Ticket Scalping in Ohio
With the upcoming Sugar Bowl I found a great article on the ins and outs of ticket scalping/resale for sporting and entertainment events.
Check out the article on Attorney Brian Kooperman’s website (I have also copied it below, with permission of course).
Brian is an excellent attorney with a focus on complex business transactions and real estate issues. I can personally attest to his capabilities as I have co-counseled with him on numerous issues pertaining to various liquor/hospitality clients. He also has one of the coolest offices in town.
To Scalp or not to Scalp
Posted on January 3, 2011 by Brian Kooperman
The 2010-2011 bowl season is just about complete. After a long wait, tomorrow night the Ohio State Buckeyes play the Arkansas Razorbacks in an SEC v. Big 10 Sugar Bowl matchup in New Orleans. A couple of weeks ago, a friend of mine called and asked the simple question: “Can I post a couple of Sugar Bowl tickets for sale on my website?” He wanted to sell the tickets for higher than face value and was wondering if this was legal. Being the sports fan that I am and having bought dozens of tickets from scalpers in my lifetime, I thought – what would be more fitting than to attempt to answer his question via an entry on my blog? So, let’s pose the question: Is it legal to scalp tickets? The simple answer to the question is, (which seems to be the predominate answer to most questions asked of lawyers) it depends. For instance, the law may be different if he were trying to sell tickets to the Ohio State/Colorado game being played in Columbus on September 24, 2011 or even a Cincinnati Bengals game.
Directly below, I will attempt to examine my friend’s question regarding ticket sales over the Internet. However, before we dig too deep, let’s examine the basics. First, what is ticket scalping? The shortest definition that I found was on Ebay. Ebay defines “Scalping” as, “reselling tickets for greater than face value”. Short and Sweet. Probably the most thorough definition I have seen was located at none other than wisegeek.com which defines “scalping” as “the practice of buying and selling event tickets by private citizens, rather than by the sponsoring venue or organization.” Now that we have a basic definition, the next step is usually to figure out if any US or federal laws forbid ticket scalping and move down the legal foodchain from there.
Based upon my research, there is no federal law that regulates or prohibits the practice of scalping tickets (although in 2009, Senator Chuck Schumer from New York did attempt to pass a federal anti-ticket scalping bill. Apparently, he was upset at the outrageous prices of U2 tickets. See here.) Because there is no applicable federal or US law, we next need to look to the laws of the individual states.
Although I have not seen any survey or report dated after 2007, according to the National Conference of State Legislatures, as of 2006, approximately 16 of the 50 states had a law which deemed scalping tickets illegal. Interestingly enough, shortly after this report was circulated, several states revisited their statutes amidst the boom of websites such as StubHub, Ebay, and Ticketmaster.
The companies who have been profiting off the lucrative ticket scalping industry hired influential lobbyists to persuade state legislatures to change their laws. This is demonstrated on Ticketmaster’s website here. Which states that: “Ticketmaster and TicketsNow are committed to providing fans with the highest levels of service, choice, convenience, and security, and are committed to doing so lawfully. Ticketmaster and TicketsNow have been working with local jurisdictions across the United States and Canada, with a myriad of different and sometimes conflicting local laws, to ensure legal compliance, so that the laws reflect the fast-changing technology and marketplace. In fact, Ticketmaster has been at the forefront of efforts to prevent the illegal diversion of tickets away from fans by the use of automated programs.”
I wouldn’t doubt Ticketmaster’s statement for one second. As of 2007, according to research conducted by the Connecticut General Assembly, only 13 states still outlawed reselling tickets above face value. As of 2011, that number may have been reduced even further. More than half of those 13 states require a special license to resell tickets. A select few states leave the issue up to state municipalities.
Believe it or not, one of the select few states that defer the decision to local municipalities is Ohio. Under Ohio Revised Code §715.48(B), the state allows municipalities to regulate “the business of trafficking” entertainment tickets. This of course makes matters even more complicated. As you would expect for example, there is a distinction between the laws governing Columbus versus the laws governing Cincinnati. There is no regulation or statute in the Columbus City Code regarding or prohibiting scalping. Conversely, there is an entire section of the Columbus City Code that regulates “peddlers” or “peddling” (Section 523 of the Columbus City Code), but there is nothing in this section that expressly prohibits scalping.
The Tenth District Court of Appeals (Franklin County) pondered this issue in a 2005 case as it related to probable cause for a police stop that took place in Columbus:
During the suppression hearing, Trooper Firmi was unsure if scalping tickets violated criminal law. Likewise, neither Trooper Firmi nor appellee cites a specific statute under the Ohio Revised Code or Columbus City Code that prohibits ticket scalping. Under R.C. 715.48(B), the state allows municipalities to regulate “the business of trafficking” entertainment tickets. However, we find no Columbus City Code against ticket scalping. We recognize that the Columbus City Code regulates a “peddler” who sells items “upon any street, road, alley, doorway, sidewalk, or upon vacant lots or other tracts of land, or from place to place, or house to house within the corporate limits of this city.” Columbus City Code 523.01. These municipal regulations contain licensing requirements for peddlers, but do not prohibit ticket scalping. See Columbus City Code 523.01 et. seq.
State v. Smith, 2005 WL 1220742, 4 (Ohio App. 10 Dist.).
Under Columbus City Code § 523, “peddling” is defined as the act of:
“selling, bartering, offering for sale, exposing for sale at retail or wholesale, any goods, wares, merchandise, chattels, vegetables, fruits, foodstuff of any other description, any drink or other substance for human consumption; or any commodity or service or other article upon any street, road, alley, doorway, sidewalk, or upon vacant lots or other tracts of land, or from place to place, or house to house within the corporate limits of this city”. The criminal penalty for a violation of this section varies from a minor misdemeanor to a first degree misdemeanor for repeat violations.”
While there are no laws in Columbus that address the scalping issue directly, the laws of another city, Cincinnati, for example, are very different. Cincinnati’s Code of Ordinances § 840, the “Street Ticket Sales” section, straightforwardly addresses the issue of scalping. In fact, section 840-3, mandates that it is illegal to sell a ticket for more than face value unless you’ve obtained a ticket-sales license from the city treasurer. This section of the Cincinnati code was passed in March of 2001. Prior to the codification of the Street Ticket Sales section, scalpers in Cincinnati were subject to harassment from police even though there was no specific statute making scalping illegal. A 1999 case shed some light on why scalpers were being prosecuted:
The city maintains what it chooses to call a “scalping detail,” strongly suggesting a municipal animus against a practice that is not, by itself, illegal. *** Most telling, there is also the statement, attributed to Officer Haun by Ryther, that the work of the “scalping detail” was in response to Marge Schott, then majority owner of the Reds, putting pressure on the city. Presumably such pressure was not to see that traffic laws and city ordinances were enforced, but that ticket scalping was stopped. *** In summary, [the Defendants] were arrested four times and never found guilty of anything, while having thousands of dollars of property-not contraband-seized from them.”
Norwell v. Cincinnati (1999), 133 Ohio App.3d 790, (Ohio App. 1 Dist.).
Regardless, this section would only apply to individuals selling tickets in and around the stadium. Based upon my interpretation, it certainly does not restrict the sale of tickets in advance over the Internet even if for profit.
Okay, now that we have tackled (pardon the pun) the scalping laws in Ohio, what about the scalping laws in the city that contains the site of the Sugar Bowl – New Orleans? Louisiana Revised Statutes § 4:1 forbids the practice of reselling tickets for higher than face value. In 2006, the statute was amended to allow the sale of tickets, at any price, for sales conducted over the Internet, so long as the organizer of the event and the event location’s operator have authorized the sale of the tickets. Second, the web site’s operator must guarantee a full refund of the total sale price (including all charges) if the event is (a) canceled, (b) the purchaser is denied admission through no fault of his own, or (c) the ticket is not delivered as promised and this results in an inability to attend the event. Third, this guarantee must be posted on the operator’s web site. Finally, the prospective purchaser must be directed to the guarantee on the operator’s website prior to the completion of the transaction. See the applicaple section here. Meanwhile the New Orleans Code of Ordinances § 54-484 prohibits scalping with no exceptions.
IS IT LEGAL OR NOT?
That finally brings us to the question posed by my friend. Well, if we play with the facts, the legal question becomes even murkier. What happens if one person sells tickets from a state that does not regulate scalping to a person in a state where selling tickets for higher than face value is prohibited? Here is Ebay’s answer: “Scalping tickets … is indeed illegal in certain states. However, reselling tickets for up to face value is legal nationwide, and resale above face value is legal in most states. The eBay ticket market encourages lawful transactions and has been designed to communicate to users all state ticket resale laws that should be adhered to.” Ebay of course profits off the sale of tickets, so one should take their answer at face value. StubHub is much smarter than that. They inconspicuously post on the bottom of their website page the following disclosure: “You are buying tickets from a third party; neither StubHub.com nor StubHub, Inc. is the ticket seller. Ticket prices are set by sellers and may differ from face value.” If you look a bit closer, the StubHub user agreement requires that the user or “seller” warrant “that they will comply with all applicable local, state, federal and international laws, statutes and regulations regarding use of the Site and selling value of the tickets. StubHub does not monitor, obtain, nor have any knowledge of the face value of tickets listed on the Site.” This all of course will absolve StubHub from any liability in their view.
What does all this mean? Great question. Now I am even more confused. If my friend were to call me today, I think my answer would be this: Call up the New Orleans Saints and the Sugar Bowl Committee. If they are okay with you selling your two tickets for a price above face value, you are good to go! Happy selling. Of course, if you cannot readily get Tom Benson on the phone, don’t publicize what you are doing in the state of Louisiana. You can probably sell the Sugar Bowl tickets in Ohio so long as you are not standing on the streets around Paul Brown Stadium or peddling around the Horseshoe. The simplest solution would be to give your tickets to me in exchange for my thorough legal analysis. Don’t worry, I would not have charged you more than the cost of the face value of the tickets.