GAO-18-347, EVENT TICKET SALES: Market Characteristics and Consumer Protection Issues

EVENT TICKET

SALES

Market Characteristics

and Consumer

Protection Issues

Report to Congressional Requesters

April 2018

GAO-18-347

United States Government Accountability Office

Highlights of GAO-18-347, a report to

congressional requesters

April 2018

EVENT TICKET SALES

Market Characteristics and Consumer Protection

Issues

What GAO Found

Ticket pricing, resale activity, and fees for events vary. Tickets to popular events

sold on the primary market sometimes are priced below the market price, partly

because performers want to make tickets affordable and maintain fans’ goodwill,

according to industry representatives. Tickets are often resold on the secondary

market at prices above face value. In a nongeneralizable sample of events GAO

reviewed, primary and secondary market ticketing companies charged total fees

averaging 27 percent and 31 percent, respectively, of the ticket’s price.

Consumer protection issues include difficulty buying tickets at face value and the

fees and marketing practices of some market participants.

• Professional resellers, or brokers, have a competitive advantage over

consumers in buying tickets as soon as they are released. Brokers can use

numerous staff and software (“bots”) to rapidly buy many tickets. As a result,

many consumers can buy tickets only on the resale market at a substantial

markup.

• Some ticket websites GAO reviewed did not clearly display fees or disclosed

them only after users entered payment information.

• “White-label” resale sites, which often appear as paid results of Internet

searches for venues and events, often charged higher fees than other ticket

websites—sometimes in excess of 40 percent of the ticket price—and used

marketing that might mislead users to think they were buying tickets from the

venue.

Selected approaches GAO reviewed, such as ticket resale restrictions and

disclosure requirements, would have varying effects on consumers and

businesses.

• Nontransferable tickets. At least three states restrict nontransferable

tickets—that is, tickets whose terms do not allow resale. Nontransferable

tickets allow more consumers to access tickets at a face-value price.

However, they also limit consumers’ ability to sell tickets they cannot use,

can create inconvenience by requiring identification at the venue, and

according to economists, prevent efficient allocation of tickets.

• Price caps. Several states cap the price at which tickets can be resold. But

according to some state government studies, the caps generally are not

effective because they are difficult to enforce.

• Disclosure requirements. Stakeholders and government research GAO

consulted generally supported measures to ensure clearer and earlier

disclosure of ticket fees, although views varied on the best approach (for

example, to include fees in an “all-in” price or disclose them separately).

Some market-based approaches are being used or explored that seek to

address concerns about secondary market activity. These approaches include

technological tools and ticket-buyer verification to better combat bots. In addition,

a major search engine recently required enhanced disclosures from ticket

resellers using its advertising platform. The disclosures are intended to protect

consumers from scams and prevent potential confusion about who is selling the

tickets.

View GAO-18-347. For more information,

contact

Michael Clements at (202) 512-8678

[email protected]

Why GAO Did This Study

Tickets for concerts, theater, and

sporting events can be purchased—

typically online—from the original seller

(primary market) or a reseller

(secondary market). Some state and

federal officials and others have raised

issues about ticketing fees, the effect

of the secondary market on ticket

prices, and the transparency and

business practices of some industry

participants. Event ticketing is not

federally regulated. However, federal

legislation enacted in 2016 restricts

bots (ticket-buying software). Also, the

Federal Trade Commission (FTC) has

taken two enforcement actions related

to deceptive marketing by ticket sellers

under its broad FTC Act authority.

GAO was asked to review issues

around online ticket sales. This report

examines (1) what is known about

online ticket sales, (2) consumer

protection issues related to such sales,

and (3) potential advantages and

disadvantages of selected approaches

to address these issues.

GAO focused on concert, theater, and

major league sporting events for which

there is a resale market. GAO

analyzed data on fees, ticket volume,

and resale prices from a variety of

sources; reviewed the largest ticket

sellers’ websites and purchase

processes; and reviewed federal and

state laws and relevant academic

literature. GAO also interviewed and

reviewed documentation from

government agencies; consumer

organizations; ticket sellers; venue

operators; promoters and managers;

sports leagues; and academics

(selected for their experience and to

provide a range of perspectives).

Page i GAO-18-347 Event Ticket Sales

Letter 1

Background 3

Ticketing Practices, Prices, Fees, and Resale Vary by Industry

and Event 6

Consumer Protection Concerns Include the Ability to Access

Face-Value Tickets and the Fees and Clarity of Some Resale

Websites 18

Effects of Ticket Resale Restrictions and Disclosures on

Consumers and Business Would Vary 36

Agency Comments 51

Appendix I Objectives, Scope, and Methodology 53

Appendix II GAO Contact and Staff Acknowledgments 58

Tables

Table 1: Key Participants in the Primary and Secondary Markets

for Event Tickets 3

Table 2: Selected Research on Ticket Resale Prices and the

Extent of Resale 13

Table 3: Observed Fees Charged by Three of the Largest Primary

Ticketing Companies 17

Table 4: Fees Charged by Three of the Largest Ticket Resale

Exchanges 18

Table 5: Potential Advantages and Disadvantages of Selected

Legislative or Regulatory Actions Related to Ticket Resale 36

Figures

Figure 1: Hypothetical Example of White-Label Search Results

and Website 26

Figure 2: Hypothetical Examples of How a Ticket Price and Fees

Can Initially Be Displayed 43

Contents

Page ii GAO-18-347 Event Ticket Sales

Abbreviations

BOTS Act Better Online Ticket Sales Act of 2016

DOJ Department of Justice

FTC Federal Trade Commission

IP Internet protocol

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Page 1 GAO-18-347 Event Ticket Sales

441 G St. N.W.

Washington, DC 20548

April 12, 2018

The Honorable Greg Walden

Chairman

The Honorable Frank Pallone, Jr.

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Bill Pascrell, Jr.

House of Representatives

The Honorable Fred Upton

House of Representatives

In recent years, consumers and others have raised issues about the

online ticket marketplace for concerts, commercial theater, and sporting

events.

For example, some consumers have complained about difficulty

obtaining face-value tickets for popular events at the primary, or initial,

sale to the general public—only to find the tickets immediately available at

high markups on the secondary, or resale, market. In response, event

organizers and legislators have targeted ticket bots—automated software

that ticket brokers can use to buy large volumes of tickets. The Better

Online Ticket Sales Act of 2016 (BOTS Act) restricted the use of bots and

gave the Federal Trade Commission (FTC) and state attorneys general

the authority to pursue violators with civil actions.

Other issues that have

been raised include the amount of ticket fees and restrictions on

transferring some tickets.

You asked us to review the marketplace and consumer protection issues

related to online ticket sales. This report examines (1) what is known

about primary and secondary online ticket sales, (2) the consumer

protection concerns that exist related to online ticket sales, and (3)

For purposes of this report, we use “online” to refer to activity that occurs on a website or

through a mobile application. Although this report focuses on online ticketing, in some

cases the issues discussed could also apply to tickets purchased via telephone or at a

physical location.

Better Online Ticket Sales Act of 2016, Pub. L. No. 114-274, 130 Stat. 1401 (2016)

(BOTS Act).

Letter

Page 2 GAO-18-347 Event Ticket Sales

potential advantages and disadvantages of selected approaches to

address these concerns.

To address the first objective, we obtained and analyzed data on ticket

volume and resale prices obtained from ticket sellers’ websites for a

nonprobability sample of 22 events, which were selected to represent a

variety of event types and popularity levels. We collected data from

October 16 through December 20, 2017. We also reviewed trade industry

data on ticket prices and sales.

To address the second objective, we reviewed the websites of 6 primary

market ticket sellers, 11 secondary ticket exchanges, and 8 ticket sellers

using “white-label” websites.

For a sample of 31 events, chosen to reflect

a mix of event types and venue sizes (e.g., arenas, theaters), we

reviewed the process of purchasing tickets online and documented when

and how clearly fees and restrictions were disclosed. In addition, we

assessed the accuracy of information that customer service departments

of three large secondary ticket exchanges provided. We also reviewed

relevant enforcement activity by federal and state agencies and obtained

and analyzed summary complaint data from FTC’s Consumer Sentinel

Network database.

To address the third objective, we reviewed federal and selected state

laws and examined the experiences of three U.S. states (Connecticut,

Georgia, and New York) with relevant event ticketing laws. We also

reviewed foreign government reports to obtain information on relevant

ticketing restrictions in two foreign countries (Canada and the United

Kingdom) with similar consumer protection issues reviewed in this report.

For all three objectives, we reviewed documentary evidence (such as

academic studies, trade reports and databases, and industry literature)

and interviewed staff from FTC, Department of Justice (DOJ), and three

state offices of attorney general; consumer organizations; primary and

secondary ticket sellers; venue operators, event promoters, and artists’

managers and agents; major sports leagues; and academics who have

studied the ticket marketplace—all of whom were selected for their

experience and to provide a range of perspectives. For more information

on our scope and methodology, see appendix I.

A white-label website is a sales website built by one company that allows affiliates to use

the software to build their own, uniquely branded websites.

Page 3 GAO-18-347 Event Ticket Sales

We conducted this performance audit from November 2016 to April 2018,

in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain

sufficient, appropriate evidence to provide a reasonable basis for our

findings and conclusions based on our audit objectives. We believe that

the evidence obtained provides a reasonable basis for our findings and

conclusions based on our audit objectives. We conducted our related

investigative work in accordance with investigative standards prescribed

by the Council of the Inspectors General on Integrity and Efficiency.

The marketplace for primary and secondary ticketing services consists of

several types of participants, including primary market ticketing

companies, professional ticket brokers, secondary market ticket

exchanges, and ticket aggregators (see table 1). Other parties that play a

role in event ticketing, as discussed later in this report, include artists and

their managers, booking agents, sports teams, producers, promoters, and

operators of event venues (such as clubs, theaters, arenas, or

stadiums).

Table 1: Key Participants in the Primary and Secondary Markets for Event Tickets

Participant

Description

Primary market ticketing

companies

Companies that provide initial-sale ticketing services for

events

Professional ticket brokers

Companies or individuals who buy tickets, usually on the

primary market, with the intention of reselling at a profit

Secondary market ticket

exchanges

Online resale platforms that facilitate transactions

between third parties (brokers or consumers), but

generally do not maintain their own ticket inventory

Ticket aggregators

Websites that aggregate in one place the resale listings

from multiple secondary ticket exchanges

Source: GAO. | GAO-18-347

Although the terms vary with use, “promoter” generally refers to a person or company

that contracts with artists or their representatives to arrange events. Promoters also

secure venues in which events will occur, arrange for production services, and market

events to the public. “Producer” generally refers to a person or company that oversees all

aspects of a theater production, including hiring creative staff (such as writers, directors,

composers, choreographers, and performers), securing financing and a venue, and

promoting the event. For this report, we use “event organizers” to refer to a combination of

artists, managers, booking agents, promoters or producers, and venue operators.

Background

The Ticketing Marketplace

Page 4 GAO-18-347 Event Ticket Sales

The private research firm IBISWorld estimated that online ticketing

services (including ticketing for concerts, sporting events, live theater,

fairs, and festivals) represented a $9 billion market in 2017, which

included both the primary and secondary markets.

Another private

research firm, Statista, estimated that U.S. online ticketing revenues for

sports and music events totaled about $7.1 billion in 2017.

Estimates of

the total number of professional ticket sellers vary. IBISWorld estimated

that the U.S. market for online event ticket sales included 2,571

businesses in 2017. The Census Bureau lists more than 1,500 ticket

services companies as of 2015 based on the business classification code

for ticket services. However, this does not provide a reliable count of

companies in the event ticketing industry because it includes companies

selling tickets for services such as bus, airline, and cruise ship travel,

among other services.

However, a small number of companies conducts the majority of event

ticket sales. In the primary ticket market—where tickets originate and are

available at initial sale—Ticketmaster is the largest ticketing company.

DOJ estimated that Ticketmaster (whose parent company is now Live

Nation Entertainment) held more than 80 percent of market share in

2008, and it was still the market leader as of 2017.

Less than a dozen

other companies control most of the rest of the primary market, by our

estimates. In the secondary market—where resale occurs—more

companies are active, but StubHub estimated it held roughly 50 percent

of market share as of 2017. According to Moody’s Investors Service,

Ticketmaster, which in addition to its primary market ticketing has a U.S.

resale subsidiary, held the second-largest market share as of 2016.

The majority of ticket sales occur online, through a website or mobile

application. Ticketmaster’s parent company reported that 93 percent of its

primary tickets were sold online in 2017.

The industry research group

IBISWorld, Online Event Ticket Sales in the US.: Market Research Report, (December

2017)

Statista, “Event Tickets,” accessed January 17, 2018,

https://www.statista.com/outlook/264/109/event-tickets/united-states.

Competitive Impact Statement, United States of America v. Ticketmaster Entertainment,

Inc., No. 1:10-cv-00139 (D. D.C. Jan. 25, 2010); Live Nation Entertainment, Inc., Annual

Report (Form 10-K) (Feb. 27, 2018). DOJ based its market share estimate on the number

of major concert venues Ticketmaster served at the time.

Live Nation Entertainment, Inc. 2017 10-K.

Page 5 GAO-18-347 Event Ticket Sales

LiveAnalytics reported that in 2014, 68 percent, 50 percent, and 49

percent of people attending concerts, sporting events, and live theater or

arts events, respectively, had recently purchased a ticket online.

The event ticketing industry is not federally regulated. However, the

Federal Trade Commission Act prohibits unfair or deceptive acts or

practices in or affecting commerce, and FTC can enforce the act for

issues related to event ticketing and ticketing companies.

One federal

statute specifically addresses ticketing issues—the BOTS Act, which

prohibits, among other things, circumventing security measures or other

systems intended to enforce ticket purchasing limits or order rules.

The

act also makes it illegal to sell or offer to sell any event ticket obtained

through these illegal methods and granted enforcement authority to FTC

and state attorneys general.

The Department of Justice’s Antitrust Division plays a role in monitoring

competition in the event ticketing industry. In 2010, Live Nation and

Ticketmaster—respectively, the largest concert promoter and primary

ticket seller in the United States—merged to form Live Nation

Entertainment, Inc. DOJ approved the merger after requiring Ticketmaster

to license its primary ticketing software to a competitor, sell off one

ticketing unit, and agree to be barred from certain forms of retaliation

against venue owners who use a competing ticket service. DOJ may also

inspect Live Nation’s records and interview its employees to determine or

secure compliance with the terms of the final judgment clearing the

merger.

State government agencies generally invoke state laws on unfair and

deceptive acts and practices to address ticketing violations, according to

representatives of two state attorney general offices. In addition, several

states have laws that directly apply to event ticketing. For example, some

LiveAnalytics, U.S. Live Event Attendance Study, June 2014. These included ticket

purchases from both primary and secondary market sources.

See 15 U.S.C. § 45(a)(1) (2017); 15 U.S.C. § 45c (2017).

BOTS Act, supra.

BOTS Act, §2(a)-(c).

United States of America v. Ticketmaster Entertainment, Inc., No. 1:10-cv-00139

(D.D.C. July 30, 2010).

Regulation

Page 6 GAO-18-347 Event Ticket Sales

states restrict the use of bots, several other states impose price caps (or

upper limits) on ticket resale prices, and states including Connecticut,

New York, and Virginia restrict the use of nontransferable tickets (tickets

with terms that do not allow resale). Several states require brokers to be

licensed and adhere to certain professional standards, such as

maintaining a physical place of business and a toll-free telephone

number, and offering a standard refund policy.

The concert, sports, and theater industries vary in how they price and

distribute tickets. Many tickets are resold on the secondary market,

typically at a higher price. Among a nongeneralizable sample of events

we reviewed, we observed that primary and secondary market ticketing

companies charged total fees averaging 27 percent and 31 percent,

respectively, of the ticket’s price.

Ticketing practices for major concerts include presales and pricing that

varies based on factors like location and the popularity of the performer.

Tickets to popular concerts are often first sold through presales, which

allow certain customers to purchase tickets before the general on-sale.

Common presales include those for holders of certain credit cards or

members of the artist’s fan club, although promoters, venues, or other

groups also may offer presales. Credit card companies might provide free

marketing for events or other compensation in exchange for exclusive

early access to tickets for their cardholders. In addition, the artist usually

has the option to sell a portion of tickets to its fan club. The venue’s

ticketing company might want to limit the number of tickets allocated to

fan clubs because the artist and manager can sell them through a

separate ticketing platform, according to three event organizers we

interviewed.

In addition to certain state requirements, at least 200 brokers belong to the National

Association of Ticket Brokers, which requires its members to adhere to a code of ethics

that includes a variety of customer service and consumer protection provisions.

Ticketing Practices,

Prices, Fees, and

Resale Vary by

Industry and Event

On the Primary Market,

Ticketing Practices Vary

by Industry and Popular

Events Are Sometimes

Priced below Market

Concerts

Page 7 GAO-18-347 Event Ticket Sales

There are no comprehensive data on the proportion of tickets sold

through presales because this information is usually confidential. Industry

representatives told us that 10 percent to 30 percent of tickets for major

concerts typically are offered through presales, although it can be as

many as about 65 percent of tickets for major artists performing at large

venues. In addition, fan club presales usually represent 8 percent of

tickets, although it may be more if the fan club presale uses the venue’s

ticketing company, according to two event organizers. A large ticketing

company told us that 10 percent of tickets may be available for fan club

presales. A 2016 study by the New York State Office of the Attorney

General found that an average of 38 percent of tickets were allotted to

presales for the 74 highest-grossing concerts at selected New York State

venues in 2012–2015.

Additionally, venues, promoters, agents, and artists commonly hold back

a small portion of tickets from public sale. “Holds” may be given or sold to

media outlets, high-profile guests, or friends and family of the artist. They

also may be used to provide flexibility when the seating configuration is

not yet final. Promoters typically will release unused holds before the

event, offering the tickets to the public at face value.

As with presales, little comprehensive data exist on the proportion of

tickets reserved for holds. Industry representatives told us holds typically

represent a relatively small number of tickets—a few hundred for major

events or perhaps a thousand for a stadium concert. The New York

Attorney General report’s review of a sample of high-grossing New York

State concerts found that approximately 16 percent of tickets, on average,

were allocated for holds. Of those holds, many went to venue operators—

for example, one arena with around 21,000 seats usually received more

than 900 holds per concert held there.

The average face-value ticket price in 2017 among the top 100 grossing

concert tours in North America was $78.93, according to Pollstar.

Concert ticket prices vary by city or day of the week, based on anticipated

demand. The main parties involved in price setting are the artist and her

New York State Office of the Attorney General, Obstructed View: What’s Blocking New

Yorkers from Getting Tickets (New York, N.Y.: 2016). This figure included both fan club

and credit card presales. Some of the concerts included multiple shows or tour stops by

the same artist.

Pollstar, 2017 Year End Business Analysis (Fresno, Calif.: Pollstar, 2018). Pollstar is a

trade publication covering the worldwide concert industry.

Page 8 GAO-18-347 Event Ticket Sales

or his management team, promoter, and booking agent. Venues

sometimes provide input based on their knowledge of prevailing prices in

the local market. Ticketing companies sometimes offer tools or support to

help event organizers price tickets based on their analysis of sales trends.

Concert ticket prices are generally set to maximize profits, according to

event organizers. In terms of production costs, the artist’s guarantee—the

amount the artist is paid for each performance—is usually the largest

expense. The most popular artists can command the highest guarantees

and their concerts also tend to have the highest production costs.

However, for some high-demand events, tickets might be “underpriced”—

that is, knowingly set below the market clearing price that would provide

the greatest revenue.

Artists may underprice their tickets for a variety of

reasons, according to industry stakeholders and our literature review:

• Reputation risk. Artists may avoid very high prices because they do

not want to be perceived as gouging fans. Similarly, event organizers

told us some artists have a certain brand or image—such as working-

class appeal—that could be harmed by charging very high ticket

prices.

• Affordability. Some event organizers told us that artists want to price

tickets below market to provide access to fans at all income levels.

• Sold-out show. Event organizers may price tickets lower to ensure a

sold-out show, which can improve the artist and event organizers’

reputations and might help future sales.

• Audience mix. Some artists prefer to have the most enthusiastic fans

at their shows, rather than just those able to pay the most, especially

in the front rows, where tickets are generally the most expensive.

• Ancillary revenue. Better attendance through lower ticket prices can

increase merchandise and concession sales, which can be a

substantial source of revenue.

In addition, event organizers may unintentionally underprice concert

tickets because of imperfect information about what consumers are willing

For the purposes of this report, we consider high-demand events to be those for which

tickets sell out early in the on-sale and prices are higher on the resale market. The market

clearing price refers to the price at which the number of tickets available for sale equals

the number of tickets customers are willing to buy, resulting in neither a surplus nor a

shortage.

Page 9 GAO-18-347 Event Ticket Sales

to pay. Tickets are also priced based on the prices and sales of the

artist’s (or similar artists’) past tours, but demand can be hard to predict.

Three event organizers told us that they have started using data from the

ticket resale market to help set prices because that is a good gauge of the

true market price.

For major league professional sports, most decisions about ticket pricing

and ticket distribution are made by the individual teams rather than by the

league.

According to the three major sports leagues we interviewed,

their teams generally sell most of their tickets through season packages,

with the remainder sold for individual games. Teams favor packages

because they guarantee a certain level of revenue for the season.

Representatives of two major sports leagues told us that their teams sold

an average of 85 percent and 55 percent, respectively, of their tickets

through season packages. One league told us that some of its teams

increasingly offer not only full-season packages, but also partial-season

packages. Another league said that in some cases, its teams might need

to reserve a certain number of single game-day tickets—for example, as

part of an agreement when public funds helped build a new stadium.

Representatives of the three sports leagues we interviewed told us that

their teams do not use presales and holds to the same extent as the

concert industry. Although teams do not sell a significant number of

tickets through presales, they might offer first choice of seats to season

ticket holders or individuals who purchased tickets in the past. In terms of

holds, one league told us it requires its teams to hold a small number of

tickets for the visiting team and teams might also hold a few tickets for

sponsors and performers. Another league told us it does not have league-

wide requirements on holds, but its teams sometimes hold a small

number of seats for media.

Sports teams generally set their ticket prices to maximize revenue, based

on supply and anticipated demand, according to the leagues we

interviewed. Ticket prices typically vary year-to-year, based on factors

such as the team’s performance the previous season and playing in a

In this report, sporting events refer to games played by teams of the four largest

professional sports leagues in the United States, which are Major League Baseball, the

National Football League, the National Basketball Association, and the National Hockey

League.

Sporting Events

Page 10 GAO-18-347 Event Ticket Sales

new stadium.

Teams in many leagues use “dynamic pricing” for

individual game tickets. They adjust prices as the game approaches

based on changing demand factors, such as team performance and the

weather forecast. The sports leagues with whom we spoke said teams’

pricing considerations are based in part on a desire to have affordable

tickets for fans of different income levels. In addition, one league told us

its teams rely heavily on revenues other than ticket sales, such as from

television deals and sponsorships.

Tickets for Broadway and national touring shows are distributed through

direct online sales as well as several additional channels, including day-

of-show discount booths, group packages, and call centers.

Industry

representatives told us that these shows use presales and holds, but not

as extensively as the concert industry. At our request, a company

provided us with data for five Broadway shows from June 2016 to

September 2017.

Approximately 13 percent of tickets in this sample

were sold through presales, almost all of which were group sales (offered

to particular groups prior to the general on-sale). Less than 1 percent of

tickets in this sample were sold through presales offered to specific credit

cardholders. Two shows in high demand held back an average of about 6

percent of tickets, while the other three shows held back about 1 percent.

Producers and venue operators generally set prices, which are influenced

by factors like venue capacity and the length of run needed to recoup

expenses, according to industry representatives. According to the

Broadway League, from May 22, 2017, to February 11, 2018, the average

face-value price of a Broadway show was $123—an average of $127 for

musicals and $81 for plays. Industry representatives told us they sell

about 10 percent of tickets through day-of-show discount booths. Even

the most popular shows typically offer steep discounts for a small number

of tickets through lotteries or other means.

Patrick Rishe and Michael Mondello, “Ticket Price Determination in Professional Sports:

An Empirical Analysis of the NBA, NFL, NHL, and Major League Baseball,” Sport

Marketing Quarterly, vol. 13, no. 2 (2004), 111.

In this report, theater refers to Broadway and national tours, which are generally

commercial productions. We are excluding community and most nonprofit theater.

We asked a company that collects data on Broadway ticketing to provide us with

summary statistics on holds and presales for a small sample of shows that played in June

2016 through September 2017, and to separate the results for high-demand shows

(defined as selling 90 percent or more of available seats). The company selected and

provided data on five shows, two of which were high-demand shows.

Theater

Page 11 GAO-18-347 Event Ticket Sales

Tickets for some of the most popular Broadway shows have sometimes

been underpriced, according to Broadway theater representatives, who

told us they feel obligated to maintain relatively reasonable prices and to

allow consumers of varying financial resources to attend their shows.

Additionally, some shows are underpriced because their popularity was

not anticipated. At the same time, in recent years, producers have started

charging much higher prices (sometimes exceeding $500) for premium

seats or for shows in very high demand, which allows productions to

capture proceeds that would otherwise be lost to the secondary market.

Sometimes event organizers work directly with brokers to distribute

tickets on the secondary market. For high-demand events, event

organizers may seek to capture a share of higher secondary market

prices without the reputation risk of raising an event’s ticket prices

directly. For lower-demand events, selling tickets directly to brokers can

guarantee a certain level of revenue and increase exposure (by using

multiple resale platforms rather than a single ticketing site).

• In major league sports, teams sell up to 30 percent of seats directly to

brokers, according to a large primary ticket seller.

• For Broadway theater, one company told us it regularly distributes

about 8 percent to 10 percent of its tickets to a few authorized

secondary market brokers.

• In the concert industry, it is unclear how often artists and event

organizers sell tickets directly through the secondary market. Any

formal agreements would be in business-confidential contracts,

according to industry representatives, and artists may be concerned

about disclosing them for fear of appearing to profit from high resale

prices.

All the artists’ representatives with whom we spoke denied that their

clients sold tickets directly to secondary market companies. However, a

Vice President of the National Consumers League has cited evidence of

cases in which ticket holds reserved for an artist were listed on the

secondary market.

A representative of one secondary market company

told us of two cases in which representatives of popular artists

Legislative Hearing on 17 FTC Bills, House of Representatives, Energy and Commerce

Committee, Subcommittee on Commerce, Manufacturing, and Trade, 114th Cong. 187-

198 (May 24, 2016) (statement of John Breyault, Vice President, Public Policy,

Telecommunications, and Fraud; National Consumers League).

Relationships between Event

Organizers and Brokers

Page 12 GAO-18-347 Event Ticket Sales

approached his company about selling blocks of tickets for upcoming

tours.

Ticket resale prices can be significantly higher than primary market prices

and brokers account for most sales on major ticket exchanges. When

tickets on the primary market are priced below market value—that is,

priced less than what consumers are willing to pay—it creates greater

opportunities for profit on the secondary market. Resale transactions

typically occur on secondary ticket exchanges—websites where multiple

sellers can list their tickets for resale and connect with potential buyers.

Primary ticketing companies have also entered the resale market. For

example, Ticketmaster allows buyers to resell tickets through its TM+

program, which lists resale inventory next to primary market inventory,

and it owns the secondary ticket exchange TicketsNow.com.

Generally speaking, the secondary market serves two types of sellers: (1)

those who buy or otherwise obtain tickets with the intent of reselling them

at a profit (typically, professional brokers), and (2) individuals trying to

recoup their money for an event they cannot attend (or sports season

ticket holders who do not want to attend all games or use resale to

finance part of their season package). Representatives from the four

secondary ticket exchanges with whom we spoke each said that

professional brokers represent either the majority or overwhelming

majority of ticket sales on their sites.

Sellers set their own prices on secondary ticket exchanges, but some

exchanges offer pricing recommendations. The exchanges allow

adjustment of prices over time, and sellers can lower prices if tickets are

not selling, or raise prices if demand warrants. Software tools exist that

assist sellers in setting prices and in automatically adjusting prices for

multiple ticket listings.

However, resale prices are not always higher than the original price, and

thus brokers assume some risk. In some cases, the market price declines

below the ticket’s face value—for example, for a poorly performing sports

team. The leading ticket exchange network has publicly stated that it

estimates that 50 percent of tickets resold on its site sell for less than face

value. However, we were unable to obtain data that corroborated this

statement.

Relatively few studies have looked at the ticket resale market for major

concert, sporting, or theatrical events. Our review of relevant economic

Tickets to Popular Events

Are Often Resold on the

Secondary Market at

Prices above Face Value

Page 13 GAO-18-347 Event Ticket Sales

literature identified six studies that looked at ticket resale prices, one of

which also looked at the extent of resale (see table 2). In general, the

studies found a wide range of resale prices, perhaps reflecting the

different methodologies and samples used or the limited amount of

information on ticket resale. Additionally, the data reported are several

years old and will not fully reflect the current market.

Table 2: Selected Research on Ticket Resale Prices and the Extent of Resale

Findings

Study title

Author and source

Study description

Ticket prices

Extent of resale

“Resale and Rent-

Seeking: An

Application to Ticket

Markets”

Phillip Leslie and

Alan Sorenson, The

Review of Economic

Studies, vol. 81, no.

1 (2013)

Using a sample of 56 concerts for

popular artists in 2004, the study

compared the number of tickets and

resale prices from a major secondary

ticket exchange and an onli

ne auction

site to the number of tickets sold and

prices in the primary market.

Seventy-four percent of

tickets were resold above

face value and 26 percent

of tickets were resold below

face value. The average

resale price overall was 41

percent higher than the

face-value price.

On average, about

5 percent of tickets

were resold, with a

range among

concerts of 3–17

percent.

“Obstructed View:

What’s Blocking New

Yorkers from Getting

Tickets”

New York State

Office of the

Attorney General

(2016)

Reviewed data from six brokers on

90,000 sales transactions made from

2010–2014 that showed the prices at

which the brokers purchased and

resold the tickets.

On average, the resale

price was 49 percent higher

than the face-value price.

By broker, the average

markup ranged from 15

percent to 112 percent.

Not addressed

(n/a).

“Primary-Market

Auctions for Event

Tickets: Eliminating

the Rents of ‘Bob the

Broker’?”

Aditya Bhave and

Eric Budish, NBER

Working Paper No.

23770 (National

Bureau of Economic

Research,

Cambridge, Mass.,

2017)

Reviewed face-value and resale

prices of tickets to 576 concerts in

2007 and 2008. Looking at the best

seats sold using auctions, the study

compared the tickets’ original face-

value prices to initial-sale (by auction)

prices and secondary market prices.

Secondary market prices,

which were close to the

auction prices, were about

double the tickets’ face-

value prices.

n/a

“An Examination of

Dynamic Ticket

Pricing and

Secondary Market

Price Determinants in

Major League

Baseball”

Stephen L. Shapiro

and Joris Drayer,

Sport Management

Review, vol. 17, no.

2 (2014)

Looking at 12 games in a Major

League Baseball team’s 2010

season, the study compared the

tickets’ face-value prices and season

ticket holder prices to listed prices on

a major secondary ticket exchange.

The average listed resale

price was 103 percent

higher than the average

price paid by season ticket

holders and about 45

percent higher than the

average single game-day

price.

n/a

“An Examination of

Underlying

Consumer Demand

and Sport Pricing

Using Secondary

Market Data”

Joris Drayer, Daniel

A. Rascher, and

Chad D. McEvoy,

Sport Management

Review, 15 (2012).

The study compared the secondary

market sale price to the primary

market price for all 32 NFL teams in

the 2007– 2008 season.

The average secondary

market price was 143

percent higher than the

average primary market

price.

n/a

Page 14 GAO-18-347 Event Ticket Sales

Findings

Study title

Author and source

Study description

Ticket prices

Extent of resale

“Pricing Behavior in

Perishable Goods

Markets: Evidence

from Secondary

Markets for Major

League Baseball

Tickets”

Andrew Sweeting,

Journal of Political

Economy, 120, no.

6 (2012).

The study compared 2007 ticket

prices for the home games of 29

Major League Baseball teams to

listed prices on a major resale

exchange and online auction site.

The average listed resale

price was about twice the

corresponding face-value

price, although prices

declined as game-day

approached.

n/a

Source: GAO-selected research. | GAO-18-347

“Listed” resale price refers to the price listed and not necessarily to the price at which the ticket

actually sold.

For illustrative purposes, we reviewed secondary market ticket availability

and prices for a nongeneralizable sample of 22 events.

Among our

selected events, the proportion of seats that were listed for resale ranged

from 3 percent to 38 percent. In general, among the 22 events we

reviewed, listed resale prices tended to be higher than primary market

prices. For example, tickets for one sold-out rock concert had been about

$50 to $100 on the primary market but ranged from about $90 to $790 in

secondary market listings.

For 7 of the 22 events, we observed instances in which tickets were listed

on the resale market even when tickets were still available from primary

sellers at a lower face-value price.

For example, one theater event had

secondary market tickets listed at prices ranging from $248 to $1,080

(average of $763), while a substantial number of tickets for comparable

seats were still available on the primary market at $198 to $398.

We did

We reviewed data from two ticket resale sites for a sample of 22 events, 17 of which we

categorized as high-demand. We also reviewed data from the primary ticket market for

each event. We defined high-demand events as those that were likely to sell out, which

we assessed by reviewing past attendance at other events for the same artist, sports

team, or theatrical event. We focused on high-demand events because they have been

the focus of interest in issues regarding resale activity. For each event, we determined (1)

the proportion of tickets listed on the secondary market, and (2) how listed resale prices

compared to face-value prices. Events were selected to represent concert, sporting, and

theater events at different demand levels (popular versus other events). We collected data

between October 16 and December 20, 2017.

We did not have information on how many tickets were available at various price points

and it is possible that the differences in pricing could have been due to the number or

quality of seats on the primary market.

To combine data from the two resellers, we computed median weekly ticket prices for

each event from each vendor, and then computed an average weighted by the number of

available tickets on each website. The primary and secondary market prices do not

include fees.

Page 15 GAO-18-347 Event Ticket Sales

not have data to determine whether the resale tickets actually sold at their

listed price. However, as discussed later, it is possible that some

consumers buy on the secondary market, at a higher price, because they

are not aware that they are purchasing from a resale site rather than the

primary seller.

Ticket fees vary in amount and type among the primary and secondary

markets, and among different ticketing companies and events.

Companies that provide ticketing services on the primary market typically

charge fees to the buyer that are added to the ticket’s list price and can

vary considerably. A single ticket can have multiple fees, commonly

including a “service fee,” a per-order “processing fee,” and a “facility fee”

charged by the venue. Most primary ticketing companies offer free

delivery options, such as print-at-home or mobile tickets, but charge

additional fees for delivery of physical tickets.

Venues usually have an exclusive contract with a single ticketing

company and typically negotiate fees for all events at the venue, though

in some cases they do so by category of event. Ticketing companies and

venues usually share fee revenue and in some cases, the venue receives

the majority of the fee revenue, according to primary ticketing

companies.

In addition, event organizers told us that promoters

occasionally negotiate with the venue to add ticket fees or receive fee

revenue.

Ticketing companies told us that they do not have a set fee schedule and

amounts and types of fees vary among venues. Fees can be set as a

fixed amount, a fixed amount that varies with the ticket’s face value (for

Ticketing companies earn revenue from tickets they sell through their website, mobile

application, call center, or physical outlets. However, they typically do not earn any fee

revenue from season tickets or tickets sold through the venue box office, or through the

artists’ fan clubs when the fan club tickets are sold on a third-party ticketing company’s

platform.

Total Ticket Fees

Averaged 27 Percent on

the Primary Market and 31

Percent on the Secondary

Market for Events We

Reviewed

Primary Market Fees

Page 16 GAO-18-347 Event Ticket Sales

example, $5 for tickets below $50 and $10 for tickets above $50), a

percentage of face value, or other variations.

While ticketing fees vary considerably, the 2016 New York Attorney

General report found average ticket fees of 21 percent based on its

review of ticket information for more than 800 tickets at 150 New York

State venues.

(In other words, a ticketing company would add $21 in

fees to a $100 ticket, for a total price to the buyer of $121.) The 21

percent figure encompassed all additional fees, including service fees and

flat fees, like delivery or order processing fees.

We conducted our own review of ticketing fees for a nongeneralizable

sample of a total of 31 concert, theater, and sporting events across five

primary ticket sellers’ websites:

• In total, the combined fees averaged 27 percent of the ticket’s face

value, and we observed values ranging from 13 percent to 58

percent.

• Service fees were, on average, 22 percent of the ticket’s face value,

and we observed values ranging from 8 percent to 37 percent.

• Fourteen of the events we reviewed had an additional order

processing fee, ranging from $1.00 to $8.20.

• Five of the events we reviewed had an additional facility fee, ranging

from $2.00 to $5.10.

Table 3 shows the ticketing fees observed for events sold through three

of the largest ticket companies we reviewed.

New York State Office of the Attorney General, 29, 41. The report collected fee

information and ticket prices for 150 New York venues listed on three primary ticketing

websites. For each venue, fee information was collected for up to three randomly selected

events and, for each event, information was collected for every seating category (e.g.,

orchestra, balcony).

A GAO investigator and a GAO analyst collected data between June 19, 2017, and

January 16, 2018 on the ticket fees charged for online purchase by five primary ticketing

companies. From one to three concert, theater, and sporting events were reviewed for

each company, covering 12 events and 10 venues in total. Ticket fees were also reviewed

for an additional 20 events sold by the largest ticketing company.

These totals encompassed both fees that were charged as a percentage of face value

(such as “service” fees) and fixed-dollar fees (such as “order processing” fees).

Page 17 GAO-18-347 Event Ticket Sales

Table 3: Observed Fees Charged by Three of the Largest Primary Ticketing

Companies

Company

Service fee charged to

buyer (as a percent of

the face value)

Facility fee

Order

processing fee

Ticket company A

23–27%

None observed

$1.00

Ticket company B

19–27%

$2.00

None observed

Ticket company C

8–37%

$2.85–$5.10

$3.92–$8.20

Source: GAO analysis of primary ticket sellers’ websites. | GAO-18-347

Notes: Not every ticket we observed had a facility fee or an order processing fee. In total, we

observed 28 events from these three companies.

A sixth ticketing company that focuses on theater uses a different fee

structure. It simply charges two flat service fees across all of its events

($7 for tickets below $50 and $11 for tickets above $50), plus a base per-

order handling charge of $3. Additionally, we noted that the 6 sporting

events we observed tended to have lower fees than the 16 concerts and

9 theater events we observed. Specifically, sporting events had total fees

averaging roughly 20 percent, compared to about 30 percent for concerts

and theater.

Fees charged by secondary ticket exchanges we reviewed were higher

than those charged by primary market ticket companies.

Secondary

ticket exchanges often charge service and delivery fees to ticket buyers

on top of the ticket’s listed price. For 7 of the 11 secondary ticket

exchanges we reviewed, the service fee was a set percentage of the

ticket’s list price. Three of the remaining exchanges charged fees that

varied across events, and the fourth did not charge service fees. Among

the 10 exchanges that charged fees:

• In total, the combined fees averaged 31 percent of the ticket’s listed

price, and we observed values ranging from 20 percent to 56 percent.

• Service fees, on average, were 22 percent of the ticket’s listed price,

and we observed values ranging from 15 percent to 29 percent.

A GAO investigator and a GAO analyst gathered information on fees charged for seven

events on the websites of 11 secondary market ticketing companies, which included nine

ticket exchanges and two aggregators of ticket resale websites. For each website, from

three to five events were reviewed, which included at least one concert, theater, and

sporting event per site.

Secondary Market Fees

Page 18 GAO-18-347 Event Ticket Sales

• In addition to the service fee, 8 of the 10 exchanges charged a

delivery fee for mobile or print-at-home tickets, ranging from $2.50 to

$7.95.

• Eight of the exchanges also charged a fee to the seller (in addition to

the buyer), which was typically 10 percent of the ticket’s sale price.

(For example, if a ticket sells for $100, the seller would receive $90

and the exchange $10.)

Table 4 provides additional information about the fees charged by three of

the largest ticket resale exchanges.

Table 4: Fees Charged by Three of the Largest Ticket Resale Exchanges

Exchange

Service fee charged to buyer

(as a percent of ticket price)

Delivery fee charged to buyer

Fee charged to seller (as a

percent of ticket price)

Resale exchange A

10–25%

Download: $2.50 or $7.95

Mail: $14.95

0–10%

Resale exchange B

21–24%

None

10%

Resale exchange C

29–30%

Download: $7.95

Mail: $15.00

0–10%

Source: GAO review of secondary ticket exchange websites. | GAO-18-347

Note: We observed three events per resale exchange. For resale exchanges A and C, data were

obtained both from our observations and from communication with company officials.

The technology and other resources of professional brokers give them a

competitive advantage over individual consumers in purchasing tickets at

their face-value price. Views vary on the extent to which the use of holds

and presales also affect consumers. Many ticketing websites we reviewed

did not clearly display their fees up front, and a subset of websites—

referred to as white-label—used marketing practices that might confuse

consumers. Other consumer protection concerns that have been raised

involve the amount charged for ticketing fees, speculative and fraudulent

tickets, and designated resale exchanges (resale platforms linked to the

primary ticket seller).

Tickets to popular events often are not available to consumers at their

face-value price, frequently because seats sell out in the primary market

almost as soon as the venue puts them on sale.

Consumer Protection

Concerns Include the

Ability to Access

Face-Value Tickets

and the Fees and

Clarity of Some

Resale Websites

For Tickets to Popular

Events, Consumers Often

Must Pay More Than Face

Value

Page 19 GAO-18-347 Event Ticket Sales

Brokers whose business is to purchase and resell tickets have a

competitive advantage over individual consumers because they have the

technology and resources to purchase large numbers of tickets as soon

as they go on sale. Some consumer advocates, state officials, and event

organizers believe that brokers unfairly use this advantage to obtain

tickets from the primary market, which restricts ordinary consumers from

buying tickets at face value. As a result, consumers may pay higher

prices than they would if tickets were available on the primary market. In

addition, some event organizers and primary ticket sellers have

expressed frustration that the profits from the higher resale price accrue

to brokers who have not played a role in creating or producing the event.

Some professional brokers use software programs known as bots to

purchase large numbers of tickets very quickly. When tickets first go on

sale, bots can complete multiple simultaneous searches of the primary

ticket seller’s website and reserve or purchase hundreds of tickets,

according to the 2016 report by the New York State Office of the Attorney

General.

Seats reserved by a bot—even if ultimately not purchased—

appear online to a consumer as unavailable. This, in turn, can make

inventory appear artificially low during the first minutes of the sale and

lead consumers to the secondary market to seek available seats,

according to event organizers we interviewed.

Bots can also automate

the ticket-buying process, as well as identify when additional tickets are

released and available for purchase. During its investigation of the

ticketing industry, the New York State Office of the Attorney General

identified an instance in which a bot bought more than 1,000 tickets to a

single event in 1 minute.

New York State Office of the Attorney General, 15. We did not identify comprehensive

information on the prevalence of the use of bots in purchasing event tickets.

Representatives from one primary ticketing company told us it believes bots accounted for

21 percent of online ticket inquiries (i.e., attempts to access the system and not

necessarily actual purchases) for two high-demand shows over a 3 month period (which it

identified based on certain characteristics associated with bot use). Other ticket sellers

with whom we spoke said they believe bots are still widely used, especially for the most

popular events. However, one said it did not have a reliable estimate on the use of bots,

noting that they do not have any way of being certain whether or not a bot was used to

purchase a ticket.

Primary ticket sellers typically limit the amount of time buyers have to complete a

purchase—for example, 10 minutes from selecting tickets to completing payment. During

this time, the selected tickets are removed from the inventory and appear to other buyers

to be unavailable.

New York State Office of the Attorney General, 18.

Brokers’ Competitive

Advantage

Page 20 GAO-18-347 Event Ticket Sales

In addition, bots can be used to bypass security measures that are

designed to enforce ticket purchase limits. For example, bots can use

advanced character recognition to “read” the characters in a test

designed to ensure that the buyer is human.

Although the BOTS Act of

2016 restricts the use of bots, as discussed later, it is not yet clear the

extent to which the act has reduced their use.

Brokers have other advantages over consumers in the ticket buying

process, according to the New York State Attorney General’s report and

industry stakeholders we interviewed. For example, some brokers employ

multiple staff, who purchase tickets as soon as an event goes on sale. In

addition, brokers can bypass sellers’ limits on the number of tickets

allowed to be purchased by using multiple names, addresses, credit card

numbers, or IP (Internet protocol) addresses.

Finally, to access tickets

during a presale, some brokers join artists’ fan clubs or hold multiple

credit cards from the company sponsoring the presale.

Holds and presales may limit the number of tickets available to

consumers at face value, according to some consumer groups,

secondary market companies, and other parties. For example, the

National Consumers League testified that events with many holds and

presales sell out more quickly during the general on-sale because fewer

seats are available.

Consumers may not be aware that many seats are

no longer available by the time of the general on-sale. In addition, the

National Consumers League and New York State Office of the Attorney

General said they believe the use of holds and presales raise concerns

about equity and fairness. They noted that most holds go to industry

insiders who have a connection to the promoter or venue, while credit

card presales are available only to cardholders, who typically are higher-

A common security measure is the Completely Automated Public Turing test to tell

Computers and Humans Apart, commonly known as CAPTCHA, which asks users to

prove they are human by identifying characters in distorted text or by selecting images

that meet certain requirements (“Identify all photos with a car”). In some cases, bots are

programmed to bypass this test. In other cases, the bot submits images of the tests to

human workers who complete it, according to the report of the New York State Office of

the Attorney General.

Ticketing companies often limit the number of tickets a consumer can purchase during a

single transaction. An Internet protocol (IP) address is a unique string of numbers that

identifies each computer using the Internet to communicate over a network.

Breyault, 2, 5. The National Consumers League is a nonprofit consumer advocacy

organization.

Role of Holds and Presales

Page 21 GAO-18-347 Event Ticket Sales

income. The New York State Attorney General’s office and seven event

organizers with whom we spoke expressed concerns that presales benefit

brokers, who take special measures to access tickets during presales.

However, other industry representatives told us that holds and presales

do not adversely affect consumers. They noted that for most events, the

number of tickets sold through presales is not very high and few tickets

are held back. Additionally, two event organizers and representatives

from a primary ticketing company noted that most presales are accessible

to a broad range of consumers—such as tens of millions of cardholders.

As a result, the distinction between what constitutes a presale and a

general on-sale can be slim. Furthermore, some fan clubs may try to limit

brokers’ use of presales. For example, one manager said his artist’s fan

club gives priority for presales to long-time fan club members.

In addition, some industry representatives noted that holds and presales

serve important functions that can benefit consumers. For example, credit

card presales can reduce event prices by funding certain marketing costs,

and fan club presales can offer better access to tickets to artists’ most

enthusiastic fans, according to event organizers with whom we spoke.

And as noted earlier, holds serve various functions, such as providing

flexibility for seating configuration.

Among the largest primary and several secondary market ticketing

companies, we identified instances in which fee information was not fully

transparent. We reviewed the ticket purchasing process for a selection of

primary and secondary ticketing companies’ websites, including a subset

of secondary market websites known as “white-label” websites. We

reviewed the extent to which the companies’ websites clearly and

conspicuously presented their fees and other relevant information and

also recorded the point at which fees were disclosed in the purchase

process.

While FTC staff guidance states that there is no set formula for

a clear and conspicuous disclosure, it states that among several key

factors are whether the disclosure is legible, in clear wording, and

proximate to the relevant information.

In recent reports, the National

We did not, however, conduct a legal compliance review for these disclosures and we

do not offer an opinion as to whether any of our findings about selected websites would

meet the relevant FTC standard for unfair or deceptive practices.

Federal Trade Commission, .com Disclosures: How to Make Effective Disclosures in

Digital Advertising (March 2013) (staff guidance).

Some Ticketing Websites

We Reviewed Were Not

Fully Transparent about

Ticket Fees and Relevant

Disclosures

Page 22 GAO-18-347 Event Ticket Sales

Economic Council (which advises the President on economic policy) and

FTC staff have expressed concern about businesses that use “drip

pricing,” the practice of advertising only part of a product’s price up front

and revealing additional charges later as consumers go through the

buying process.

For the 23 events we reviewed, the largest ticketing company—believed

to have the majority of the U.S. market share—frequently did not display

its fees prominently or early in the purchase process.

• For 14 of 23 events we reviewed, fees could be learned only by (1)

selecting a seat; (2) clicking through one or two additional screens; (3)

creating a user name and password (or logging in); and (4) clicking an

icon labeled “Order Details,” which displayed the face-value price and

the fees.

• For 5 of the 23 events, the customer did not have to log in to see the

fees, but the fees were visible only by clicking the “Order Details” icon.

• For 4 of the 23 events, fees were displayed before log-in and without

the need to take additional steps.

• Additionally, for 21 of the 23 events, ticket fees were displayed in a

significantly smaller font size than the ticket price.

For the five other primary market ticketing companies whose ticketing

process we reviewed, fees were displayed earlier in the purchase process

and more conspicuously.

All five companies displayed fees before

asking users to log in, including one that displayed fees during the initial

seat selection process. Four of the five companies displayed fees in a

font size similar to that of other price information and in locations on the

page that were generally proximate to relevant information. However, for

White House National Economic Council, The Competition Initiative and Hidden Fees

(Washington, D.C.: December 2016); and Mary W. Sullivan, Economic Analysis of Hotel

Resort Fees (Washington, D.C.: January 2017), Federal Trade Commission Bureau of

Economics Staff Report.

We reviewed the purchase process on the company’s website for 23 events, which

included events at 13 different venues of varying sizes, including arenas and theaters. We

collected data between June 20, 2017, and January 16, 2018.

For each of these five ticketing companies, a GAO investigator and a GAO analyst

reviewed the purchase process for between one and three events. We believe these

ticketing companies are among the largest in the U.S.

Primary Market Ticketing

Companies

Page 23 GAO-18-347 Event Ticket Sales

all companies we reviewed, fees and total ticket prices were not displayed

during the process of browsing for different events.

We found that two primary ticket sellers that sometimes offer

nontransferable tickets (that is, tickets whose terms and conditions

prohibit transfer) had prominently and clearly disclosed the special terms

of those tickets—for example, that the buyer’s credit card had to be

presented at the venue and the entire party had to enter at the same

time.

One company’s website displayed these conditions on a separate

screen for 10 seconds before allowing the buyer to proceed. The other

company’s website similarly displayed information about the tickets’

nontransferability on a separate page in clear language in a font size

similar to the pricing information.

We also reviewed disclosure of fees and other relevant information on the

websites of 11 secondary ticket exchanges and resale aggregators.

Two of the 11 websites displayed their fees conspicuously and early in

the purchase process, and a third site did not charge ticketing fees.

However, we found that ticket resale exchanges sometimes lacked

transparency about their fees:

• Fees often were revealed only near the end. Seven of the 11

websites disclosed ticket fees only near the end of the purchase

process, after the consumer entered an e-mail or logged in. Three of

those seven websites displayed fee information only after the credit

card number or other payment information was submitted.

• Fees sometimes were not conspicuously located. On 2 of the 11

websites, some fees were not displayed alongside the ticket price, but

instead were only visible by clicking a specific button.

• Font sizes were small in two cases. On 2 of the 11 websites, fees

were displayed in a font size significantly smaller than other text.

According to industry stakeholders, nontransferable tickets are rarely used. Due to their

rarity, we could only identify one event using nontransferable tickets from each of two

ticket sellers at the time of our analysis.

The 11 companies included 9 secondary ticket exchanges and 2 ticket resale

aggregators, which aggregate listings from multiple exchanges. For each, we reviewed the

purchase process for between three and five events.

Secondary Ticket Exchanges

Page 24 GAO-18-347 Event Ticket Sales

In contrast to primary market sellers, secondary market sellers’ websites

sometimes did not clearly disclose when a ticket was nontransferable.

Disclosures on secondary market ticket exchanges varied, in part

because individual sellers are permitted to enter their own descriptions

about ticket characteristics. In some cases, the seller identified

nontransferable tickets only by labeling them “gc,” indicating that a gift

card would be mailed to the buyer to present for entry to the venue.

To further review nontransferable ticket listings, we contacted the

customer service representatives of three large secondary ticket

exchanges to ask about a nontransferable ticket listing.

We asked if we

would have difficulty using the ticket because the venue’s or ticket seller’s

website stated that only the original buyer could use the ticket, with one

website noting that picture identification might be required for entry.

Customer service representatives of all three exchanges told us that

despite the purported restrictions, we would be able to use the ticket to

gain entry to the venue. To confirm these statements, we contacted

officials of these venues, who acknowledged that picture identification

had not been required for entry at these events.

Consumers may not always be aware they are purchasing tickets from a

secondary market site at a marked-up price. In a 2010 enforcement

action, FTC settled a complaint against Ticketmaster after alleging,

among other things, that the company steered consumers to its resale

site, TicketsNow, without clear disclosures that the consumer was being

directed to a resale website. The settlement requires Ticketmaster,

TicketsNow, and any other Ticketmaster resale websites to clearly and

conspicuously disclose when a consumer is on a resale site and that

prices may exceed face value, and to include “reseller price” or “resale

price” with ticket listings. In addition, in January 2018, the National

Advertising Division, a self-regulatory organization, asked FTC to

According to some industry stakeholders, nontransferable tickets are sometimes resold,

although the tickets’ terms and conditions prohibit it.

Because nontransferable tickets often require the buyer’s credit card or other

identification be presented at the venue, brokers will sometimes purchase tickets using a

prepaid card that is mailed to the buyer.

For two of the companies, a GAO investigator and a GAO analyst sent eight e-mails to

each customer service department. For the third company, five “live chats” were

conducted with customer service representatives. Each e-mail or live chat inquired about

one of two events using nontransferable tickets. We did not identify ourselves as

representing GAO during these contacts.

Page 25 GAO-18-347 Event Ticket Sales

investigate the fee disclosure practices of StubHub, a large secondary

ticket exchange, alleging the company did not clearly and conspicuously

disclose its service fees when it provides ticket prices.

A subset of ticket resale websites, known as “white label,” used marketing

practices that might confuse consumers. A company providing white-label

support allows affiliates to connect its software to their own, uniquely

branded website.

This is sometimes also described as a “private label”

service in the industry. For event ticketing, a ticket exchange offering

white-label support provides the affiliate company with access to its ticket

inventory and services, such as order processing and customer service.

However, the affiliate uses its own URL (website address), sets the ticket

prices and fees, and conducts its own marketing and advertising. Two

secondary ticket exchanges operate white-label affiliate programs, under

which affiliates create unique white-label websites for ticket resale.

While we did not identify data on the number of white-label websites for

event ticketing, they commonly appear in the search results for all types

of venues, including smaller venues like clubs and theaters. White-label

websites often market themselves through paid advertising on Internet

search engines, appearing at the top of search results for venues. Thus,

they are often the first search results consumers see when searching for

event tickets.

Figure 1 provides a hypothetical example of a white-label

The National Advertising Division is an investigative unit of the Council of Better

Business Bureaus’ Advertising Self-Regulatory Council. According to an Advertising Self-

Regulatory Council press release, StubHub declined to comply with the division’s previous

recommendations, stating that its fee disclosure practices were in line with industry

practice and that consumers generally understand that fees will be added at the end of the

purchase process. See Advertising Self-Regulatory Council, “NAD Refers StubHub Pricing

Claims to FTC for Further Review After Advertiser Declines to Comply with NAD Decision

on Disclosures” news release, January 16, 2018,

http://www.asrcreviews.org/nad-refers-stubhub-pricing-claims-to-ftc-for-further-review-after

-advertiser-declines-to-comply-with-nad-decision-on-disclosures/.

White-label programs are used in many industries, not just event ticketing. For example,

there are white-label software search engines for booking airlines and hotels.

Two of the largest search engines offer advertising services that allow companies to

appear in the search results related to selected products or services. Advertisers identify

keywords relevant to their products and when users search for those keywords, their

advertisements will appear on top of or next to the relevant search results. These

advertised search results are usually identified in some manner to separate them from

other search results. Use of paid search results for event ticketing is not limited to white-

label websites and is a common marketing practice of many primary and secondary

market ticket sellers.

White-Label Websites for

Ticket Resale

Page 26 GAO-18-347 Event Ticket Sales

advertisement on a search engine, as well as the typical appearance of a

white-label website.

Figure 1: Hypothetical Example of White-Label Search Results and Website

Note: “GAO Arena” is a fictitious venue used for illustrative purposes.

In 2014, FTC and the State of Connecticut announced settlements with

TicketNetwork—one of the exchanges operating a white-label program—

and two of its affiliates after charges of deceptively marketing resale

tickets.

The complaint alleged that these companies’ advertisements

See Federal Trade Commission v. TicketNetwork, Inc., No. 3:14-cv-1046 (D. Conn. Aug.

12, 2014); Federal Trade Commission v. SecureBoxOffice, LLC, No. 3:14-cv-1046 (D.

Conn. Aug. 12, 2014); Federal Trade Commission v. Ryadd, Inc., No. 3:14-cv-1046 (D.

Conn. Aug. 12, 2014).

Page 27 GAO-18-347 Event Ticket Sales

and websites misled consumers into thinking they were buying tickets

from the original venue at face value when they were actually purchasing

resale tickets at prices often above face value. According to the

complaint, the affiliate websites frequently used URLs that included the

venue’s name and displayed the venue’s name prominently on their

websites in ways that could lead consumers to believe they were on the

venue’s website. The settlements prohibited the company and its affiliates

from misrepresenting that they are a venue website or that they are

offering face-value tickets, and from using the word “official” on the

websites, advertisements, and URLs unless the word is part of the event,

performer, or venue name. They also required that the websites disclose

that they are resale marketplaces, that ticket prices may exceed the

ticket’s face value, and that the website is not owned by the venue or

other event organizers.

FTC staff with whom we spoke told us that they were aware that similar

practices have continued among other white-label companies. Staff told

us they have continued to monitor white-label websites and related

consumer complaints. Additionally, a wide range of stakeholders with

whom we spoke—including government officials, event organizers, and

other secondary ticket sellers—expressed concerns about these

websites. In particular, they were concerned that consumers confused

white-label websites for the venue’s website.

We reviewed 17 websites belonging to eight companies that were

affiliates of the two secondary ticket exchanges offering white-label

programs.

We identified the sites by conducting online searches for nine

venues (including stadiums, clubs, and theaters) on two of the largest

search engines. All nine of the venues had at least one white-label site

appear in the paid advertising above the search results. We observed the

following:

• Sites could be confused with that of the official venue. Fourteen

of the 17 white-label websites we reviewed used the venue’s name in

the search engine’s display URL, in a manner that could lead a

consumer to believe it was the venue’s official website. In addition, 5

of the 17 webpages used photographs of the venue and 11 provided

Companies that use white-label ticketing sites typically have multiple websites displaying

different URLs in online search results. We reviewed the purchase process for between

one and four events per site. For each event, we recorded the prices and fees charged,

and how and when the site disclosed its fees and that it was a resale site.

Page 28 GAO-18-347 Event Ticket Sales

descriptions of the venue (such as its history) that could imply an

association with the venue.

• Fees were higher than on other resale sites. Total ticketing fees

(such as “service charges”) for the white-label sites ranged from 32

percent to 46 percent of the ticket’s list price, with an average of 38

percent. These fees were generally higher than those of other ticket

resellers—for example, the secondary ticket exchanges that we

reviewed charged average fees of 31 percent.

• Fees were revealed only near the end. All 17 of the white-label sites

we reviewed disclosed their fees late in the purchase process.

Ticketing fees and total prices were provided only after the consumer

had entered either an e-mail address or credit card information.

• Other key disclosures were present but varied in their

conspicuousness. All 17 of the white label webpages we reviewed

disclosed on their landing page and check-out page that they were not

associated with the venue and were resale sites whose prices may be

above face value. However, this information was presented in a small

font or in an inconspicuous location (not near the top of the page) for

the landing page of 7 of these webpages, as well as for the check-out

page of 12 of the 17 webpages.

• Ticket prices were higher than other resale sites. The ticket price

charged for the events we reviewed on the white-label sites had an

average markup of about 180 percent over the primary market price.

By comparison, other ticket resale websites we reviewed had an

average markup of 74 percent.

In some cases, we observed white-label websites selling event tickets

when comparable tickets were still available from the primary seller at a

lower price. For example, two white-label sites were offering tickets to an

event for $90 and $111, respectively, whereas the venue’s official

ticketing website was offering comparable seats for $34. (All figures

include applicable fees). Given the significantly higher cost for the same

product, some consumers may be purchasing tickets from a white-label

site only because they mistakenly believe it to be the official venue’s site.

As we discuss in greater detail later in this report, in February 2018,

Google implemented requirements for resellers using its AdWords service

The primary market price includes the face value and any additional fees, which we

obtained from the primary ticket sellers’ websites. We compared the primary market price

to the total price on the white-label site (including fees).

Page 29 GAO-18-347 Event Ticket Sales

that are intended, among other things, to prevent consumer confusion

related to white-label sites.

Ticket fees, the use of speculative tickets, ticket fraud, and designated

resale exchanges have raised consumer protection concerns among

government agencies, industry stakeholders, and consumer advocates.

Consumer protection advocates, event organizers, and some government

entities have expressed concerns about high ticket fees.

For example,

the New York State Attorney General’s report expressed concern about

what it deemed high ticketing fees charged for unclear purposes. The

report found that among online platforms, vendors of event tickets

appeared to charge fees to consumers higher than most other online

vendors.

Concerns about high ticket fees also were frequently cited in

2009 congressional hearings on the proposed merger of Live Nation and

Ticketmaster.

In addition, some managers and agents we interviewed

said their clients were dissatisfied with high ticket fees. Data we received

from FTC’s Consumer Sentinel Network indicated 67 complaints related

specifically to event ticket fees from 2014 through 2016.

A 2010 analysis by the Department of Justice said that the dominance of

one company, Ticketmaster, in the primary ticketing market allowed the

As previously noted, we found that the primary and secondary markets had average

fees of 27 percent and 31 percent, respectively, of face value or listed price.

New York State Office of the Attorney General, 31.

Hearing on Competition in the Ticketing and Promotion Industry, Judiciary Committee of

the United States House of Representatives, Subcommittee on Courts and Competition

Policy, 111

Cong. 1 (Feb. 26, 2009) and The Ticketmaster/Live Nation Merger: What

Does It Mean for Consumers and the Future of the Concert Business?, Committee on the

Judiciary of the United States Senate, Subcommittee on Antitrust, Competition Policy and

Consumer Rights of the Committee,111

Cong. 1 (Feb. 24, 2009). (For example, see

testimony of Edmund Mierzwinski, Consumer Program Director, U.S. Public Interest

Research Group.)

FTC’s Consumer Sentinel Network is a database of consumer complaints received by

FTC, as well as those filed with certain other federal and state agencies and

nongovernmental organizations, including the Consumer Financial Protection Bureau and

the Better Business Bureaus. For our review, we asked FTC staff to search the database

from 2014 through 2016 using the terms “ticket,” types of events (e.g., concert, sport,

theater, game, show), and “fee” or “charge.” We asked FTC to limit the search to

complaints received against 6 primary ticketing companies and 11 secondary ticket resale

exchanges or aggregators.

Other Consumer

Protection Issues Have

Been Identified

Amount Charged for Ticket

Fees

Page 30 GAO-18-347 Event Ticket Sales

company to maintain high ticket fees.

The report noted high barriers to

entry for competitors, among which were high startup costs,

Ticketmaster’s reputation for providing quality service to venues, and

long-term exclusive contracts that large venues typically sign with one

ticketing company. In addition, with the merger, Live Nation Entertainment

owns both the largest primary ticket seller (Ticketmaster) and largest

promoter (Live Nation), and owns many large venues and an artist

management company. When the ticketing company is owned by a major

promoter, the combined firm’s ability to bundle ticketing services and

access to artists would require competitors to offer similar services in

order to compete effectively, according to the Department of Justice

analysis. In an attempt to mitigate these potential effects, the Department

of Justice final judgment on the merger prohibited certain forms of

retaliation against venues that contract with other ticketing companies. In

the United Kingdom, where the venue and promoter typically contract with

multiple ticket sellers, ticket fees are lower than in the United States—

around 10 percent to 15 percent of the ticket’s face value, according to a

recent study.

Industry experts generally consider the secondary market for event

ticketing to be more competitive than the primary market because of the

large number of brokers participating in the industry.

According to a

report by the National Economic Council, fees in this market may be

higher than expected because of the lack of transparency described

earlier—consumers may be more willing to accept high fees and less

likely to comparison shop when fees are disclosed at the end of a

multistep purchase process. An FTC staff report made a similar point

regarding hotel resort fees, noting that fees disclosed only at the end of

the shopping process could harm consumers by making it more difficult to

comparison shop for hotels.

In addition, consumers who are led to

Competitive Impact Statement, United States of America v. Ticketmaster Entertainment,

Inc., No. 1:10-cv-00139 (D. D.C. Jan. 25, 2010).

Michael Waterson, Independent Review of Consumer Protection Measures Concerning

Online Secondary Ticketing Facilities, a report prepared at the request of the United

Kingdom Department for Business, Innovation and Skills and Department for Culture,

Media and Sport (London: May 2016), 30-31.

For example, see Daniel A. Rascher and Andrew D. Schwarz, “The Antitrust

Implications of ‘Paperless Ticketing’ on Secondary Markets,” Journal of Competition Law

and Economics 9, no. 3 (May 2013), 659.

Sullivan, 27.

Page 31 GAO-18-347 Event Ticket Sales

believe that white-label ticketing sites are the official venue site may

accept high fees because they think they are buying tickets from the

primary ticketing provider, according to two industry representatives with

whom we spoke.

The level of fees in the secondary market might also be affected by

partnerships between the primary and secondary ticket seller. Primary

ticketing companies sometimes offer resale options or use of designated

resale exchanges (discussed below). The American Antitrust Institute has

expressed the view that these relationships can reduce inventory for rival

secondary sellers and in turn, can result in higher fees, as the primary

ticket seller essentially has a monopoly over both markets.

A speculative ticket refers to a ticket put up for sale by a broker when the

broker does not yet have the ticket in hand, perhaps because the event

has not yet gone on sale. Brokers may sell speculative tickets because

they anticipate they will be able to secure the tickets (whether on the

primary or secondary market) and sell them for a profit. The terms of use

of most secondary sites we reviewed did not allow speculative ticket

listings. However, while we were unable to identify comprehensive data

on the extent of speculative tickets, numerous industry representatives

told us that these sites commonly do not enforce this prohibition and

listing of speculative tickets was widespread. One common form of

speculative ticketing occurs when brokers offer tickets after a popular

artist has announced a concert schedule but not yet begun ticket sales,

according to industry representatives.

Several concerns exist around the use of speculative ticketing:

• The buyer may never get the ticket. Speculative ticket listings can

result in canceled orders if the broker cannot obtain the ticket, or

cannot obtain it at a price that would result in a profit. For example, it

was reported that many fans who thought they purchased tickets to

the 2015 Super Bowl actually purchased speculative tickets that were

subsequently canceled when the supply of tickets was less than

James D. Hurwitz, Restrictive Paperless Tickets: A White Paper by the American

Antitrust Institute (Washington, D.C.: 2012), 36-37, 41-42. The American Antitrust Institute

is an independent, nonprofit organization dedicated to promoting competition through its

research, education, and advocacy.

Speculative Tickets

Page 32 GAO-18-347 Event Ticket Sales

expected.

According to industry stakeholders, consumers can

typically obtain a refund on a canceled order from the broker or

secondary ticket exchange, but may still face disappointment,

inconvenience, or costs associated with nonrefundable travel to the

planned event.

• The seat location is not guaranteed. Brokers selling speculative

tickets typically do not specify the seat number but rather promise a

certain section of the venue, according to two event organizers we

interviewed. However, because the broker does not have the ticket in

hand, consumers can receive seats that are worse or different than

advertised.

• Speculative ticketing can cause consumer confusion. One large

ticket resale exchange told us it only allows trusted brokers to sell

speculative tickets under certain circumstances and requires sellers to

use a special label for these listings. However, we observed other

exchanges that are less transparent and do not make clear to the

buyer that the ticket is speculative. Consumers may not be aware that

tickets have not officially gone on sale yet and eventually may be

available on the primary market at a lower price.

In its 2010 enforcement action against Ticketmaster and its resale

exchange, TicketsNow.com, FTC alleged that the companies failed to tell

buyers that many of the resale tickets advertised were being sold

speculatively.

The settlement required Ticketmaster and its affiliates to

disclose if a ticket was being sold speculatively and to otherwise refrain

from misrepresenting the status of tickets. FTC staff also sent warning

letters to other resale companies that may have been at risk of violating

the FTC Act with regard to their speculative ticketing practices. More

recently, in 2015 a request by the New York State Attorney General

resulted in three major ticket exchanges removing speculative ticket

listings for an upcoming tour. Representatives from one of the secondary

ticket exchanges told us that while it is difficult to determine if a listing is

truly speculative, they have removed listings when they have information

For example, see Geoff Baker, “Super Bowl dream becomes nightmare for Seahawks

fans after shortage of tickets,” Seattle Times, January 31, 2015, accessed on February 8,

2018. https://www.seattletimes.com/sports/seahawks/super-bowl-dream-becomes-

nightmare-for-seahawks-fans-after-shortage-of-tickets/.

Complaint at 8-9, Federal Trade Commission v. Ticketmaster L.L.C., No. 1:10-cv-01093

(D. Ill. Feb. 18, 2010).

Page 33 GAO-18-347 Event Ticket Sales

from event organizers to indicate that no one could have obtained the

tickets.

Posing as a consumer, a GAO investigator made 11 inquiries to customer

service representatives of two of the largest secondary ticket exchanges

about two events listing tickets that appeared to be speculative.

The

customer service representatives generally acknowledged that the sellers

did not yet have the tickets in hand but assured the investigator that the

tickets would be provided.

Event tickets are sometimes fraudulent—for example, a fraudster may

create and sell a counterfeit ticket or multiple copies of the same print-at-

home ticket, according to industry representatives. We did not identify

comprehensive data on the extent of ticket fraud. Event organizers with

whom we spoke said that they typically only see a handful of fraudulent

tickets at popular events, and do not consider fraudulent ticketing to be a

widespread problem. A limited search of FTC’s Consumer Sentinel

Network data identified relatively few complaints—an estimated 19

related to fraudulent tickets from 2014 through 2016.

Industry

representatives told us fraudulent tickets are most common for the most

popular events and were often purchased on the street outside the venue

or through an online classified advertisement.

According to industry representatives, fraudulent ticketing is rare on

secondary market exchanges, in part because the exchanges can take

action against sellers of fraudulent tickets, such as fining them or banning

them from future sales. The National Association of Ticket Brokers

requires its members to have a policy to reimburse consumers for

fraudulent tickets.

Two secondary market participants told us the most

We identified ticket listings that appeared to be speculative by searching for events that

had been announced but for which tickets had not yet been released through a general

on-sale or presale. Acting in an undercover capacity, the investigator contacted one

company’s customer service through eight e-mail inquiries (each sent from a different e-

mail address) and the other company through three separate “live chats.”

Our estimate of the number of complaints from 2014 through 2016 related to ticket fraud

was derived by having FTC staff search the Consumer Sentinel Network for complaints

including the term “ticket” and at least one term signifying fraud (e.g., “fake,” “invalid”).

The search included only complaints against six primary ticketing companies and 11

secondary ticket resale exchanges or aggregators that we identified.

The National Association of Ticket Brokers is a trade association that represents ticket

sellers in the secondary market and is comprised of over 200 broker members.

Fraudulent Tickets

Page 34 GAO-18-347 Event Ticket Sales

common fraudulent activity they must address is credit card fraud by

buyers rather than invalid tickets posted by sellers.

Designated resale exchanges are resale platforms that are linked to the

primary ticket seller. They are most commonly used in major league

sports. The four major sports leagues have agreements with one of two

ticketing companies that allow consumers to buy and sell tickets through

an official “fan-to-fan” resale marketplace. In addition, some individual

teams and venues have an agreement with a third company to use its

resale platform, which uses paperless tickets and can facilitate ticket

transfers from one consumer to another or restrict transfers altogether

(such as with nontransferable tickets).

On these exchanges, when a consumer lists a ticket for resale, the

exchange electronically confirms the seller’s identity, then cancels the

original ticket information (such as a barcode) and reissues the ticket with

the new buyer’s name.

According to the three sports leagues we

interviewed, designated resale exchanges are generally optional—for

example, the sports leagues allow brokers and consumers to use other

secondary market exchanges as well.

A representative of one of the major sports leagues told us the exchanges

provide added revenue to teams because the teams receive some of the

fee revenues from sales on the exchanges. The exchanges provide data

on event attendees, which is valuable for marketing and security

purposes, according to another sports league and a primary ticket seller.

In addition, the exchanges can reduce resale fraud because the primary

seller verifies the legitimacy of the ticket being resold, according to

representatives of the three leagues we interviewed.

However, some academics and secondary market participants we

interviewed have argued that designated resale exchanges work to the

detriment of consumers. For example, one academic study stated that a

primary ticket seller’s dominance in the secondary market can

substantially reduce inventory for rival secondary sellers, thus impeding

League officials we interviewed explained that although they have league-wide resale

partnerships with certain companies, individual teams or clubs sometimes have their own

partnerships with other companies.

Designated Resale Exchanges

Page 35 GAO-18-347 Event Ticket Sales

competition in the resale market.

The study stated that reduced

secondary market competition, in turn, can result in higher fees.

In 2015, a U.S. district court dismissed StubHub’s antitrust complaint

against the Golden State Warriors basketball team and Ticketmaster,

LLC. StubHub claimed that the Warriors’ and Ticketmaster’s exclusive

resale agreement restricted secondary market competition for

professional basketball tickets in the Bay Area, but the court disagreed.

Some designated resale exchanges use price floors, below which

consumers may not sell their tickets. One sports league’s exchange has a

price floor of $6, while the exchanges of two other sports leagues do not

have league-wide price floors, according to league representatives. In

addition, we identified instances of individual teams using price floors on

their designated resale exchanges.

One purpose of price floors is to

protect brand reputation, according to league representatives, because

too low a ticket price can lessen an event’s perceived value. Price floors

also can prevent the secondary market from undercutting a team’s own

(primary market) price. However, some consumer organizations and

secondary ticket sellers said price floors were unfriendly to consumers.

Season ticket holders might be unable to sell tickets for low-demand

games for which market prices were lower than the floors. In addition, the

New York State Attorney General’s office noted that consumers might not

always be aware that price floors were in effect and thus pay more than

they would on another exchange.

Rascher and Schwarz, 693.

Order Granting Defendants Motion to Dismiss, StubHub, Inc. v. Golden State Warriors,

LLC, No. C 15-1436 MMC, 2015 U.S. Dist. LEXIS 151188, at *4 (N.D. Cal. Nov. 5, 2015).

For example, we identified one basketball team with a $20 price floor for tickets sold on

its designated resale exchange, and a baseball team’s deal with a major ticket resale

exchange that set a price floor of 50 percent of the ticket’s original season ticket price.

New York State Office of the Attorney General, 32.

Page 36 GAO-18-347 Event Ticket Sales

Policymakers, consumer organizations, and industry participants have

proposed or implemented a number of ticket resale restrictions and

disclosure requirements, each of which have or would have advantages

and disadvantages for consumers or industry participants (see table 5).

Event ticketing is not federally regulated and some industry participants

are using or exploring technology and other market-based approaches to

address concerns related to secondary market activity.

Table 5: Potential Advantages and Disadvantages of Selected Legislative or Regulatory Actions Related to Ticket Resale

Action

Description

Key advantages

Key disadvantages

Prohibiting

nontransferable tickets

Prohibiting tickets that do

not allow transfer from one

person to another and

therefore restrict resale

Ensures ticketholders can recoup

costs on tickets they cannot use

Efficient allocation because tickets

go to those willing to pay the most

Reduced opportunity for consumers to

access tickets at lower face-value price

Price caps

Capping the price at which

tickets can be resold (i.e.,

limits the markup)

Keeps prices down for consumers

by restricting markups

Still preserves consumers’ ability

to resell and recoup costs

Challenging to enforce

Could send resale activity

underground, where there are fewer

protections

Inefficient allocation because tickets do

not go to those willing to pay the most

Requiring up-front

disclosure of ticket fees or

requiring all-in pricing

Legislative or regulatory

requirement to provide up-

front disclosure of fees

during ticketing process or

to wrap fees into the listed

price

Increased transparency that

allows better consumer decision

making and facilitates comparison

shopping

Would restrict companies’ flexibility in

choosing how to disclose fees

Compliance challenges

Requiring disclosure of

ticket’s face value on

resale sites

Legislative or regulatory

requirement that resellers

show a ticket’s face value

alongside the list price

Makes the markup transparent

and helps ensure consumers

know they are buying from a

resale site

Can help consumers assess

quality of seat

Could impose challenges for

businesses in identifying face value

Challenging to enforce

Requiring disclosure of

ticket availability

Legislative or regulatory

requirement that venue or

event organizers disclose

how many tickets are

available when event goes

on sale

Transparency for consumers on

how many tickets are actually

available for sale

Unclear how useful this information is

for consumers

Compliance challenges

May require businesses to disclose

proprietary information

Source: GAO | GAO-18-347

Note: None of these requirements are in effect at the federal level, but some have been implemented

or considered at the state level, as described elsewhere in this report.

Effects of Ticket

Resale Restrictions

and Disclosures on

Consumers and

Business Would Vary

Page 37 GAO-18-347 Event Ticket Sales

Some event organizers make tickets to their events nontransferable—that

is, the terms and conditions of the ticket prohibit its transfer from one

person (in whose name the ticket is issued) to another. The prohibition

can be enforced by requiring consumers to bring to the venue the credit

or debit card used for purchase and matching photo identification. The

consumer then receives a seat locator slip—akin to a consumer swiping a

credit card at the airport to retrieve a boarding pass.

At least three states—Connecticut, New York, and Virginia—have laws

that restrict ticket issuers’ ability to sell nontransferable tickets.

Similar

legislation has been introduced in several other states in recent years.

The use of nontransferable tickets, even in states where they are legal, is

relatively uncommon. For example, an artist advocacy group told us that

some events that use them make only the first several rows of seats

nontransferable. One large primary ticketing company told us it estimated

that less than 5 percent of its events used nontransferable tickets, while

another told us nontransferable tickets represented less than 1 percent of

its tickets in total. Almost all nontransferable tickets are for concerts; the

practice is rare for sporting events and theater, according to industry

stakeholders with whom we spoke.

Advantages to consumers of nontransferable tickets stem from the goal of

preventing ticket resale—allowing consumers to pay face value rather

than a higher price on the secondary market. As described earlier,

markups on the secondary market can be substantial. Proponents of

nontransferable tickets, which include a large primary ticket seller and

some event organizers and well-known artists, have argued they are an

important tool that makes it harder for brokers to resell tickets for profit.

We identified one empirical study on the effects of nontransferable tickets

on resale activity. A 2013 study in the Journal of Competition Law and

Economics compared two events using nontransferable tickets to

comparable events using transferable tickets at the same venues. It found

that nontransferable tickets significantly reduced resale and that prices

See N.Y. ARTS & CULT. AFF. LAW § 25.30(1)(c) (Consol. 2018); 2017 CONN. ACTS 17-28

(Reg. Sess.); V

A. CODE ANN. § 59.1-466.5 - 59.1-466.7 (2017). New York’s law has been

in place since 2010, while Connecticut’s and Virginia’s laws were passed in 2017.

For example, legislation was introduced in Alabama, Maryland, and Missouri that would

restrict nontransferable tickets.

Nontransferable Tickets

Can Reduce the Price

Some Consumers Pay but

Also Limit Flexibility

Advantages of Nontransferable

Tickets

Page 38 GAO-18-347 Event Ticket Sales

were significantly higher for the relatively small portion of nontransferable

tickets that were resold.

In addition, there is anecdotal evidence that nontransferable tickets

reduce the rate of resale and allow more consumers to access tickets at

face-value prices. Many stakeholders told us that making tickets

nontransferable reduces secondary market activity, with some

stakeholders citing specific examples.

For instance, the manager of a

large concert venue that primarily uses nontransferable tickets told us that

resale is much less common for the venue’s events than for comparable

events at similar venues. Similarly, the manager of a major musical artist

told us that using nontransferable tickets for a subset of seats on a recent

arena tour resulted in minimal listings for those seats on the secondary

market. The New York State Attorney General’s report stated that

nontransferable paperless tickets “appear to be one of the few measures

to have any clear effect in reducing the excessive prices charged on the

secondary markets and increasing the odds of fans buying tickets at face

value.”

But, while we identified evidence that nontransferable tickets

limit resale, they may not eliminate resale because sellers may not follow

the restriction.

However, other parties—including primary and secondary market

participants, consumer advocacy groups, academics, and government

agencies—have noted that nontransferable tickets can have the following

disadvantages to consumers and adverse effects on markets:

Financial loss. With nontransferable tickets, ticket buyers who cannot

attend an event can lose the ability to recoup their money through resale.

Inconvenience. Nontransferable tickets can be inconvenient because the

buyer may need to present identification, a debit or credit card, or both, to

Rascher and Schwarz, 655-708. In this study, a theoretical model was developed and

an empirical analysis was performed to demonstrate the potential impact of “paperless

ticketing,” a form of nontransferable tickets, on the quantity and price of resale tickets

relative to conventional ticketing.

Industry stakeholders expressing this view included two primary ticket sellers; two

booking agents; two venue managers; Broadway representatives; an artists’ advocate

group; a manager; a promoter; a secondary ticket seller; and the New York State Office of

the Attorney General.

New York State Office of the Attorney General, 36. The report recommended repealing

the state’s prohibition on nontransferable tickets.

Disadvantages of

Nontransferable Tickets

Page 39 GAO-18-347 Event Ticket Sales

gain entry to the venue, which can create delays. Nontransferable tickets

also can create challenges for consumers buying tickets for others

(including as a gift) because the ticket terms may require the buyer and

original purchase card be present to gain entry. However, a primary ticket

seller and a promoter told us these obstacles can be overcome—for

example, through mechanisms allowing buyers to transfer tickets upon

request, and by using processes to speed venue entry (such as

automated kiosks).

Economic inefficiency. When nontransferable tickets are priced below

the prevailing market price in the primary market, this creates excess

demand, and tickets are sold without regard to consumers’ willingness to

pay.

Traditional economics maintains that an efficient market would

result in tickets going to those willing to pay the highest price, which

nontransferability inhibits by restricting a secondary market.

In addition,

some academics have noted that consumers may be less willing to buy

nontransferable tickets because they do not offer the “insurance” that

comes with the ability to resell them.

Potential impingement on property rights. Some consumer groups

and secondary market participants have argued that nontransferable

ticket policies impinge on consumers’ property rights. These parties argue

that once consumers buy a ticket, they should be able to do whatever

they like with it.

Effect on competition. The New York State Attorney General’s office

and some economics literature have cautioned that use of

Rascher and Schwarz, 682.

Hurwitz, 43; Rascher and Schwarz, 667.

See, for example, Pascal Courty, Pricing Challenges in the Live Events Industry: A Tale

of Two Industries (January 2015), 7; Hurwitz, 38; and Rascher and Schwarz, 667. Staff we

interviewed from the Department of Justice’s Antitrust Division also mentioned that the

inability to resell nontransferable tickets could be a deterrent for potential buyers.

Some courts have treated tickets as revocable licenses. For example, in a 2014 civil

case regarding a National Football League (NFL) team’s ticket sales practices, the U.S.

District Court of the Western District of Washington stated that tickets to an NFL game are

not tangible goods, but instead revocable licenses. See e.g., Williams v. NFL, No. C14-

1089 MJP, 2014 U.S. Dist. LEXIS 155488, at *9 (D. Wash. Oct. 31, 2014); James T.

Reese and Mark A. Dodds, “Let’s Hear It for the Home Team: Williams v. National

Football League Upholds Geographic Ticket Sales Ban,” Sport Marketing Quarterly, vol.

24, no. 2 (2015).

Page 40 GAO-18-347 Event Ticket Sales

nontransferable tickets by primary ticketing companies can impede

competition in the secondary market by making these companies’ own

resale exchanges the only way to transfer tickets.

Several states have caps on the price at which tickets can be resold,

while others have repealed caps and some studies have questioned their

enforceability. For example, Kentucky generally prohibits the resale of

event tickets for more than either face value or the amount charged by

the venue, and Massachusetts prohibits resale by brokers of most tickets

for more than $2 above face value, with the exception of relevant service

charges.

New Jersey allows a maximum markup of 20 percent or $3

(whichever is greater) for nonbrokers and a maximum markup of 50

percent for registered brokers, but does not limit resale prices for

nonbrokers for sales over the Internet.

A number of other states—

including Minnesota, Missouri, New York, and Connecticut—repealed

their price cap laws in the 2000s. However, the New York State Attorney

General’s 2016 report recommended bringing back a price cap, through a

“reasonable limit” on resale markups.

Price caps are generally intended to protect consumers from high

markups and increase the fairness of ticket distribution so that the

wealthiest consumers do not have disproportionate access to tickets. In

theory, price caps offer consumers the advantages of nontransferable

tickets without the disadvantages: they limit high secondary-market prices

but still allow consumers to transfer tickets to others or resell tickets they

cannot use.

However, three government studies we reviewed stated that price caps

are difficult to enforce and are rarely complied with. A 1999 report by the

New York Attorney General noted that ticket resellers “almost universally

disregarded” a cap in place at the time.

Representatives from the office

New York State Office of the Attorney General, 37; Hurwitz, 36-37; Rascher and

Schwarz, 693-694.

See KY. REV. STAT. ANN. § 518.070 (LexisNexis 2017); MASS. GEN. LAWS ch. 140,

§ 185D (2017).

N.J. STAT. § 56:8-33 (2017).

New York State Office of the Attorney General, 37.

New York State Office of the Attorney General, Why Can’t I Get Tickets?: Report on

Ticket Distribution Practices May 1999, 21. New York repealed its price cap in 2007.

Caps on Resale Prices

Can Have Advantages and

Disadvantages

Page 41 GAO-18-347 Event Ticket Sales

told us enforcement of such a cap might be easier now because the

secondary market is largely on the Internet, which offers greater price

transparency. A 2016 study of the United Kingdom’s ticket market noted

that enforcement of a price cap was complicated by the fact that ticket

resellers were not a well-defined group and sales could occur on various

platforms and across jurisdictions.

Similarly, the New York State

Department of State noted in 2010 that enforcement of price caps can be

challenging.

In addition, critics of price caps have said that caps might force resale

activity underground, which would reduce transparency and protections

(such as refund guarantees) that legitimate secondary market exchanges

provide. Both the largest ticket exchange and the largest primary market

ticket company have opposed price caps, with the ticket exchange

arguing that they would result in street-corner transactions, where the risk

of counterfeit and fraud would be significant.

On formal exchanges,

transactions can be monitored and regulated. As with nontransferable

tickets, price caps also can create economic inefficiencies because

tickets are not necessarily allocated to those willing to pay the highest

price.

A 2010 study by the New York State Department of State compared

publicly available secondary market listings for high-demand concerts in

New York to the same artists’ concerts in nearby states with price caps. It

found no definitive evidence that price caps resulted in greater or lesser

availability on the secondary market or in lower resale prices.

The study

noted that online resale prices routinely exceeded the price caps.

However, the authors of the study acknowledged that their findings were

Michael Waterson, Independent Review of Consumer Protection Measures Concerning

Online Secondary Ticketing Facilities, a report prepared at the request of the United

Kingdom Department for Business, Innovation and Skills and Department for Culture,

Media and Sport (London: May 2016), 22-23, 150-151.

New York State Department of State, Report on Ticket Reselling and Article 25 of the

Arts and Cultural Affairs Law (Albany, N.Y.: Feb. 1, 2010), 33.

StubHub, “StubHub Open Letter to Fans Following Passage of the Ontario Ticket Sales

Act,” December 13, 2017, accessed December 14, 2017,

https://www.newswire.ca/news-releases/stubhub-open-letter-to-fans-following-passage-of-

the-ontario-ticket-sales-act-663928593.html.

See, for example, Hurwitz, 35.

New York State Department of State, 26.

Page 42 GAO-18-347 Event Ticket Sales

limited by their inability to obtain data on ticket sales and availability from

secondary sellers.

Legislative or regulatory actions to improve disclosure and transparency

of ticket fees, resale markups, and ticket availability have advantages and

disadvantages.

Some government stakeholders have suggested improving fee

transparency through a legal requirement to disclose ticket fees earlier in

the purchase process. As discussed earlier, ticketing companies in the

primary and secondary markets vary on when and how they disclose their

fees, and some disclose fees only upon checkout. No federal law

expressly addresses fee disclosure in event ticketing. However, at least

one state requires disclosure of fees at the beginning of the purchase

process.

On the primary market, up-front fee disclosure helps decision making by

informing consumers of the total ticket price early in the process. It also

helps consumers decide whether to buy from the ticketer’s website or at

the box office, where there typically are no fees. On the secondary

market, up-front fee disclosure aids comparison shopping by helping

consumers identify the resale exchange with the best total price. Sellers

that do not provide enough or full information on prices through hidden

fees could have competitive advantage because they would be perceived

as offering lower prices over their competitors who do provide full

information showing the price. For products and services in general, FTC

staff guidance advocates that fees be disclosed up front, particularly

before the point at which the consumer has decided to make a

purchase.

Connecticut requires any advertisement for an in-state event to include the total price

and the portion of that price (in dollars) that represents a service charge.

CONN. GEN. STAT.

§ 53-289a (2017).

For example, see Federal Trade Commission, .com Disclosures: How to Make Effective

Disclosures in Digital Advertising, March 2013, 14. Similarly, Canada’s Competition

Bureau, an independent Canadian law enforcement agency, has stated that not disclosing

fees up front can be misleading to consumers because the advertised price is not

attainable. See Competition Bureau Canada, “Calling All Ticket Vendors: Be Upfront about

the True Cost of Tickets,” July 4, 2017, accessed March 12, 2018,

https://www.canada.ca/en/competition-

bureau/news/2017/06/calling_all_ticketvendorsbeupfrontaboutthetruecostoftickets.html.

Stakeholder Views Vary on

Effects of Additional

Disclosure Requirements

Up-front Fee Disclosure

Page 43 GAO-18-347 Event Ticket Sales

Figure 2 provides examples of different approaches to displaying prices

and fees.

Figure 2: Hypothetical Examples of How a Ticket Price and Fees Can Initially Be

Displayed

Note: These examples are illustrative and are not based on actual tickets or events.

Currently, FTC relies on the Federal Trade Commission Act—which

prohibits unfair or deceptive acts or practices—to address problems

related to fee disclosures. But FTC staff said it is challenging and

resource-intensive to use the act to address inadequate fee disclosures

industry-wide because it requires proving violations on a case-by-case

basis.

FTC staff told us that, depending on the circumstances, a

legislative disclosure requirement that specified requirements for fees

could facilitate enforcement activity and create a more level playing field

Industry stakeholders expressing this view included two managers, one agent, one

promoter, two artist advocacy groups, four secondary market ticket exchanges, and the

National Association of Ticket Brokers.

Page 44 GAO-18-347 Event Ticket Sales

for consumers and sellers. Eleven industry stakeholders and three

consumer advocacy groups with whom we spoke similarly expressed

support for a requirement that ticketing fees be disclosed up front. Many

noted that fees should be fully transparent to consumers.

However, a primary ticket seller, two venue managers, and a secondary

ticket seller we interviewed questioned the need for an up-front fee

disclosure requirement. For example, a primary ticket seller stated that

knowing fees up front would not affect a consumer’s decision of whether

or not to buy a ticket. The two venue managers believed that the timing of

the fee disclosure was not important, as long as fees are disclosed before

consumers complete the purchase. Representatives of one secondary

ticket exchange said that up-front disclosure of fees could be challenging

because a ticket’s fee is not stable—for example, the fee can change

based on price fluctuations, different delivery methods, and the use of

promotion codes.

The National Economic Council has stated that “all-in pricing,” a form of

up-front pricing, may be preferable to other methods of fee disclosure.

All-in pricing incorporates the ticket’s face value and all mandatory fees

and taxes, as illustrated in figure 2 above. According to the National

Economic Council, all-in pricing eases comparison across vendors. The

FTC staff report analyzing hotel resort fees supported all-in pricing for that

industry because it said that breaking out fees, instead of providing a

single total price, hindered consumer decision making and often resulted

in consumers underestimating the total price.

Officials from two state

attorney general offices told us that all-in pricing could be advantageous,

noting that fee disclosures represent their most significant enforcement

issue related to the ticketing industry.

Three secondary ticket sellers told us they might support a requirement to

provide all-in pricing, but only if it was required of all ticket sellers. In

2014, the largest secondary market ticketing company began using all-in

pricing, with its listings displaying a single total price that incorporated

fees. However, the company soon discontinued all-in pricing as the

default because, it told us, it put the company at a competitive

disadvantage with other secondary market providers whose fees were not

White House National Economic Council, 16.

Sullivan, 27.

Page 45 GAO-18-347 Event Ticket Sales

included in the initial ticket price displayed to consumers.

A requirement

that all ticket sellers provide up-front fee disclosure would mitigate or

resolve that issue.

One argument against a requirement for all-in pricing is that such

regulation would restrict ticket companies’ flexibility in choosing how to

disclose fees. In addition, a manager, a promoter, and two artist advocacy

groups said all-in pricing could give fans the incorrect impression that the

artist was charging the full ticket price and receiving its revenues,

because the portion of the price going toward ticketing fees would not be

transparent.

Some federal and state policymakers have proposed requirements for

resellers to disclose a ticket’s face value on secondary ticket websites.

Georgia and New York State have enacted similar requirements, with

statutes requiring resellers to disclose both the face value of tickets and

their list price.

Requiring that ticket resellers disclose the ticket’s face value can have

several advantages. First, it makes the reseller’s markup transparent.

Second, it can help consumers assess the quality of the seat location and

compare similar seats across resale listings. Third, it might reduce the

possibility that consumers mistake a reseller’s website for a venue

website, as described earlier. This, in turn, could encourage consumers to

recognize they are viewing a secondary market exchange and

comparison shop for a better price elsewhere.

However, a requirement that resellers disclose a ticket’s face value can

present challenges because the definition of “face value” may not always

be clear, according to three ticket resellers and FTC Bureau of Consumer

Protection staff. If the face value does not incorporate fees and taxes

charged on the primary market, it would not reflect the full amount paid by

The company still provides the customer the option of displaying all-in pricing at the

listing page, as do some other secondary market providers.

Georgia’s ticketing law requires brokers to disclose to the purchaser, in writing, the

difference between a ticket's face value and the price being charged. GA. CODE ANN. § 43-

4B-28(a)(3) (2017). New York requires licensed resellers to post a price list showing the

established (face value) price charged by the operator of the place of entertainment for

which the ticket is being resold. N.Y.

ARTS & CULT. AFF. LAW §25.23 (Consol. 2018). At

least two foreign jurisdictions—the United Kingdom and Ontario, Canada—have similar

laws, according to a United Kingdom government study of the country’s ticket resale

market and a Canadian government press release.

Disclosing Face Value on

Resale Sites

Page 46 GAO-18-347 Event Ticket Sales

the original buyer. Similarly, some tickets are sold through VIP packages

that do not itemize the price of the ticket and other components, such as

backstage access or parking. In addition, with dynamic pricing, a ticket’s

face value can change frequently. Furthermore, season tickets may

display a higher face value than the season ticket holder paid because

teams usually sell the packages at a discount.

A requirement to disclose a ticket’s face value also could create

compliance costs for secondary ticket exchanges, and could be difficult to

enforce, according to some stakeholders. Three secondary ticket

exchanges told us they do not currently collect information on a ticket’s

face value and would have difficulty verifying the value provided by the

listing broker—in part because of the challenges in defining face value, as

described above. The New York State Office of the Attorney General

stated in its 2016 report that most resellers cannot comply with the state’s

disclosure requirement because most secondary ticket exchanges do not

offer the option to show the ticket’s face value alongside its list price,

despite having the capability to add such functionality.

In addition, an

official from Georgia’s Athletic and Entertainment Commission told us that

resellers largely disregarded the state’s requirement to disclose face

value.

Another proposal, advocated by secondary market stakeholders, among

others, would require primary ticket sellers to disclose how many tickets

are available when an event first goes on sale to the general public. For

instance, a venue or ticket seller might be required to provide the venue

capacity and number of tickets available for sale after accounting for

presales and holds. A 2017 law in Ontario, Canada, requires primary

ticket sellers to provide certain information about venue capacity and

presales, according to testimony by the Ontario Attorney General.

Such a disclosure would provide consumers a clearer picture of ticket

availability and help them manage expectations and make informed

decisions, according to three consumer advocacy groups and two

academics with whom we spoke. In addition, the National Association of

Ticket Brokers and a secondary ticket exchange stated that disclosing

ticket availability would shed light on what some consider excessive holds

New York State Office of the Attorney General, 34.

Official Report of Debates (Hansard) No. 136, Legislative Assembly of Ontario, 2nd

Session, 41st Parliament (Dec. 13, 2017).

Disclosing Ticket Availability

Page 47 GAO-18-347 Event Ticket Sales

and presales by the primary market. They said that brokers often are

blamed when events quickly sell out on the primary market, whereas

there may have been relatively few tickets available for sale in the first

place. The New York State Office of the Attorney General stated that the

lack of transparency about the manner in which tickets are distributed

creates a level of mistrust among consumers.

However, many primary market stakeholders with whom we spoke—

including promoters, managers, venue operators, and primary ticket

sellers—said such a disclosure would have little-to-no benefit. First, some

of them noted that ticket inventory can change as event production details

evolve and holds are released, making it difficult to provide an accurate

number of tickets available at any one time. Second, some said this

disclosure would be confusing or meaningless for consumers, with one

promoter noting that for high-demand events, a consumer’s odds of

getting a ticket are low regardless of whether he or she knows the

number of available tickets. Another promoter noted that the seat maps

used to select seats when purchasing tickets already provide information

on ticket availability. Many stakeholders also told us such a disclosure

would only help brokers by giving them information useful in buying

tickets and setting resale prices. In addition, a venue manager noted that

information on ticket sales is considered proprietary and artists and event

organizers should not be required to disclose confidential business

information.

100

Federal agencies face constraints in addressing ticketing issues. Some

industry players are implementing technological and market-based

approaches that seek to address concerns about secondary market

activity.

100

When initially introduced in October 2017, the Ticket Sales Act enacted by Ontario,

Canada, included a provision requiring advance disclosure of the number of tickets to be

sold to the general public, according to a statement by the Attorney General of Ontario. He

stated that this provision was dropped after opposition from artists and venue operators,

who claimed, among other things, that it would provide useful market information

advantageous to ticket brokers.

Event Ticketing Is Not

Federally Regulated and

Some Stakeholders Cite

Market-Based Approaches

to Address Concerns

about Secondary Market

Activity

Page 48 GAO-18-347 Event Ticket Sales

As noted earlier, the event ticketing industry is not federally regulated. In

contrast, in the airline industry, the Department of Transportation can

issue regulations regarding the disclosure of airline fees.

101

Staff from

FTC’s Bureau of Consumer Protection told us that—in addition to the

enforcement activity noted earlier—they monitor consumer complaints

related to the event ticket industry. However, they said they have

resource and other constraints that make it difficult to conduct industry-

wide investigations related to ticketing practices.

Issues around the level and transparency of fees are not unique to the

event ticketing industry. For example, as noted earlier, FTC staff have

raised concerns about mandatory “resort fees” charged by many hotels

but not immediately disclosed (such as in online price search results).

102

In addition, according to the National Economic Council, sellers of other

goods and services—such as car dealers and telecommunications

companies—sometimes offer low prices up front that rise substantially

with the addition of mandatory fees revealed later in the purchase

process.

103

As such, options for regulating the transparency of fees can

have applicability broader than that of event ticketing.

As noted earlier, the BOTS Act, which prohibits circumventing security

measures or other systems intended to enforce ticket purchasing limits or

order rules, went into effect in December 2016. However, a variety of

industry, consumer, academic, and government stakeholders have

expressed doubt that the BOTS Act would have much of an effect on

prohibited bot use. Several of these stakeholders told us that bot users

can easily evade detection and that enforcement of the act would be

extremely difficult, in part because a lot of bot use occurs—or could

shift—outside the United States. As of February 2018, FTC had not taken

any enforcement action related to the act, but FTC staff told us they were

monitoring the situation.

101

For example, since 2010, the Department of Transportation has taken or has proposed

a range of actions to improve the transparency of airlines’ fees for optional services, such

as requiring certain airlines to disclose optional service fees on their websites. See GAO,

Commercial Aviation: Information on Airline Fees for Optional Services, GAO-17-756

(Washington, D.C. Sept. 20, 2017).

102

Sullivan, 1.

103

White House National Economic Council, 9-15.

Federal Regulatory

Environment

Page 49 GAO-18-347 Event Ticket Sales

The degree to which legislation combatting bots is effective may depend

in part on the extent to which state attorneys general pursue enforcement

actions. As of February 2018, we identified two states that had taken

enforcement actions related to bot use. In May 2017, the New York State

Office of the Attorney General announced settlements totaling $4.11

million with five ticket brokers which, among other offenses, violated New

York State law by using bots to purchase and resell tickets.

104

In April

2016, the office announced settlements totaling $2.7 million with six ticket

brokers for similar violations.

105

In February 2018, the Washington State

Office of the Attorney General announced settlements totaling $60,000

with two ticket companies that used bots in violation of the state’s

ticketing law.

106

Industry players, including ticket companies and event organizers, are

using or exploring technology and market-based approaches that seek to

address concerns about secondary market activity. Examples of these

approaches and their potential effects include the following:

• Delivery delays. Ticket sellers sometimes use delivery delays,

meaning they do not provide the ticket immediately upon purchase.

Instead, buyers receive their tickets (in paper or print-at-home form)

closer to the day of the event. Delivery delays can inhibit resale

activity because they give brokers less time to buy and resell tickets,

and allow primary ticket sellers to review whether brokers and bots

made bulk purchases, according to some promoters and primary

ticket sellers. However, secondary market sellers we interviewed

generally argued against delivery delays, with two sellers saying it can

104

New York State Office of the Attorney General, A.G. Schneiderman Announces $4.19

Million In Settlements with Six Companies That Illegally Purchased and Resold Hundreds

of Thousands of Tickets to Concerts and Other NY Events (May 11, 2017).

105

New York State Office of the Attorney General, A.G. Schneiderman Announces $2.7

Million In Settlements With Six Ticket Brokers That Illegally Bought And Resold Tickets In

Bulk (Apr. 27, 2016).

106

Washington State Office of the Attorney General, Ticket Sales Company to Pay $60k

for Use of Ticket Bots (Feb. 8, 2018).

Market-Based Approaches

Page 50 GAO-18-347 Event Ticket Sales

be inconvenient and stressful for consumers to receive a ticket just a

few days before an event.

107

• Dynamic pricing. The use of dynamic pricing—which adjusts prices

over time based on demand—can reduce secondary market activity

by pricing tickets closer to their market clearing price. Raising primary

market ticket prices, such as through dynamic pricing, does not

necessarily benefit consumers but can help ensure that more ticket

revenue accrues to the artist or team rather than ticket resellers.

• Verified fan program. At least one major ticket company has a

program to sell tickets to pre-approved “verified fans,” to help ensure

that more consumers and fewer brokers can access tickets on the

primary market.

• New technology. Two stakeholders noted the potential for distributed

ledger technology in ticketing.

108

The technology associates a unique

identification code with the ticket and its owner, which can help restrict

transfer of the ticket and ensure its authenticity.

• Adding concerts. Artists can seek to make their ticket prices

accessible by increasing the supply of seats—for example, one major

artist has added concert dates with the express purpose of matching

ticket supply to demand to prevent higher resale prices.

• Face-value resale exchanges. Resale exchanges used by some

artists only allow resale at face value (plus a limited amount to

account for primary market fees). This allows consumers to recoup

their ticket costs if their plans change, while preventing resale

markups.

Market-based approaches also may augment regulatory and enforcement

action with regard to problems discussed earlier around transparency. In

February 2018, Google’s AdWords service—which offers paid advertising

alongside search results—implemented new certification requirements for

businesses that resell event tickets. First, resellers using AdWords must

clearly disclose on their website or mobile application that they are a

secondary market company and not the primary provider of the tickets.

107

In addition, the National Association of Ticket Brokers and one ticket reseller told us

they view delivery delays as an attempt to force ticketholders to use the primary sellers’

own secondary marketplaces. They said this was demonstrated by tickets that otherwise

have delivery delays being available for instant resale on the resale sites of some primary

sellers.

108

Distributed ledger technology allows participants in a peer-to-peer network to share and

retain identical secured records through a decentralized database.

Page 51 GAO-18-347 Event Ticket Sales

They cannot imply they are the primary provider by using words such as

“official” or by including the artist or venue name in their website’s URL—

practices we noted earlier that were being used by some white-label

websites. Second, resellers must prominently disclose when their ticket

prices are higher than face value and disclose a price breakdown,

including any fees, before the customer provides payment information.

Google said in a statement that these measures were intended to protect

customers from scams and prevent potential confusion. However, due to

the recency of this change, it is too early to determine how it will affect the

marketplace.

In addition, the advertising industry’s self-regulatory organization has

taken steps to address potentially misleading pricing practices in the

ticket industry. The Advertising Self-Regulatory Council sets standards for

truth and accuracy for national advertisers, monitors the marketplace, and

holds advertisers responsible for their claims.

109

As noted earlier, the

organization recently referred a major ticket company to FTC for not

following its recommendations to conspicuously disclose its fees.

110

Although the council can play a role in monitoring deceptive advertising

related to ticketing, it also faces constraints—for example, it addresses

practices case-by-case and its recommendations depend on voluntary

compliance by the advertiser.

No matter what efforts are made to address concerns about the ticket

marketplace, some of the consumer dissatisfaction with event ticketing

stems from an intractable issue: demand for tickets to highly popular

events exceeds supply. As such, no activity, outside of expanding the

supply, is likely to effectively address one key source of consumer

dissatisfaction: that tickets are not available to popular sold-out events.

We provided a draft of this report to DOJ and FTC for review and

comment. We received technical comments from FTC, which we

incorporated as appropriate. We also provided relevant excerpts of the

draft for technical review to selected private parties cited in our report,

and included their technical comments as appropriate.

109

Advertising Self-Regulatory Council, “ASRC Snapshot,” accessed February 2, 2018,

http://www.asrcreviews.org/about-us/.

110

Advertising Self-Regulatory Council, “NAD Refers StubHub Pricing Claims to FTC for

Further Review After Advertiser Declines to Comply with NAD Decision on Disclosures,”

(New York, NY: Jan. 16, 2018).

Agency Comments

Page 52 GAO-18-347 Event Ticket Sales

As agreed with your offices, unless you publicly announce the contents of

this report earlier, we plan no further distribution until 30 days from the

report date. At that time, we will send copies to DOJ, FTC, the

appropriate congressional committees and members, and others. In

addition, the report will be available at no charge on the GAO website at

http://www.gao.gov.

If you or your staff have any questions concerning this report, please

contact me at (202) 512-8678 or clementsm@gao.gov. Contact points for

our Offices of Congressional Relations and Public Affairs may be found

on the last page of this report. GAO staff who made major contributions to

this report are listed in appendix II.

Michael Clements

Director, Financial Markets and Community Investment

Appendix I: Objectives, Scope, and

Methodology

Page 53 GAO-18-347 Event Ticket Sales

The objectives of this report were to examine (1) what is known about

primary and secondary online ticket sales, (2) the consumer protection

concerns that exist related to online ticket sales, and (3) potential

advantages and disadvantages of selected approaches to address these

concerns. The scope of our work generally focused on ticketing for large

concert, theater, and sporting events for which there is a resale market.

To develop background information on the U.S. ticketing industry, we

analyzed business classification codes from the North American Industry

Classification System, which assigns a 6-digit code to each industry

based on its primary activity that generates the most revenue. The code

we selected, “All Other Travel Arrangement and Reservation Services,”

includes theatrical and sports ticket agencies, as well as automobile club

road and travel services and ticket offices for airline, bus, and cruise ship

travel. Because the Census data do not distinguish event ticketing from

other services in particular, we determined the data do not provide a

reliable count of companies in the event ticketing industry. In addition, we

obtained publicly available data from private research firms and reviewed

the largest publicly held ticketing companies’ annual public filings with the

Securities and Exchange Commission (Form 10-K). We also collected

information from firms that collect data related to the ticketing industry,

such as IBISWorld and LiveAnalytics.

To examine what is known about primary and secondary online ticket

sales, we reviewed data related to ticket prices and sales published by

Pollstar, a concert industry trade publication, and the Broadway League,

a trade organization representing commercial theater. In addition, we

obtained and analyzed data on ticket volume and resale prices for a

nongeneralizable sample of 22 events. These events were selected

because they (1) occurred in relatively large venues (more than 500

seats) that typically experience ticket resale activity; (2) represented a mix

of event types (13 concerts, 3 commercial theater productions, and 6

sporting events); and (3) represented a mix of popularity, including 17

events that would be expected to be in high demand. We defined high-

demand events as those that were likely to sell out, which we assessed

by reviewing past attendance at other events for the same artist or

theatrical event. For sports, we assessed demand by reviewing team

performance and rankings. We collected data from October 16 through

December 20, 2017. For each event, we analyzed:

• resale prices and volume, through data obtained from publicly

available listings on the websites of two secondary ticket exchanges;

Appendix I: Objectives, Scope, and

Methodology

Appendix I: Objectives, Scope, and

Methodology

Page 54 GAO-18-347 Event Ticket Sales

• primary market prices and availability, through data obtained from

the websites of primary market ticket sellers; and

• event capacity, through data obtained from Billboard or Pollstar

(trade publications) for concerts, the Broadway League for theater,

and ESPN.com (a media company) for sporting events.

To examine consumer protection concerns, we reviewed the websites of

6 primary market ticket sellers, 11 secondary ticket exchanges, and 8

“white-label” ticket websites.

We collected data from June 19, 2017,

through January 16, 2018.

• For the primary market ticket seller that represents the majority of

market share, we observed the online ticket purchase process for 23

events. Three events were selected using the process described

below and the remaining 20 were chosen to reflect 2 events at each of

10 venues, selected because they were among the 200 top-selling

arenas or 200 top-selling theaters in the United States in 2017,

according to Pollstar.

• For each of the 5 other primary market ticket sellers and the 11

secondary ticket exchanges, we observed the online ticket purchase

process for 1–5 events. For each primary ticket seller, we selected

one event per category (concert, theater, and sports). For consistency

and comparability across companies, we also limited events to the

same state (which did not extensively limit ticket resale) and time

period. We also selected 2 events in another state because they used

nontransferable tickets. For the secondary ticket exchanges, we used

3–5 events from our review of primary ticket sellers’ websites. If the

event was no longer available, we selected an alternative event at the

same venue.

• For each of the 8 white-label ticket sellers, we reviewed 1–4 events

from the events described above. In some cases, the same event was

not available so we selected an alternative event at the same venue.

For these events—31 events in total—we documented (1) the ticket fees

charged, (2) at what point in the purchase process the fees were

disclosed, and (3) any restrictions to the ticket. In addition, we assessed

A white-label website is a sales website built by one company that allows affiliates to use

the software to build their own, uniquely branded websites, which often appear as paid

results of Internet searches for venues and events. We identified these websites by

conducting searches on two of the largest search engines for the venues of the events we

selected for review.

Appendix I: Objectives, Scope, and

Methodology

Page 55 GAO-18-347 Event Ticket Sales

the clarity, placement, and font size of the fees, restriction information,

and—for white-label websites—disclaimers that the website was a ticket

resale website. We worked with a GAO investigator to review the

websites that required users to provide an e-mail address or credit card

information before viewing fees. Analysts followed a protocol to help

ensure consistency of observations and completed a data collection

instrument for each website. A second analyst independently reviewed

each website to verify the accuracy of information collected by the first

analyst. Any discrepancies between the two analysts were identified,

discussed, and resolved by referring to the source websites.

A GAO investigator acting in an undercover capacity contacted the

customer service departments of three large secondary ticket exchanges

to inquire about two events for which tickets were nontransferable (not

allowed to be resold) and two events for which listed tickets were

speculative (not yet in-hand by the seller). The nontransferable tickets

were identified through press releases and articles about popular touring

artists and the speculative tickets were identified by searching for events

that had been announced but were not yet for sale on the primary market.

The investigator contacted customer service through 16 e-mails to one

company and 8 online “live chats” with another company. For the third

company, the investigator sent 8 e-mails about nontransferable tickets

and did not inquire about speculative tickets because this company

labeled such tickets. We also contacted the venues hosting these events

to help assess the accuracy of the information provided by the ticket

companies’ customer service departments.

In addition, we reviewed enforcement activity by federal and state

agencies related to ticketing and ticket companies. We also collected

information on the number of consumer complaints by requesting the

Federal Trade Commission (FTC) conduct a search of its Consumer

Sentinel Network database, which includes complaints submitted to FTC,

the Consumer Financial Protection Bureau, the Better Business Bureaus,

and other sources. The search results covered calendar years 2014–

2016 and used the term “ticket” with terms related to events (e.g.,

“concert,” “sport,” “theater”), sold-out events (e.g., “sold-out”); fees;

fraudulent tickets (e.g., “fake”); delayed delivery (e.g., “late,”); or

nontransferable tickets (e.g. “paperless”). We selected our initial search

terms by reviewing terms used in similar complaints on the Better

Business Bureau website. We made modifications to our search string

based on suggestions from FTC staff who reviewed the results of a

preliminary search. To help ensure that results were related to event

ticket sellers, we limited the search to complaints against the 6 primary

Appendix I: Objectives, Scope, and

Methodology

Page 56 GAO-18-347 Event Ticket Sales

ticket sellers and 11 secondary ticket exchanges in our scope. We

assessed the reliability of the complaint data by interviewing agency

officials. In addition, we have assessed the reliability of Consumer

Sentinel Network data as part of previous studies related to consumer

protection and found the data to be reliable for the purposes of gauging

the extent of consumer complaints about event ticketing. However, in

general, consumer complaint data have limitations as an indicator of the

extent of problems. For example, not all consumers who experience

problems may file a complaint, and not all complaints are necessarily

legitimate or categorized appropriately. In addition, a consumer could

submit a complaint more than once, or to more than one entity, potentially

resulting in duplicate complaints.

To examine the potential advantages and disadvantages of selected

approaches to address consumer protection concerns, we reviewed

federal and selected state laws related to event ticket sales. At the federal

level, these included the Better Online Ticket Sales Act of 2016 and

relevant provisions of the Federal Trade Commission Act. To determine

which states had laws related to ticket resale or disclosure, we reviewed

compilations of state ticketing laws from the National Association of Ticket

Brokers, a secondary ticket seller’s website, and a law firm publication,

and we conducted independent research and verification. We reviewed

ticketing-related legislation—selected for its relevance to the approaches

covered in our review—in Connecticut, New York, and Georgia. We

reviewed state government reports and interviewed state officials to get

information on the states’ experiences with these laws. We also consulted

foreign government reports to obtain information on relevant laws or

regulations in Canada and the United Kingdom, which have reported

similar consumer protection issues as we reviewed in our report.

To address all of our objectives, we conducted searches of various

databases, such as ProQuest, Academic OneFile, Nexis, Scopus, and the

National Bureau of Economic Research, to identify sources such as peer-

reviewed academic studies; law review articles; news and trade journal

articles; government reports; and hearings and transcripts related to

ticketing issues. We examined summary-level information about each

piece of literature, and from this review, identified articles that were

germane to our report. We generally focused on articles from 2009 and

later. We identified additional articles and reports through citations in

literature we reviewed and from expert recommendations.

For the articles we used to cite empirical findings or to support arguments

on advantages and disadvantages of selected resale restrictions or

Appendix I: Objectives, Scope, and

Methodology

Page 57 GAO-18-347 Event Ticket Sales

disclosure requirements, we conducted a methodology and soundness

review. We eliminated one study on pricing and one study on price caps

because we believed the methods were not sufficiently rigorous.

In addition, we identified and reviewed relevant congressional testimony

on proposed ticketing legislation. We reviewed the Department of

Justice’s competitive impact statement and testimonies with regard to the

2010 merger of Ticketmaster and Live Nation. We interviewed staff from

the FTC’s Bureau of Consumer Protection and Bureau of Economics, the

Department of Justice’s Antitrust Division, and the New York State Office

of the Attorney General, and we conducted a group interview, coordinated

by the National Association of Attorneys General, with staff from the

offices of the attorney general of Pennsylvania and Texas. We also

interviewed representatives of three consumer organizations: Consumer

Action, the National Association of Consumer Advocates, and the

National Consumers League; four trade associations: the Broadway

League, Future of Music Coalition, National Association of Ticket Brokers,

and the Recording Academy; as well as four primary ticket sellers, five

secondary ticket exchanges and aggregators, one broker, five venue

operators, three event promoters (who also operate venues), five artists’

managers and booking agents, three major sports leagues, and three

academics who have studied the ticket marketplace. These organizations

and individuals were selected based on their experience and prominence

in the marketplace and to provide a range of perspectives.

We conducted this performance audit from November 2016 to April 2018

in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain

sufficient, appropriate evidence to provide a reasonable basis for our

findings and conclusions based on our audit objectives. We believe that

the evidence obtained provides a reasonable basis for our findings and

conclusions based on our audit objectives. Our investigative staff agent

conducted all related investigative work in accordance with investigative

standards prescribed by the Council of the Inspectors General on Integrity

and Efficiency.

Appendix II: GAO Contact and Staff

Acknowledgments

Page 58 GAO-18-347 Event Ticket Sales

Michael E. Clements, (202) 512-8678 or [email protected]

In addition to the contact named above, Jason Bromberg (Assistant

Director), Lisa Reynolds (Analyst in Charge), and Miranda Berry made

key contributions to this report. Also contributing were Enyinnaya David

Aja, Maurice Belding, JoAnna Berry, Farrah Graham, John Karikari,

Barbara Roesmann, Jena Sinkfield, and Tyler Spunaugle.

Appendix II: GAO Contact and Staff

Acknowledgments

GAO Contact

Staff

Acknowledgments

(101222)

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