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Ontario to make ticket-buying ‘bots’ illegal, cap markups in scalping crackdown

Recognizing that rapid ticket-scalping "bot" technology will only get more sophisticated with time, Ontario plans to implement a cap on markups for resold tickets at 50 per cent above their face value to make scalping less lucrative as part of broad legislation to make ticket-buying more fair.

While bots will be banned with the forthcoming Ticket Sales Act, to be tabled this fall, Attorney General Yasir Naqvi said in an interview that stripping financial incentive from scalping would be a more sustainable long-term plan. "Technology is going to rapidly evolve. We want to make sure we put rules in place that can withstand the changes in technology," he said.

While many jurisdictions around the world have laws flat-out banning ticket resales for more than their original values, Ontario wants to acknowledge that "the Internet is here to stay," Mr. Naqvi said.

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Related: Canadians say ticket bots a 'huge problem,' but divided on solution

In leaving room for moderate markups, the proposal would leave resale prices relatively low for fans and let those who genuinely need to offload tickets sell them on popular authenticity-guaranteeing resale marketplaces such as Stubhub Inc. If adopted and well received, it could set a precedent for ticket selling in other jurisdictions in Canada and beyond.

Ticket sellers, meanwhile, would rather place their faith in the free market than become mired in regulation, which might drive consumers to sources where ticket fraud could occur.

"Any type of regulation that discourages consumers from using really transparent and public marketplaces, and taking those sales into an environment where consumer protections don't exist, we believe is bad for the fan," said Laura Dooley, Stubhub's senior manager of government relations, in an interview.

After consulting nearly 35,000 people this spring, Attorney General Yasir Naqvi, local MPP Han Dong and Sophie Kiwala, the MPP for Kingston and the Islands – home to the Tragically Hip – unveiled the Ticket Sales Act Monday morning at Roundhouse Park in Toronto, in the shadow of the Rogers Centre, one of the country's largest live-entertainment venues.

If adopted, the legislation would include a number of measures to encourage transparency on behalf of ticket sellers. Original vendors would need to make clear the full prices of tickets including service charges and fees, and reveal the total number of tickets available to the general public. The Act would require ticket resellers to be more transparent about ticket information, too, and would ramp up enforcement of the new rules.

Consumers would be able to file complaints with Consumer Protection Ontario if they find tickets posted for sale with excessive markups; they'd be able to sue offenders when the law is broken, too, Mr. Naqvi said.

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Ticket reselling marketplaces such as Stubhub generally define themselves as passive hosts for transactions and ask users to abide by the laws in their jurisdiction, but it's still easy to find overpriced tickets in provinces such as Quebec and Manitoba on such websites, despite provincial laws against markups.

Mr. Naqvi told The Globe and Mail the new legislation would require more proactive involvement from the marketplace companies themselves. Consumers would additionally be able to file complaints with Consumer Protection Ontario, and inspectors will become available to investigate and impose fines.

For people and corporate entities found violating the proposed legislation, he said his ministry is proposing to put "a progressive regime" on punishments, with fines as high as $25,000 and jail sentences possibly reaching multiple years.

If the offenders lived or operated outside of Ontario, "those companies or individuals who are selling have a nexus to Ontario" under the proposed legislation, Mr. Naqvi said, making enforcement easier.

Scalping was long illegal in the province, but Queen's Park reversed course in 2015, amending the Ticket Speculation Act to let consumers resell tickets for more than face value as long as they were confirmed as authentic or had a money-back guarantee. The move helped legitimize secondary marketplaces such as Stubhub Inc., which let consumers list their tickets for sale in exchange for a fee, in Canada's most populous province. Primary vendors such as Ticketmaster have begun to roll out secondary buying options for customers, too.

In April, Michael Rapino – chief executive of Live Nation Entertainment Inc., the parent company of global ticket-selling leader Ticketmaster – told The Globe and Mail that battling scalpers through legislation was "unrealistic."

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"I think some of these [legislative changes and suggestions around the world] are decent attempts, but I don't think over all, until you start pricing the product better, and/or have better technology to deliver the fan their ticket, that you'll start to make a difference," Mr. Rapino said.

Ms. Dooley of Stubhub defended the importance of the free market. "Our whole concept is to provide the platform and the interaction between two parties that they themselves can price the ticket at the price they think makes sense, and then make the decision to purchase the ticket based on what they value that experience to be," she told The Globe.

Last year, tickets to The Tragically Hip's most recent Canadian tour – their first after frontman Gord Downie revealed he had terminal brain cancer – were widely scalped and put up for resale at enormous markups. While this has become a frequent problem in live entertainment as rapid ticket-buying software has become more sophisticated, Mr. Downie's diagnosis gave the situation an emotional heft and a national scale.

Ms. Kiwala subsequently put forward a private member's bill proposing that scalper bots be outlawed. In February, Mr. Naqvi threw his weight behind the cause, and his office launched the public consultation.

Of the thousands who responded to the province's public consultation this spring, 90 per cent of whom said they've struggled to get tickets from original vendors because they were sold out. Many wanted laws to enforce fairness: 89 per cent, for instance, said ticket-buying software, or bots, should be illegal.

The consultation's results were directly reflected in the legislation; 89 per cent said there should be a price cap for resale markups – which would make scalping much less lucrative. And 85 per cent of respondents wanted it to be illegal to post tickets on a resale site before they're available to the public.

Transparency was a huge theme in the public response. The vast majority want primary sellers to disclose tickets' full prices with service and processing fees, much like with airlines. Many wanted sellers to reveal the total number of tickets for sale, and disclose how many would be reserved for fan clubs and membership programs or banked for the artist or venue. Nine in 10 wanted resellers to reveal tickets' original face value to get a truer sense of markup.

Jurisdictions around the world are trying to wrap their heads around ticket scalping and markups. One of Barack Obama's final acts as U.S. president was to sign a ban on ticket bots into law, and Australia is debating taking similar action. Ireland is considering banning the resale of most tickets for more than their original price.

Canadian provinces including Quebec, Ontario, Manitoba and Saskatchewan have varying laws around scalping; Alberta repealed its scalping-related legislation eight years ago.

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About the Author

Josh O’Kane is a reporter with The Globe and Mail's Report on Business. Since joining the paper in 2011, he has told stories from New Brunswick to Nairobi. In his spare time, he writes about music and the industry around it. More

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