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New York Attorney General Signals War on Ticket Bots Is Just Beginning

The announcement yesterday by New York Attorney General Eric Schneiderman that a $2.76 million settlement had been reached with six ticket brokers as part of the AG's investigation into the ticketing…

The announcement yesterday by New York Attorney General Eric Schneiderman that a $2.76 million settlement had been reached with six ticket brokers as part of the AG’s investigation into the ticketing business may be only the beginning, according to some observers.

That includes Schneiderman himself, who says in a statement, “Our office will continue to enforce New York’s ticket laws by investigating ticket brokers who are breaking our laws, and making them pay for their illegal acts.”

The settlement is the first fallout from the investigation detailed in the NYAG’s January report titled “Obstructed View: What’s Blocking New Yorkers from Getting Tickets,” which focused what it deemed as anti-consumer tactics employed by primary and secondary sellers. Much of the report zeroed in on automated ticket-buying “bots” that repeatedly attempt to buy tickets and utilize computer code to jump to the front of the virtual queue. These bots notoriously hammered hot onsales this year by such artists as Adele and Bruce Springsteen, and the report stated that, while no current federal law specifically prohibits the use of ticket bots, the “Better On-line Ticket Sales Act of 2014” or BOTS Act, would prohibit the sale or use of ticket bots, with criminal penalties attached.

The New York Times reports the attorney general determined that the six brokers sold tickets in New York without a proper license, and five of the brokers used bots; the settlement requires the brokers to immediately rectify both situations. “These brokers have only settled with the state of New York,” points out Don Vaccaro, CEO of online secondary ticket aggregator TicketNetwork. “I expect them to also face settlements in their home states, as well as the Federal government.  With the proliferation of web-based POS systems, these authorities have access to all the bot brokers’ transactions”

Don Vaccaro, CEO of online secondary ticket aggregator TicketNetwork, says he “applauds Attorney General Schniderman’s actions, as do most ticket brokers in the industry,” adding that the settlement will ultimately lead to, “a better experience for consumers, venues and our exchange.”

Vaccaro tells Billboard that, both across the secondary market and among those brokers that settled, “most of these bot users use software from a Chicago-based exchange, and list exclusively on that exchange and a California-based fan-to-fan exchange [that is] not TicketNetwork.” He says those secondary sites have “direct access” to a bot inventory, which “has allowed them to grow exponentially at the expense of consumers, and gives them an unfair competitive advantage over TicketNetwork.” While Vaccaro declined to name any specific companies, online secondary ticket seller Vivid Seats is based in Chicago, and secondary market leader StubHub, a subsidiary of eBay, is based in San Francisco. Neither immediately replied to a request for comment.

Some of the suggestions from the Attorney General’s report included preemptively enforcing ticket limits, analyzing purchase data to identify ongoing bot operations, and investigating resellers regularly offering large numbers of tickets to popular shows, among others. The report pointed out that “in many cases, industry players do not have an incentive to reform,” perhaps news of the settlement might provide a financial incentive.

So far, anti-botting efforts have seen mixed results. For the Adele on-sales alone, Ticketmaster says its data science team “blocked more than 1 million [bot] attempts.” StubHub, too, publicly takes an anti-botting stance, with StubHub president Scott Cutler telling Billboard in an interview earlier this year, “We shut down bot use on our site on a daily basis.” Regarding bot inventory on StubHub, Cutler said, “we have no way of knowing, unless we are notified by the primary, which to date has never happened.”

Vaccaro believes the repercussions of this investigation might transcend the entertainment industry and ooze into the tech and financial worlds. “The Attorney General may have uncovered a larger conspiracy with not only bot operators, but software makers,” he says, without revealing specifics on the record. “If this is correct, the investigation may not stop here, as there appear to be criminal violations of state and federal laws, including possible securities fraud.”