Ticket Resale Legal Issues

Is This Ticket Scalping?

I’m guessing a lot of people have questions about the legal issue of being a ticket broker.  But first of all, ticket brokering is NOT ticket scalping in a traditional sense.  Ticket scalping typically involves reselling tickets within a certain proximity of a venue.  A number of states have laws that prevent ticket resellers from selling tickets within a certain distance from a venue. But ticket brokering is an altogether different animal. Ticket brokers operate out of their home or office, and transactions take place online. 

So are there are any legal issues with being a Ticket Broker?  The answer to that depends.   In a nutshell, it’s up to each individual state how they chose to deal with it.  And state ticket resale laws only apply to the citizens of the state.

As of March 2011, the five states below have laws that strictly limit how much ticket resellers can charge.  Several states prevent reselling tickets for any amount over face value, while some allow ticket resellers to charge just a small amount overt face value to cover costs .

State

Law

Fine/penalty

Massachusetts

 

Limits ticket resellers to charging no more than $2 over face plus costs. Costs can include service charges and misc costs, including the cost of paying someone to wait in line.

 

 

Fine – not more than $500.  However, for the 3rd offense, jail time is a possibility.

Michigan

 

Prohibits the resale of tickets for more than face value unless the individual has permission from venue owner.

 

 

Misdemeanor – $100 fine.

Kentucky

 

Prohibits the resale of a ticket in excess of its face value for all entertainment events held in the state unless has permission from the owner.

 

Fine – between $50 and $100.

Arkansas

 

Prohibits the resale of a ticket in excess of its face value plus handling charges for high school or college athletic events, events held for the benefit of charity, and any music events held in the state.

 

Misdemeanor – a fine of between $25 and $500.

Rhode Island

 

Allows ticker resellers, such as recognized Internet ticket sites, to charge a reasonable fee – defined in law as not more than $3 or 10 percent of the price printed on the ticket.

 

A fine – $1000.00

 

Laws only apply to citizens of each state:

For example, I live New Hampshire where there are no laws restricting reselling tickets.  Just south of New Hampshire is Massachusetts which does have restrictions on how much profit you can make on tickets.  If a ticket broker in Massachusetts wants to resell Boston Red Sox tickets, they can sell tickets for no more than $2 over the face value plus their cost of obtaining the ticket. The cost of obtaining the ticket can include expenses such as advertising, postage and payments to an employee who waited in line to buy the ticket.  It sounds like no one in their right mind would become a ticket broker in Massachusetts!

So what about citizens in Massachusetts that just want to resell unwanted tickets?  It seems murky…. the laws apply to individuals who "engage in the business of reselling tickets".  Does this mean that this restriction only includes individuals who have a ticket brokering business?  Hmmmmm……..

However, if I want to resell Red Sox tickets, there are no restrictions on how much I can sell them for.  I’m glad I live in New Hampshire, the "live free or die state."

Trends in state ticket resale laws:

The trend among state law makers is to repeal anti-scalping laws, whether because of an increasing inability to enforce such laws, or an acceptance of free market forces.  For example, North Carolina and Florida, recently repealed anti-scalping laws dealing with internet ticket reselling.  As in a number of states, there are restrictions on selling tickets within a certain distance from the venue.  But except for these five states, internet ticker resellers are free to charge whatever the market commands.

Several states, including New York and Vermont, have enacted laws to prohibit the use of “bots” or automated software that can circumvent large blocks of tickets.   I don’t know too many people that would take issue with banning this practice.  As the ticket sales technology changes and evolves, so must the laws that govern them.
 

The curious case of New York:

In 2007, NY repealed their anti-scalping laws as an experiment, which effectively allowed ticker brokers to operate without price limits for the first time. This law was set to expire after 3 years in 2010,and because of  delays in the state legislature, the original highly restrictive anti-scalping law was in effect again briefly.   However, the law passed in 2007 was then reenacted as part of another ticket resale bill that addressed the issue of paperless tickets. 

This less restrictive law is set to expire regularly – the next expiration date is May 15, 2011, so the NY legislature will need to reenact it.   This seems likely.  A study by the NY legislature was conducted to examine the impact of the new less restrictive law on consumers, and it concluded that it had a positive effect on consumers.