New Federal and New York State Laws Enacted Against the Online Ticket Brokering Industry

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Over the past ten days, both Congress and New York state have outlawed automated ticket purchasing software, known as “bots” designed to stop ticket brokers from buying up all the good seats to concerts, sports games and Broadway shows and preventing the tickets from reaching the ticket-buying public.  As ticket brokers are not particularly popular due to the general public’s inability to purchase tickets to events at face value, there was very little opposition to the new laws which heavily increase the penalties for those who use computer software to bypass security controls on a retail ticket selling platform in order to get around ticket purchasing limits or other stated ordering rules.  In New York state, additionally, the new law criminalizes the use of ticket-purchase software to purchase seats.  As these new laws are potentially devastating both financially and criminally (in the case of the New York bot law), ticket brokers who receive a subpoena for records or are a target of a criminal or civil investigation for use of bots are wise to engage experienced lawyers who since 1991 have represented ticket brokers in battles against the federal government, New York’s Attorney General’s office and Consumer Affairs on issues relating to the ticket scalping business.

The New York Amended Law Follows Years of Investigation by the New York Attorney General

New York acted first, with the signing into law by Governor Cuomo of anti-bot legislation on November 28.  Going into effect 90 days from that date, the new Arts and Cultural Affairs Law § 25.24 stiffens the previous penalties for the use of bot software to purchase seats: previously just a civil penalty (albeit a very high one), the law now provides for not only increased financial penalties (up to $1500 for each ticket sold – or even offered for sale – which was purchased with bot software, as well as disgorgement of profits) but also makes it a misdemeanor punishable by up to a year in jail.  In addition, the new law specifically proscribes the use of bot software which acts with “human assistance” – thus clearly outlawing bot software which includes the use of a room filled with people in a foreign country to solve CAPTCHA queries prior to tickets being purchased online.

This new law comes after years of investigation by the New York Attorney General into the secondary ticket reselling industry with a focus on bot use.  That being said, the Attorney General has gone after the low-hanging fruit – ticket brokers – as he surely is aware that there is no popular support for ticket scalpers in any corner of the planet, let alone in New York where the ticket buying public is regularly forced to head to such sites as StubHub in order to pay far over face value for tickets to shows and games.  Despite producers of Broadway shows and other artists regularly holding back and scalping their own seats, despite Ticketmaster knowing full well which purchasers are using bots to buy seats sold on its platform (the IP addresses, email addresses and times of ticket purchases are known to Ticketmaster), the Attorney General has simply turned a blind eye and refused to not only stop these problems but has refused to even investigate them.  As such, even after the new Arts and Cultural Affairs Law goes into effect, consumers will be hard pressed to notice a difference in their ability to purchase better seats for face value prices.

The Federal Law is Broader — But Does Not Include Criminal Penalties

As for the federal law against the use of bot software, President Obama is poised to sign into law the Better Online Ticket Sales Act, or BOTS Act, passed last week by both Congress and the Senate with full bipartisan support – again, both Republicans and Democrats can agree on one thing: they all dislike ticket scalping.  The federal law is much broader and more vague than the New York law and does not contain criminal penalties; the law permits Attorney Generals from individual states as well as the Federal Trade Commission (FTC) to sue ticket brokers who use bot software. The broad federal law prohibits any person from “circumvent[ing] a security measure, access control system, or other technological control or measure on an Internet website or online service that is used by the ticket issuer to enforce posted event ticket purchasing limits or to maintain the integrity of posted online ticket purchasing order rules ….”  This vague, broad language will surely be sharpened by a judge once the first litigation against a broker is brought.  Again, the federal law does not bother to even address other huge problems in the ticket industry: unscrupulous producers and artists who scalp their own tickets, Ticketmaster which has surely unwittingly aided bot users in the purchase and resale of bot-purchased tickets, and even companies which use misleading websites to lure consumers into thinking they are purchasing tickets directly from the official ticket seller for that event.

Very Few Attorneys Have Litigated Ticket Industry Cases — Or Defended Brokers in Criminal and Civil Investigations

As there have been relatively very few ticket brokers targeted by the New York Attorney General for scalping-related transgressions over the past 25 years, there are obviously very few law firms which have handled such cases – and even less lawyers who have successfully litigated them.  Similarly, even less attorneys have faced off with federal prosecutors on ticket-related criminal and civil investigations.  Not surprisingly, there is a steep learning curve to even understand this complicated, somewhat secretive industry – and the laws designed to stop it.  The experienced ticket broker and bot software lawyers at the Law Offices of Jeffrey Lichtman have represented brokers for over 25 years on all issues related to the ticket industry.  Call us at (212) 581-1001 to discuss your situation today.