The Tragically Hip Fiasco: What Exactly is the Current Law on the Resale of Tickets in Ontario? (Hint: It's not at all what you'd expect, and it's probably not what the government intended either.)

The stories dominated the headlines: "Tickets for Tragically Hip gone in a flash"; "Tragically Hip Tickets sell out again"; and "After Tragically Hip ticket fiasco, attorney general consults industry on ticketing practices."

Although the use of ticket-scalping bots is old news, the inability of the average fan to get a ticket to what are likely to be the final concerts of Gord Downie's storied career as the frontman of the Tragically Hip has brought widespread attention to the issue of ticket resales. This follows a scathing and in-depth look at the ticketing industry from New York Attorney General Eric T. Schneiderman earlier this year. Former Ticketmaster CEO Nathan Hubbard also published an illuminating article explaining why the average fan can't get a ticket to sporting and entertainment events.

As many newspapers reported, with varying degrees of (in)accuracy, the resale of tickets for above the price paid by the original purchaser when the tickets were issued ("face value") is legal in Ontario. But only in certain contexts.

The DJ and the Embarrassed Reseller

A ticket reseller who offered Tragically Hip tickets for sale on Kijiji was embarrassed by a DJ in an encounter that went viral, after the DJ convinced the reseller to drive from Mississauga to St. Catharines under the guise of the DJ purchasing the tickets at prices well above face value. Of course, the DJ never showed up at the agreed-upon meeting point, and he instead used the opportunity (via the phone call from the reseller wondering where the DJ was) to berate the reseller for trying to profit off a dying man's last tour.

Putting aside any breach of contract issues, was the reseller in violation of Ontario's Ticket Speculation Act (the "Act")? Was the DJ (who made an offer to purchase the tickets) in violation of the Act? Were both?

What Exactly is the Law on Ticket Reselling in Ontario?

I) Prior to July 1, 2015:

Prior to July 1, 2015, the Act prohibited:

• the resale or attempted resale of tickets above face value;
• the purchase or attempted purchase of tickets with the intention of reselling them at a profit; and
• the purchase of or offer to purchase tickets at a higher price than the tickets were advertised or announced to be for sale by the original seller, regardless of whether the purchaser intended to resell the tickets.

The penalty for violators of the Act (assuming they were actually caught, which is, of course, a massive assumption) upon conviction was (and remains) a fine of not more than $5,000. While the average person may have known that reselling tickets was illegal, it is highly unlikely they were aware that by purchasing tickets, they too may have been violating the Act.

The distinction between what was permitted by a reseller (selling at or below the price paid when the tickets were issued) and what was permitted by a purchaser of resold tickets (at or below the advertised or announced price for the tickets by the original seller) leads to some bizarre scenarios.

For example, if the original purchaser purchased the tickets for $50 (at a discounted price available only to season ticket holders) and resold the tickets at $65 (being the lowest price advertised by the original seller), then the reseller (but not the purchaser of the resold tickets) would have violated the Act. In other cases, both the reseller and the purchaser would be in violation of the Act (e.g. if the reseller had instead sold the tickets for $75 instead of $65, as the tickets were resold above both the issued and the advertised and announced price).

II) Since July 1, 2015:

The July 1, 2015 exemptions to the Act are buried in the regulations to the Act , which helps explain the release of newspaper articles (which have since been amended) as the Tragically Hip story broke that incorrectly noted that ticket resales are illegal in Ontario.

The exemptions allow for the purchase and sale of tickets above face value provided that either:

• the reseller provides a guarantee to the purchaser of a full refund if the event is cancelled, the ticket doesn't allow the purchaser to enter the event, the ticket is counterfeit, or the ticket is misrepresented or is not what was advertised; or
• the reseller arranges for the original seller (e.g. Ticketmaster) to provide confirmation to the purchaser that the ticket is valid. An exemption also exists if the resale price is for less than the aggregate of the face value plus any services fees paid by the original purchaser.

Compliance from a Practical Perspective

From a practical standpoint, to comply with the Act, the reseller will need to either (i) sell the tickets through a third party ticket reselling platform (e.g. Stubhub) that provides the above guarantees to the purchaser*; or (ii) make arrangements directly with the purchaser (e.g. via Kijiji) for the tickets to be transferred securely (e.g. via Ticketmaster's free ticket transfer service). For a reseller who is engaged in the business of reselling tickets, contracting directly with the purchaser (e.g. via Kijiji) to provide one of the guarantees him or herself appears to also be a satisfactory solution*.

While the first two practices provide the buyer with significant reassurance that their tickets are valid, or that they will receive a refund in the event certain issues arise, the third practice is only as good as the reseller's word (and their finances).

For resellers who do not wish to provide one of the required guarantees or cannot/do not want to have the tickets validated, there appears to be an obvious and awfully ironic loophole waiting to be taken advantage of. There does not appear to be anything preventing a reseller from selling the ticket at face value while tacking on a sizeable 'convenience fee' or a 'printing fee' to the purchaser. If Ticketmaster can do it, why can't a reseller? While one would have expected the Act to explicitly prevent such practices, there does not appear to be anything in the Act to prevent or even discourage such behavior.

Unsurprisingly, of course, a host of tickets are available on platforms such as Kijiji that do not provide the required guarantees for the resale of tickets. Many resellers themselves do not provide that the validity of tickets will be confirmed by the primary seller before being resold and do not offer the required guarantees. Ironically, for tickets bought and sold above face value in such a manner, both the reseller and the purchaser are likely violating the Act. Whether or not the government will actually fine six-year old Bobby $5,000 for buying his dad a pair of Tragically Hip tickets for Father's Day for a price above face value is a different story!

* The Act requires the guarantees to be provided by a "secondary seller," which is defined as someone who is engaged in the business of making available for sale tickets that have been acquired in any manner and by any person from or through a primary seller (e.g. Ticketmaster).

This definition appears to be problematic for two reasons:

• If the guarantee is provided by a third party ticket reselling platform that does not actually 'acquire' the tickets, but simply lists them as available for purchase, then such guarantee does not appear to meet the Act's requirements for the guarantee to be provided by a "secondary seller." In such a case, the express wording does not appear to be consistent with the intention of the amendments, which was to protect consumers from purchasing fraudulent tickets. It is reasonable to suggest that a guarantee provided by a company generating hundreds of millions of dollars in annual revenue provides greater consumer protection that one provided by the average individual re-seller of tickets. Recent comments from the office of Ontario's Attorney General have indicated that tickets resold by a third party ticket reselling platform are not seen as violating the Act.
• If the guarantee is provided by an individual reseller, the guarantee only meets the requirement of the Act if the reseller is 'engaged in the business of making available for sale tickets.' Technically, to determine whether or not a proposed purchase of tickets is in compliance with the Act, the purchaser would need to conclusively determine whether the reseller is actually engaged in such a business (good luck getting the reseller to acknowledge that!).

Back to the DJ and the Embarrassed Reseller "“ Who Violated the Act?

It's not just resellers or purchasers who are at risk of violating the Act. The Act is clear that anyone who endeavours or offers to resell tickets above face value, or who offers to purchase tickets above face value, must also satisfy one of the above exemptions.

Back to the DJ example. The reseller does not appear to have offered the required guarantees or arranged for the primary seller to provide confirmation of the ticket validity. The reseller, unsurprisingly, appears to have violated the Act (although I'm sure the Act was front of mind for the reseller and he was planning on addressing these things with an oral contract when he met the DJ in person to hand over the tickets). More interestingly, the DJ who offered to purchase the tickets above face value did not arrange for the required guarantees or confirmation, meaning he too appears to have violated the Act.

And you can see why people are confused"¦