than firms that resell for profit. Miley Cyrus, for instance, issues only paperless tickets.

“This arguably cuts down on ticket speculation insofar as the actual purchaser has to be present in order to gain access to the concert venue,” according to a report issued by Secretary of State Lorraine A. Cortes-Vazquez in February.

But the report also raised concerns that paperless tickets could prevent or force the resale of tickets through sites controlled by the original seller, restraining trade.

“This is an issue that will likely receive much scrutiny in the future, particularly if the frequency of the new procedure’s use is expanded,” Cortes-Vazquez wrote.

Rather than leaving restrictions of paperless tickets out of the law, Paterson and the Assembly want the state to mandate that companies give consumers other options when issuing paperless tickets.

“It’s absurd that Ticketmaster demands more private information for a 13-year-old to attend a Miley Cyrus concert than the federal government requires to board an airplane,” National Association of Ticket Brokers counsel Gary Adler said.

The NATB cites problems with paperless tickets including scanner errors, parents forced to wait in line to obtain tickets for children and tickets not honored due to inability to provide required identification.

“Fans have the right to receive tangible and transferable tickets in advance of an event, and the right to give, gift, sell or use them as they wish,” Adler said.

Paterson and the NATB argue brokers shouldn’t be allowed to charge additional fees for the privilege of reselling paperless tickets, which should be the fans’ property after purchase.

“In many cases, these entities require that ticket holders charge minimum prices and pay substantial service charges just to get rid of tickets that they can no longer use,” Paterson said.

He said the right to opt out of paperless tickets will guarantee consumers will be able to “give tickets as gifts, and transfer or sell tickets that they cannot use to other people without having to go through the entity from which they originally purchased the tickets.”

Others argue if New York bans exclusively paperless ticket sales, some artists may choose to perform in nearby states.

“If artists feel strongly about this, they’ll just go to the Meadlowlands and New York will lose out,” Azzopardi said.

New York from 1922 to 2007 imposed price caps on ticket resales, rising to as much as 45 percent of face value. The 2007 law expired June 1, 2009 and was renewed by a vote of 133 to 9 until May 15.

Cortes-Vazquez in her February report on ticket reselling said “these legitimate businesses” contribute to the economy.

About 700 ticket broker websites operated in North America as of 2007 with annual revenue ranging from $2.5 billion to $10 billion, according to the report.