The Indian Ticket Scalping Scandal: Addressing Regulatory Gaps And Paving The Way Forward

From IPL match tickets to Coldplay concert passes, ticket scalping has become ubiquitous, infiltrating every corner of the entertainment industry. Despite the proliferation of online ticketing platforms and various regulatory efforts, India still lacks a concrete legislation to effectively curb this exploitative practice. This article attempts to delve into the pervasive issue of ticket scalping by highlighting the gaps in the existing legal framework. Subsequently, it proposes viable solutions to address this growing problem by emphasizing on cross-jurisdictional learnings and best practises in the broader realm of the industry.

From Black Markets to Online Platforms: Why Laws must Evolve?

In the pre-digital era, this practice was known as black marketing, and it thrived outside cinema halls as the 'Dus-Ka-Tees' scheme. Contemporaneously, this scheme exists in the digital ether, albeit under a new label — 'scalping'. Back then, the people black marketing the tickets could be physically apprehended outside the theatres, but the existing laws prove inefficient to tackle this problem in the present world. In this digital world, it is easy for scalpers to buy tickets in bulk, oftenly with the use of bots and automation tools. Incidentally, these tickets are sold on secondary markets, such as Viagogo, on inflated prices. With this shift in methods and scope of ticket resale, it becomes important that laws also change equivalently. Unfortunately, this is clearly not the case, as the current legal framework fails to tackle the issue to sufficient definiteness.

The effect is that even though in regard to scalping of the Coldplay concert tickets, an FIR has been lodged and the official distributor BookMyShow has been called in to answerquestions, the legal recourse remains significantly weak. It is speculated that BookMyShow itself was involved in the unauthorized sales. As of now, this issue can be vaguely categorized as fraud orcheating, especially in the absence of any contractual stipulation between BookMyShow and the first instance buyers that expressly prohibits scalping. The allegations of cheating and fraud possibly make this case fall under Section 318 of the Bharatiya Nyaya Sanhita (BNS). However, this poses significant impediments in effectively tackling the issue. Firstly, it does not completely address the issue of who is guilty of defrauding and cheating; is it the official distributor BookMyShow, who claims to have warned against such counterfeit tickets, or the first instance buyers who are actually reselling the tickets? Secondly, ticket scalping often involves merely reselling tickets at a higher price. Accordingly, it might not necessarily involve the element of deception concerning the quality or validity of the ticket, thus not falling within the definition of cheating for all relevant purposes. Thirdly, buyers often know they are purchasing tickets at a marked-up price in the secondary market, which could undermine the very essence of argument that they were 'cheated' since no deception was involved.

A telling illustration of this legislative gap is the 2015 Punjab and Haryana High Court case of MandeepSingh v. State (UT, Chandigarh), 2015 SCC OnLine P&H 13773), involving the resale of World Cup match tickets on eBay. The tickets in question were for a match at Mohali, and the seller was caught when police placed a decoy bid and arrested him at the scene. An FIR was filed against him under Section 420 of the Indian Penal Code (IPC), alleging fraud. However, the court ultimately had to quash the FIR because no offence was disclosed. The court noted the absence of any specific Indian laws against ticket scalping, contrasting with the UK where such practices are explicitly illegal under Section166 of the Criminal Justice and Public Order Act 1994. The Indian court pointed out that the necessary element of dishonesty, crucial for a conviction under Section 420, was not proven. This case highlighted a significant gap in Indian laws regarding ticket resale, showcasing a glaring gap in India's legislative approach to the issue.

Next, some may argue that since it involves online transactions, it can be put under the annals of the InformationTechnology Act 2000 (IT Act). However, a closer enquiry reveals that the IT Act itself lacks specific enactments that deal with online resale of commodities such as tickets. At the most, the provisions such as Section66A (held unconstitutional post the landmark Shreya Singhal v. Union of India, 2015 SCC OnLine SC 248 dictum) are more focused on data theft, privacy breaches, and fraud involving identity theft or damaging computer systems. As a corollary, prosecutors are forced to fit the scalping scenario into broader categories of cybercrimes, which not even remotely cover the nuances of scalping, thereby allowing perpetrators to slip through the system.

Another key angle is that ticket scalping fuels public frustration and consumer exclusion. A possible recourse may be sought within the Consumer Protection Act (2019) under the offence of 'unfair trade practice', as per Section94. The Act defines unfair trade practices to include any deceptive practice that falsely represents the quality, quantity, or standard of a product or service. The definition of unfair trade practices under the Consumer Protection Act primarily focuses on deceptive practices, false representation, and misleading advertisements. Ticket scalping, primarily characterized by the resale of tickets at higher prices, may not always involve these elements unless the scalper uses deceptive tactics with respect to the availability or authenticity of the tickets. With regards to its enforcement, it lacks nuanced provisions that can help address the issue dynamically as it is prima facie limited to cases of direct selling and not particularly resale or scalping in the present scenario. The Act has no guidelines on whether to target the official distributor or the individuals who are directly involved in scalping. Sometimes, as has been seenin the US, the distributors themselves are involved in scalping, increasing the legal conundrum by multiple folds.

Moving forward, with respect to the Indian competition policy perspective, Section 3(1) of the Competition Act can be resorted to, which prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition (AAEC). Specifically, Section3(3) of the Act provides against horizontal agreements between enterprises, such as cartels, that manipulate supply, prices, or market conditions. In the case of ticket scalping, agreements between resellers and organizers to restrict the availability of tickets or engage in price gouging could be classified as a cartel-like behaviour, inevitably resulting in unfair pricing for consumers. However, this may still not be possible, owing to the inherent difficulties in proving the existence of such agreements, which are ordinarily informal. Ticket scalping primarily affects consumer welfare (i.e., inflated prices and reduced availability), but the Act lacks direct mechanisms to protect consumers from such unfair trade practices. Thus, addressing such complex issues within the wider ambit of scalping calls for better legislations catered to this.

Lastly, an unsuccessful attempt can be made at penalising ticket scalping under Section3 read with Section7 of the Essential Commodities Act 1955. However, the most obvious impediment is that concert or match tickets fall far away from the definition of “essential commodities”, thereby not even touching the issue tangentially. Accordingly, it becomes conspicuously evident that the existing framework does not adequately address ticket scalping, requiring greater attention of the policymakers for better laws and robust implementation.

Potential Solutions for the Indian Regime

The foregoing has revealed the problems in the legal framework surrounding ticket scalping and emphasized the relevance of implementing a legislation tailored to curtail this issue. To allay the concerns of the stakeholders, let us outline certain recommendations that can potentially fill the gap. Drawing on cross-jurisdictional learnings and industry practices, both ex-ante and ex-post regulations are warranted that prohibit scalping, with due consideration to freedom for bona fide reselling.

After the highly publicized Coldplay-BookMyShow row, some have argued for outrightly making the tickets 'non-transferable' and not allowing their resale. However, such an extreme approach fails to adequately harmonize the interests of bona fide resellers, who are not reselling for profits. In this relation, ex-ante measures could be introduced that pre-empt the very possibility of ticket scalping. Firstly, ticket resale can be capped at 10% above the original price (or any other reasonable limit, as deemed fit), as also sought by the Fair-Trading Amendment(Ticket Scalping and Gift Cards) Bill 2017 in New South Whales, Australia. Secondly, the usage of secondary markets to accomplish these reselling transactions can be controlled by platform-based reselling. This is explicable by Zomato's 'Book Now, Sell Anytime' Feature, wherein reselling can only be performed on the primary platform at reasonable prices that can be managed by the promoters. By finding a middle ground, such solutions are expected to provide a balanced approach, as they deter ticket scalping, whilst protecting legitimate resellers.

However, preventive solutions alone may not be sufficient. These ex-ante solutions must be supplemented with stringent ex-post measures that penalize ticket scalping. Interestingly, Japan imposes criminal sanctions on both, the resellers and the acquirers of scalped tickets. In a similar vein, India can also effectuate stricter criminal sanctions on those who engage in such activities. Additionally, another novel angle worth exploring is the intersectionality between data privacy and ticket scalping. Essentially, the scalpers can possibly harvest on consumer data to gain an unfair advantage for fulfilling their motives. Including stringent data privacy laws would also mitigate this issue, so as to deter automated purchases of the tickets.

Admittedly, this would be concomitant with enforcement challenges. It is possible to implement these changes by adopting technological advancements (such as, but not limited to Blockchain) for verified ticket transfers. Recently, AI-Native Ticketing is becoming popular, that can flag suspicious behavior in sale of tickets. Collaboration with leading tech companies can also help build India's monitoring capabilities for real-time scrutiny of prohibited conduct in secondary markets. This would ensure that actions can be taken against those who do not abide by rules while reselling the tickets. Pragmatically, only then can we create a fair and transparent system that curbs exploitation without stifling genuine resale.

Conclusion: A Call for Reform

In a world where access has become the new commodity, ticket scalping is a stark reminder of how technology can be both a tool for empowerment and exploitation. If India endeavors to protect its cultural and entertainment landscapes from becoming the playgrounds of profiteers, decisive action is imperative. In this regard, the Maharashtra Entertainments Duty Act,1923 shines as a beacon of hope, prohibiting the resale of tickets for certain events above their face value. Such enactments restore faith in the country's policymakers. However, as ticket scalping is rampantly spreading throughout India, amidst its rising consumer culture and growing economy for being a lucrative venue, urgent laws at the central- level are much necessitated. Accordingly, references to laws in other jurisdictions and best industry practises can be made, while formulating an efficient legal framework. The enforcement of these laws must be done with careful consideration to their impact assessment on all the stakeholders. It is only then can we create a future where entertainment is for all, and not only for those who can outbid the rest for profits.

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