[Senate Report 114-391]
[From the U.S. Government Publishing Office]


114th Congress    }                                  {          Report
                                 SENATE
 2d Session       }                                  {         114-391
_______________________________________________________________________

                                     


                 BETTER ONLINE TICKET SALES ACT OF 2016

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 3183












[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

























                December 5, 2016.--Ordered to be printed
                                ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

69-010                         WASHINGTON : 2016 






















       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                    one hundred fourteenth congress
                             second session

                   JOHN THUNE, South Dakota, Chairman
 ROGER F. WICKER, Mississippi         BILL NELSON, Florida
 ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
 MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
 KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
 TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
 DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
 JERRY MORAN, Kansas                  ED MARKEY, Massachusetts
 DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
 RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
 DEAN HELLER, Nevada                  JOE MANCHIN, West Virginia
 CORY GARDNER, Colorado               GARY PETERS, Michigan
 STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Director
                 Clint Odom, Democratic General Counsel





















114th Congress    }                                  {          Report
                                 SENATE
 2d Session       }                                  {         114-391

======================================================================
 
                 BETTER ONLINE TICKET SALES ACT OF 2016

                                _______
                                

                December 5, 2016.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 3183]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 3183) to prohibit the 
circumvention of control measures used by Internet ticket 
sellers to ensure equitable consumer access to tickets for any 
given event, and for other purposes, having considered the 
same, reports favorably thereon with an amendment (in the 
nature of a substitute) and recommends that the bill (as 
amended) do pass.

                          Purpose of the Bill

    The purpose of S. 3183, the Better Online Ticket Sales Act 
of 2016 (BOTS Act of 2016), is to prohibit the circumvention of 
control measures used by Internet ticket sellers to ensure 
equitable consumer access to tickets for any given event.

                          Background and Needs

    The market for live event tickets has encountered 
challenges from scalpers who use software to circumvent the 
safeguards primary ticket sellers use to limit ticket 
purchases. This software, commonly referred to as ``bots'' or 
``bot'' software, automates ticket-buying on online platforms 
by: (1) automatically and continuously checking ticket seller 
websites for ticket releases; (2) automatically reserving and 
displaying available tickets for the human operator; (3) 
automatically buying tickets using as many names, addresses, 
and credit card numbers as necessary to appear to be individual 
ticket buyers; and (4) defeating anti-ticket bot security 
measures such as so-called CAPTCHA (Completely Automated Public 
Turing test to tell Computers and Humans Apart) to determine 
whether or not a ticket purchaser is human (for example, by 
asking the purchaser to type correctly a series of letters that 
appear as a twisted or stretched image on the ticketing 
website).\1\
---------------------------------------------------------------------------
    \1\Eric T. Schneiderman, N.Y. State Office of the Attorney General 
(OAG), Obstructed View: What's Blocking New Yorkers from Getting 
Tickets, pp. 15-16, January 2016, at http://www.ag.ny.gov/pdfs/
Ticket_Sales_Report.pdf [hereinafter N.Y. OAG Report].
---------------------------------------------------------------------------
    In many cases, primary ticket sellers limit purchases. For 
example, ticket sellers often make tickets available to the 
general public on a set date and time\2\ and may limit the 
number of tickets to four or six per purchasing party.\3\ These 
measures are aimed at ensuring that ticket buyers have a fair 
chance of obtaining tickets to the live event, which are 
necessarily limited in number. Ticket sellers also generally 
prohibit the use of automated software to defeat the technical 
safeguards and subvert ticket purchase limits. For example, 
Ticketmaster prohibits the ``[u]se of any automated software or 
computer system to search for, reserve, buy or otherwise obtain 
tickets . . . available on the Site.''\4\
---------------------------------------------------------------------------
    \2\Letter from William M. Rubenstein, Commissioner of Consumer 
Protection, State of Connecticut, to Hon. Paul Doyle, State Sen., Co-
Chair, General Law Comm., State of Connecticut, p. 4, February 22, 
2012, at http://www.ct.gov/dcp/lib/dcp/pdf/publications/
final_ticket_letter.pdf (``The date on which tickets will be available 
to all members of the public is known as the `public on-sale date.''') 
[hereinafter Conn. Report].
    \3\Testimony of Gil Genn, Managing partner of the Maryland Sports & 
Entertainment and Industry Coalition, in U.S. Congress, U.S. Committee 
on Energy & Commerce, Subcommittee on Commerce, Manufacturing, and 
Trade, Legislative Hearing on 17 FTC Bills, hearings, 114th Congress, 
May 24, 2016, (``[F]or most live entertainment events there is a 
restriction on the number of seats one purchaser can buy - usually 
between 4 and 8 tickets.'') [hereinafter Genn Testimony].
    \4\Ticketmaster, Terms of Use, last visited Oct. 19, 2016, at 
http://www.ticketmaster.com/h/terms.html.
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    The use of ticket bots has frustrated the intentions of 
performers\5\ and other ticket sellers\6\ to make tickets 
available equitably and at reasonable prices. Primary ticket 
sellers have estimated that ticket bots obtain 60 percent of 
the most desirable tickets for some shows.\7\ Ticket bots also 
have enabled scalpers to purchase and subsequently sell large 
swaths of event tickets on the secondary market at exorbitant 
prices. One study finds that, on average, scalpers mark up the 
price of tickets on the secondary market by 49 percent of the 
primary ticket seller's price.\8\ The ability to buy massive 
amounts of tickets in violation of primary ticket sellers' 
terms and technical controls, however, has enabled scalpers in 
some instances to mark up the price by over 1,000 percent.\9\
---------------------------------------------------------------------------
    \5\Lin-Manuel Miranda, ``Stop the Bots From Killing Broadway,'' New 
York Times, June 7, 2016, at http://www.nytimes.com/2016/06/07/opinion/
stop-the-bots-from-killing-broadway.html; Patrick Doyle, ``Eric Church 
on Scalpers, Bro-Country and Blake Shelton Scandal,'' Rolling Stone, 
June 11, 2014, at http://www.rollingstone.com/music/news/eric-church-
on-scalpers-bro-country-andblake-shelton-scandal-20140611.
    \6\Genn Testimony, at p.2.
    \7\Ben Sisario, ``Concert Industry Struggles With `Bots' That 
Siphon Off Tickets'', New York Times, May 26, 2013, at http://
www.nytimes.com/2013/05/27/business/media/bots-that-siphon-off-tickets-
frustrate-concert-promoters.html.
    \8\N.Y. OAG report, p. 4.
    \9\Ibid.
---------------------------------------------------------------------------
    Several States have enacted laws to combat ticket bots.\10\ 
Two of these States, New York and Connecticut, also have issued 
reports on the market for event tickets in those respective 
States.\11\ Although these reports focus more broadly on the 
ticket market as a whole, they include some data on ticket 
bots.\12\ For example, the New York Attorney General found that 
at least tens of thousands of tickets per year are being 
acquired using bots. At present, there have been no reports of 
enforcement of any of the State laws.
---------------------------------------------------------------------------
    \10\Shawntaye Hopkins, Blame it on the Bots: States Act to Ban 
Ticket-Buying Software, The Current State (Council of State Gov'ts) , 
July-August 2016, at http://www.csg.org/pubs/capitolideas/enews/
cs53_1.aspx (``about a dozen states have laws that ban ticket bots'').
    \11\See N.Y. OAG Report; Connecticut Report.
    \12\N.Y. OAG Report, p 4.
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                          Legislative History

    On July 13, 2016, Senator Moran (for himself, Senator 
Blumenthal, Senator Fischer, and Senator Schumer) introduced S. 
3183, which was referred to the Committee on Commerce, Science, 
and Transportation. Additional cosponsors include Senators 
Nelson, Klobuchar, Cantwell, Warner, and Stabenow.
    On September 13, 2016, the Consumer Protection, Product 
Safety, Insurance and Data Security Subcommittee held a hearing 
on S. 3183.
    On September 21, 2016, the Committee held an Executive 
Session at which S. 3183 was considered. The bill was approved 
unanimously by voice vote and was ordered to be reported with 
an amendment (in the nature of a substitute).

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 3183--Better Online Ticket Sales Act of 2016

    S. 3183 would prohibit people from taking certain actions 
to circumvent technology used by ticket sellers to enforce 
online event ticket purchase rules and limits. The bill also 
would prohibit the resale of tickets obtained in that manner. 
The Federal Trade Commission (FTC) would enforce the proposed 
prohibition.
    Based on information from the FTC about its current 
enforcement capabilities, CBO estimates that increased costs 
related to monitoring and enforcing the new prohibitions 
established by S. 3183 would total less than $500,000 per year; 
such spending would be subject to the availability of 
appropriated funds.
    In addition, CBO estimates that enacting S. 3183 would 
increase federal revenues from civil penalties imposed to 
enforce the new prohibition; therefore, pay-as-you-go 
procedures apply. However, CBO estimates that those collections 
would be insignificant because of the small number of cases 
that the agency would probably pursue. Enacting the bill would 
not affect direct spending.
    CBO estimates that enacting S. 3183 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    S. 3183 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    On September 9, 2016, CB0 transmitted a cost estimate for 
H.R. 5104, the Better Online Ticket Sales Act of 2016, as 
ordered reported by the House Committee on Energy and Commerce 
on July 13, 2016. The two pieces of legislation are similar and 
CBO's estimates of the budgetary effects are the same.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                           Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

    The bill would establish a new prohibition on conduct 
relating to circumvention of ticket access control measures, 
with certain exceptions including investigation and research. 
This prohibition would be treated as a trade rule defining an 
unfair or a deceptive act or practice under the Federal Trade 
Commission Act (15 U.S.C. 41 et seq.; FTC Act). Therefore, this 
legislation would subject those individuals or businesses 
engaged in such conduct to new regulations.

                            economic impact

    S. 3183 is expected to have an overall positive impact on 
the Nation's economy. While this legislation aims to prohibit 
the use of bots, and therefore is intended to have a negative 
impact on the business model of ticket resellers who employ 
this method to purchase improperly available tickets in large 
numbers, S. 3183 nevertheless would have a positive impact on 
the secondary ticket sellers to the extent that it would 
advance a fair and competitive ticket market. S. 3183 would 
ensure a large percentage of available tickets remain available 
to fans at fair and reasonable prices, which in turn would 
encourage additional spending on merchandise, concessions, and 
additional events.

                                privacy

    S. 3183 would not have a negative impact on the personal 
privacy of individuals.

                               paperwork

    S. 3183 would increase the paperwork burden of States, 
requiring the attorney general of a State to notify the Federal 
Trade Commission (FTC) in writing that the attorney general 
intends to bring a civil action under this legislation before 
initiating the civil action (if feasible, or otherwise 
immediately upon instituting the civil action), including a 
copy of the complaint filed to initiate the civil action.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis


Section 1. Short title.

    This section would provide that the Act may be cited as the 
``Better Online Ticket Sales Act of 2016'' or the ``BOTS Act of 
2016.''

Section 2. Unfair and deceptive acts and practices relating to 
        circumvention of ticket access control measures.

    This section would prohibit any individual from 
circumventing a security measure, access control system, or 
other technological control or measure on an Internet website 
of a ticket issuer that is used by the ticket issuer to enforce 
posted event ticket purchasing limits or to maintain the 
integrity of posted online ticket purchasing order rules. It 
also would prohibit the sale or offer for sale of any event 
ticket in interstate commerce obtained in violation of these 
measures if the person selling or offering to sell the tickets 
either participated directly in or had the ability to control 
the conduct in violation of these measures, or knew or should 
have known that the event tickets were acquired in violation of 
these measures.
    This section would exempt the creation or use of any 
computer software or system to: investigate, or further the 
enforcement or defense of, any alleged violation of this 
section or other statute or regulation; or engage in research 
necessary to identify and analyze flaws and vulnerabilities of 
measures, systems, or controls if these research activities are 
conducted to advance the state of knowledge in the field of 
computer system security or to assist in the development of 
computer security product.
    This section would require the FTC to enforce this section 
as an unfair or deceptive act or practice under the FTC Act, 
while holding any individual in violation of this section 
subject to the penalties and entitling them to the privileges 
and immunities of that law.
    This section would allow the attorney general of a State to 
bring civil action on behalf of the State's residents, as 
parens patriae, if the attorney general believes that an 
interest of the State's residents has been or is threatened by 
any person in violation of this section. It would provide a 
State's attorney general the authority to obtain damages, 
restitution, or other compensation on behalf of the State's 
residents.
    This section also would require a State's attorney general 
to notify the FTC of any civil action pertaining to this 
section within 10 days of the action's initiation with some 
feasibility exceptions provided. It would allow the FTC to 
intervene in any civil action brought by a State's attorney 
general under this section.
    This section would reaffirm that nothing in the section may 
be construed to prevent a State's attorney general from 
exercising his or her investigatory powers by the laws of the 
State. This section would prevent a State's attorney general, 
in an effort to preempt action by the FTC, from bringing a 
civil action under this section if the FTC has already 
instituted a civil action or an administrative action against 
the same defendant.
    It would authorize that any action under this section may 
be brought in the applicable district court of the United 
States or another court of competent jurisdiction. This section 
also would authorize any other consumer protection officer 
authorized by a State to bring a civil action within this 
section subject to the same requirements and limitations that 
apply to a State's attorney general.
    This section contains a savings provision that would 
provide that nothing in the section be construed to limit, 
impair, or supersede the operation of the FTC Act or any other 
provision of Federal law.

Section 3. Definitions.

    Section 3 of the bill would define terms used in the bill, 
including ``covered events,'' ``tickets,'' and ``ticket 
issuers.''

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill as reported would make no change to existing law.

                                  [all]