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State calls reselling of sports, concert tickets ‘fixed game’

ALBANY – Sports fans and concertgoers have grown increasingly suspicious about how hard it is to get their hands on tickets to prime events and, even if they do, run into prices that soar far above face value.

As it turns out, they’ve had good reason, according to state Attorney General Eric T. Schneiderman, following a three-year investigation by his office.

“Ticketing is a fixed game,” said Schneiderman, who will release a report Thursday showing that consumers face multiple and often impenetrable obstacles in their way of a fair shot at getting their hands on tickets to popular events at fair prices.

Those now under investigation as a result of the Schneiderman probe run the gamut of industry players.

At one end, sources say, is the National Football League, which the attorney general is looking at in connection with possible restraint-of-trade issues related to ticket-reselling policies. At the other end are largely unknown but profitable ticket brokers now facing probes for employing illegal computer software programs used to beat fans in the race to purchase tickets.

A copy of the 43-page report by Schneiderman, which includes a number of issues for state lawmakers to tackle, was obtained Wednesday by The Buffalo News.

The situation is costly for consumers. Brokers, on average, mark up ticket prices for events in New York by 49 percent, and fees – called “administrative” or “service” or various other names – can average about 21 percent of the ticket price. The report called on companies known as ticket resale platforms, such as StubHub, which are major sources of tickets for companies in the next chain of the resale marketplace, to step up and at least ensure that firms they deal with are licensed in New York.

Worsening the situation, the report indicated, have been changes to state laws over the last decade or so that in large part trusted an industry and competition to reduce a long history of ticket scalping in New York.

The ticket-selling system’s problems have been encountered by everyone from fans trying to buy tickets to Paul McCartney’s Buffalo concert last fall to a rodeo in Manhattan, concerts in Saratoga Springs and sports events from Brooklyn to Buffalo. Perhaps illustrating just how deep the problems run, the Schneiderman report says brokers jumped in and made money on the sale of what were supposed to be free tickets to events associated with last year’s visit to New York City by Pope Francis.

Sources told The News that Schneiderman, in an investigation he is leading with a handful of attorneys general from other states, has an active probe underway of the NFL.

Officials declined to identify specific NFL teams or to discuss the review of the NFL in any detail.

Schneiderman also has ongoing investigations of a number of brokers for possible criminal violations, including how they may have done illegal end runs around ticket vendors, such as Ticketmaster and AXS, in ways to dominate the purchasing market when prime tickets are put up for sale. Nearly all of the resellers under investigation are not licensed, as required by law, in New York.

Battling ‘ticket bots’

The problem of ticket availability and pricing run-ins that consumers face are systemic, the attorney general’s report shows.

When tickets go on sale, consumers trying to obtain them online, over the phone or in person are engaged in a battle with an unseen competitor: “ticket bots,” illegal computer programs used by some brokers to grab large amounts of tickets at face value only to turn around and often set sky-high prices.

How effective are ticket bots? One broker using the software programs last year grabbed 1,012 tickets in just 60 seconds for a U2 concert at Madison Square Garden.

Tens of thousands of tickets each year are grabbed up using the illegal computer software, the report found.

Brokers then turn around, Schneiderman said, and mark up face value ticket prices by an average of 49 percent, though 1,000 percent markups are not unusual.

But before consumers even fight against ticket bots, they already are swimming upstream in their quest for prime tickets, Schneiderman said. His investigation found that “holds” placed on tickets to popular events sharply limit the number of tickets that consumers might even be able to land. The practice has put “industry insiders” first in line for thousands of tickets sold over the last three years.

At a Kayne West show at Barclays Center in Brooklyn, 29 percent of tickets were blocked from going to the regular marketplace and, instead, held for “insiders,” while a 2014 Katy Perry concert saw just 12 percent of tickets put up on the regular consumer marketplace in an initial sales period.

Schneiderman called for more transparency when tickets are set aside and held before remaining tickets get released to fans.

Schneiderman said that the ticket broker industry today does not operate underground as it did in the past, but that it “remains difficult to learn about and often operates in violation of one or more state laws.”

“The average fan vying to purchase a ticket to a popular concert has little hope of competing against brokers, many of whom use illegal and unfair means to purchase tickets,” the report alleges.

The attorney general also is calling for an array of responses to address ticket sales in New York, including addressing a provision in state law allowing resellers to charge “reasonable” fees for supposedly service or processing charges. Those, he said, end up being at “outlandish” levels.

The stories of fans paying the price for a thriving secondary ticket-selling market have grown over the years across the country. Last June, The News reported that a record 57,500 season ticket sales for the Buffalo Bills created an environment at the beginning of the summer where individual seats were already unavailable in the lower and upper bowls for the first seven home games of the season.

That is, except on the secondary broker market, where some 10,000 seats were still for sale – at up to five times the face value of the tickets.

New York State government also has helped worsen the problem, the report suggested. In 2007, a longtime cap on the ticket markup that resellers could charge was eliminated. It was dubbed at the time as a consumer-friendly act that, since then, has been taken advantage of by middlemen with the use of computer programs and other tools.

The report notes that ticket scalping has been a problem in New York for generations, with Gov. Nathan L. Miller in 1922 signing an anti-scalping measure into law to address “gross profiteering” in ticket sales at events including boxing and wrestling matches.

Subsequent laws over the years setting caps on levels brokers could charge consumers above face value ticket prices encountered either difficulty, or lack of interest, in enforcement, as an underground sales market flourished.

In what backers declared a consumer rights victory, in 2007 lawmakers began the march away from laws capping ticket resale prices.

Albany also began regulating brokers with new disclosures about ticket sales.

A new infusion of competition would control ticket prices, backers argued, and consumers could be in store for price drops.

It didn’t work out that way, Schneiderman said, in calling for changes to the 2007 law. There also are questions whether a 2010 set of law changes have helped or hurt; one change that year mandated consumers only be charged “reasonable” fees, in addition to face value markups, by ticket sellers. The report being released Thursday said that such resellers’ charges, as administrative or “special service” fees, often add 21 percent to the price of a ticket, and at times can double a ticket’s price.

Under a section titled “The Legislature should act,” Schneiderman calls for a number of statutory changes, including ending a ban on nontransferrable paperless tickets. The use of such tickets, backed by artists including Bruce Springsteen and Miley Cyrus, require a consumer entering an event to show identification and the credit card information that were used to buy a ticket, thereby all but blocking the ability for tickets to be resold by brokers. In 2010, lawmakers allowed what Schneiderman called a de facto ban on such paperless tickets in New York.

Problems grow worse

The attorney general also wants lawmakers to make ticket bots not just illegal, as they are now, but subject to criminal prosecution; current law imposes just civil sanctions.

The Schneiderman report, involving a review of 150 venues across the state including First Niagara Center in Buffalo, comes nearly 16 years since then-Attorney General Eliot L. Spitzer, who later became governor, made one of the first modern-era attacks by a top state official against ticket scalping.

Much has changed since 1999, Schneiderman noted, in the technology of ticket selling and the emergence of state laws that officials believe would offer consumer more protections.

“Yet many of the problems described in 1999 have persisted and, in some cases, have grown worse,” the Schneiderman report states. “Whereas in many areas of the economy the arrival of the Internet and online sales has yielded lower prices and greater transparency, event ticketing is the great exception.”