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Tragically Hip legacy law on ticket scalping a 'toothless disaster,' critics warn

Ontario’s new law promising to cap prices of scalped sports and concert tickets is doomed to fail, critics warn. The law is just weeks away from taking effect and the province isn't adding any new staff to help enforce it.

StubHub and Ticketmaster say Ontario’s price cap on resale tickets will be 'futile’ and 'unenforceable'

Fan frustration finding tickets for the Tragically Hip's summer tour in 2016 prompted Ontario's government to introduce a new law to cap scalpers' prices. But critics say the law, which comes into effect July 1, will be toothless without staff to enforce it.

Ontario's new law promising to cap prices on scalped sports and concert tickets — due to roll out July 1 — will fail, critics warn, in part because the province isn't adding new staff to enforce it.

Ontario's Ministry of the Attorney General told CBC News in a statement this week the government will "use its existing resources to enforce the new Ticket Sales Act."

The new law dominated debate among music journalists and ticket companies attending Canadian Music Week in Toronto, with many of them questioning whether the new law will work.

"If they're not adding new resources that would be a pretty toothless law if there's no enforcement," said veteran music journalist and radio personality Alan Cross. "Who's going to abide by it?"

Music journalist Alan Cross says the legislation is 'a populist response to a situation that is beyond anyone's control.' (Rachel Houlihan/CBC)

Cross hosted an on-stage interview with Jared Smith, president of Ticketmaster's North American operations, during the conference for artists and industry professionals.

Smith defended the online ticket company's expansion into the "resale market" frequented by scalpers and mass ticket brokers. He also criticized Ontario's new law, saying an attempt to cap prices simply won't work.

"A cap is going to be unenforceable … technologically and otherwise," Smith said.

Music journalist Alan Cross, left, interviews Ticketmaster's president of North American operations Jared Smith, right, about ticket selling. Smith says a cap on scalped ticket prices will be 'unenforceable.' (Rachel Houlihan/CBC)

"There's been resale bans and price caps in the States and in a whole bunch of other places for decades and decades and decades and they're not enforceable. I just don't think it's going to work."

A representative of StubHub, the world's largest resale website, was also at the conference and echoed those sentiments.

"When it comes to price caps, agreed, it's a futile effort," said Jeff Poirier, StubHub's general manager in Canada.

Ontario adopted the Ticket Sales Act last fall in the wake of the Tragically Hip's 2016 farewell tour, which saw thousands of fans shut out as scalpers scooped up two-thirds of all tickets. The tickets were then resold for profits of $25 million to $30 million.

"The idea of a price cap on concert tickets is a brilliant idea in theory. But in practice it's going to be a disaster," Cross told CBC News. "This legislation is basically a populist response to a situation that is beyond anyone's control."

Other provinces like Manitoba and Quebec prohibit scalping altogether, but Ontario has taken a unique approach by allowing a partial markup of 50 per cent above face value. Under the law, anyone — or any website — selling above that limit could face maximum fines recently set at $5,000.

StubHub, Ticketmaster on the hook

The price cap poses a problem for resale websites like StubHub, Vivid Seats, SeatGeek and Ticketmaster, which make tens of millions of dollars in profit each year by charging hefty fees on the tickets bought and sold on their platforms. The higher the prices charged by scalpers, the bigger the fees collected by the websites.

But the platforms themselves now can be charged if they "facilitate" sales above Ontario's price cap.

Currently, scalping sites host vast quantities of tickets priced above Ontario's limit. CBC News found hundreds of tickets this week listed at prices that will soon be illegal.

The most jaw-dropping hike was for front row seats to Ozzy Osbourne's concert at the Budweiser Stage in Toronto on Sept. 4. Tickets sold for $1,500 apiece at the box office are posted for resale on StubHub at $4,592 — a markup of 306 per cent.

Ticketmaster, Vivid Seats and StubHub continue to lobby the Ontario government and are struggling to figure out how best to comply with Ontario's law.

"This is the first instance we've ever had to deal with this, anywhere around the world," Glenn Lehrman of StubHub told CBC News.

"At the end of the day we're only going to be able to police so much. Our sellers are going to be the ones that are going to have to help us," Lehrman said in an interview.​

Will police enforce the law?

Critics of the legislation also say prosecuting online resellers may be impossible given sophisticated scalpers can be anywhere in the world when they scoop up tickets — or post them for resale at huge markups.

Local police also may not have the resources or the inclination to pursue online scalpers.

"Some of that stuff is hard to enforce, particularly if you're dealing with offshore companies in the day of cloud computing," Bruce Morrison on the small online ticketing company ShowClix told the CMW audience.   

"I don't think we're sending the OPP out to the Ukraine to figure out who's firing off those bots for the Justin Bieber ticket on sale," Morrison joked.

The Ontario government says it will be up to police to enforce the portions of the new law that target scalper bots, while the Ministry of Consumer Services — with no additional staff — will be responsible for enforcing the price cap.

Manitoba's law strictly prohibits any markup with reselling tickets. But in Winnipeg this week, CBC found $67 tickets for the June 25th Vance Joy concert at Bell MTS Place posted on StubHub for $5,159.48.

A Manitoba government spokesperson told CBC it's up to police to enforce the law.

Winnipeg police say they've had "very few" public complaints and in the past eight years have issued only nine tickets.

Sophie Kiwala, the member of the Provincial Parliament from Kingston, Ont., who first sponsored the law, said she hopes Ontario police make it a priority.

"Let's keep our fingers crossed that the enforcement is as solid as it needs to be," she told CBC News.