Topic:
RETAIL TRADE; CONSUMER PROTECTION;
Location:
CONSUMER PROTECTION;

OLR Research Report


October 7, 2003 98-R-0382

FROM: Judy Watson, Legislative Fellow

RE: Ticket Scalping Laws in Other States

You asked for a summary of Connecticut's ticket scalping law. You also asked how many other states impose restrictions on above-face value ticket sales of entertainment or sports events.

SUMMARY

Connecticut prohibits selling or attempting to sell a ticket or admission at a price greater than that printed on the ticket plus tax and a service charge up to three dollars without the permission of the owner or operator of the property where the event is being held. A first offense is a class C misdemeanor, a second offense is a class A misdemeanor, and any subsequent offenses are class D felonies.

We identified 15 states in addition to Connecticut that impose some restrictions on reselling tickets for entertainment or sporting events at above-the value price printed on the ticket (Arkansas, California, Connecticut, Florida, Georgia, Kentucky, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, and Wisconsin).

In Table One we have listed each of those states alphabetically, provided the citation to the relevant state law, and briefly summarized the sales restrictions. In addition, some of the literature we examined suggested there were municipalities throughout the country that may also impose some restrictions but we did not attempt to collect those.

Table 1

States with Restrictions on Ticket Sales Procuring above Face-Value Ticket Price

State

Restriction on Ticket Sales Price

Arkansas

Ark. Code Ann. 5-63-201

No resale allowed on athletic events or charity events Resale on high school or college music events restricted to face value plus reasonable credit card charges

California

Cal. Penal Code 346

No resale allowed if on grounds of event

Connecticut

CGS 53-289

$3 allowed as a service charge

Florida

Fla. Stat. Ann. 17.361

$1 only

Georgia

Ga. Code Ann. 10-1-310

$3 for certain sporting events by licensed ticket agents.

$0 for other events except original seller may authorize a service charge for sale of such ticket

Kentucky

Ky. Rev. Stat. Ann. 518.070

$0 unless authorized by the issuer

Maryland

Md. Code Ann. Bus. Reg. 4-318

$0 and a limit on the promoter

Massachusetts

Mass. Gen. Laws Ann. Ch. 140 185D

$2 and service charges

Minnesota

Minn. Stat. 609.805

$0

Missouri

Mo. Ann. Stat. 578.395

$0 but can collect a reasonable service charge

New Jersey

N.J. Stat. Ann. 56:8-33

$3 or 20% of the face value, whichever is greater

New York

Arts & Ca. Bk. 3b 25.13

$2

North Carolina

N.C. Gen. Stat. 14-344

$3 service charge

Pennsylvania

Pa. Stat. Ann. T.4 211

$5 or 25% of the face value, whichever is greater

Rhode Island

R.I. Gen. Laws 5-22-26

$3 or 10% of the face value, whichever is greater

Wisconsin

Wis. Stat. Ann. 42.07

$0—tickets to any amusement given by or under the auspices of the state fair park

BACKGROUND AND ARGUMENTS FOR AND AGAINST REGULATION OF SECONDARY MARKET TICKET SALES

Ticket resale by those other than the producer of a live event has been the subject of debate for decades. Until the 1980's, state and local governments sought to curb the resale of tickets by “ticket scalpers” through various legislative mechanisms such as restricting the resale of tickets when a ticket to a live event was sold above its printed face value. Also, legislation typically restricted the ticket scalper's physical presence at an event. This was accomplished by either banning the presence of ticket scalpers altogether, or, making the ticket scalpers stand a certain distance away from the event. In addition, legislation has sometimes provided licensing mechanisms as a means of “legitimizing” ticket scalpers, who then became licensed “ticket brokers” or agents.

In the past decade ticket scalping laws have evolved into laws that actually distinguish between a ticket scalper and a ticket broker. This is viewed by some as a means of bringing the resale market closer to a purely competitive, free market model of doing business. Others view the separation of ticket scalpers and ticket brokers as an unsuccessful venture, claiming that tickets are still being sold at prices as high as 1300% above face value. Such a high price, critics contend, inherently prevent individuals with lesser incomes from access to public events.

Tickets are generally sold in advance with a printed and predetermined face value. Because attendance at a live event has “fixed seating capacity” the demand for seats is the prime determining factor of a ticket's price. In addition, one-time events have a quality of uniqueness: watching a live event is the impetus for attending by some; for others, the notion of being part of a group provides the incentive for attending a one-time event. Ticket scalping results from an inherent secondary sales market in this high-demand, limited seating dilemma. The only way to avoid this phenomenon is to sell tickets only at admission time and never in advance of the event.

Opponents of anti-scalping laws state that because tickets are sold in advance of an event, re-sale of tickets will inherently occur. This is caused by a number of factors. For instance, if an event is a popular event, a line of individuals will inevitably form. Consequently, time spent in line is a commodity to those who can not, or will not, wait hours, or sometimes even over night, waiting in line to buy tickets. Thus, if a line is expected at the box office, scalpers will be present to perform the service for those willing to pay a higher ticket price to avoid standing in line.

A free market system allows people to call a broker and decide whether to buy a ticket based upon price and event location. A free market assumes that willing buyers seek out the services of willing sellers with little or no interference from government restraint. Proponents of a free market system assert that it will make ticket resales more available and resale prices cheaper then under a regulated system. Opponents of a free market system assert it will encourage scalpers to accumulate more tickets and discriminates against those who can not afford to pay inflated prices.

Some people assert that producers of live events do not like ticket scalpers for several reasons. First, at an unpopular event, when scalpers stand outside and sell tickets at below face value, producers lose the chance to sell the tickets they are inevitably stuck with. Second, when scalpers sell tickets above face value, producers do not share in the profits made. Last, producers claim that scalpers are loud, aggressive and a nuisance in general. Moreover, scalpers tend to hire “droids” or “beggars” that wait in line in place of the scalpers and the droids hired tend to represent the homeless and disenfranchised more often than not. Producers claim this makes other ticket buyers uncomfortable.

Opponents of anti-scalping laws state that more brokers might enter the secondary ticket sales market if restrictions against such were lifted. This would not only alleviate the need for droids but would offer legitimacy to the industry along with lower ticket prices because of a free market competition system. Moreover, ticket brokers assert that if there was not a need for their service the business would not continue to be in existence and the fact remains that business thrives because individuals view the service as beneficial to them in some way.

ATTACHMENTS

In section A of the attached materials, we have provided a copy of each of these state's laws. In section B of the attached materials we have provided a copy of the report prepared for Governor Christine Todd Whitman concerning New Jersey's recent experiment with a “free market” approach to ticket resales. The report was prepared by Attorney General Peter Verniero and the Director of the Division of Consumer Affairs, Mark S. Herr.

As you know, New Jersey temporarily suspended its restrictions on ticket scalping from October 4, 1995 to April 4, 1997. As part of this trial-period process, Governor Whitman asked the Division of Consumer Affairs to review the moratorium's impact. According to a cover letter to Governor Whitman from Verniero and Herr, the review found that “there is no persuasive evidence that suggests that the so-called free market approach to ticket resales has lowered prices or made more tickets available to consumers.” The letter goes on to say, “the results, at best, are inconclusive.”

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