Blockchain: The Solution to Ticket Fraud

By Kaitlyn Bello

The secondary entertainment ticket sales market is saturated with fraud and price inflation.[1]  Fans that wish to attend concerts or sporting events can have a difficult time acquiring tickets for these popular events.[2]  If a fan is unable to purchase a ticket during the primary sale, their only option is to purchase a ticket from the secondary market.[3]  This is a challenging task because purchasers have to trust that the tickets they are purchasing are not counterfeit. [4]  In a study conducted by Aventus, a blockchain platform for ticket sales, it was determined that 72% of concertgoers would attend more events if online ticket sales were more secure.[5]  During the 2018 NBA Western Conference Finals, eighty-six fans were denied entrance to the game because the tickets they had purchased on StubHub were counterfeit.[6]  Although these fans got their money back, that is not always the case.[7]  More importantly, even if the fan did get their money back, they lost the opportunity to attend Game 7 of the NBA Western Conference Finals. [8]

Companies like Aventus are now creating platforms to sell tickets on the blockchain which will eliminate price inflation and counterfeit ticket sales. [9]   The blockchain is “an electronic distributed ledger or list of entries . . . that is maintained by various participants in a network of computers.” [10]   Blockchains are decentralized systems that “use cryptography to process and verify transactions on the ledger, providing comfort to users and potential users of the blockchain that entries are secure.”[11]  Since blockchains are secure, fans may purchase tickets on the blockchain without any concern that the ticket is counterfeit or that the price of the ticket will increase. [12]

Blockchain technology may be the solution to ticket fraud because event organizers will use smart contracts to control ticket sales.[13]  This will reduce price inflation because all the tickets will be controlled in one place, the immutable ledger. [14]  This is different from the secondary online ticket market because all available tickets will be on the same blockchain as oppose to consumers searching different websites to find tickets for an event.[15]  Unlike the primary ticket market, the secondary ticket market does not have a central location listing all available tickets and sellers often list the same tickets on multiple sites, which means multiple fans can purchase the exact same ticket. [16]  In the secondary market, fans have to check a variety of different websites to find all the available tickets and search for the lowest prices while making sure they are purchasing a legitimate ticket.[17]  Fans will feel more comfortable buying tickets to events without having to worry about missing the event or losing money because they purchased a counterfeit ticket.[18]  Companies like Ticketmaster have realized the issue with secondary ticket sales and have decided to use blockchain technology to solve the problem. [19]  Ticketmaster has recently acquired “UPGRADED”, a blockchain ticket sales startup, to facilitate ticket sales on the blockchain.[20]  Ticketmaster believes blockchain technology will reduce the uncertainty consumers have when they purchase tickets in the secondary market. [21]  Blockchain ticket barcodes will reduce fraud because they are encrypted, unlike traditional ticket barcodes that can easily be duplicated.[22]  Ticketmaster will be using blockchain technology in hopes of protecting consumers from ticket fraud and price inflation. [23]   Hopefully all event organizers follow Ticketmaster’s footsteps and begin selling tickets on the blockchain where ticket sales are more secure and controlled.

[1] See generally, Council of Better Business Bureaus, BBB Tip: Buying Tickets, BBB (Oct. 3, 2018), https://www.bbb.org/article/tips/13986-bbb-tip-buying-tickets (listing tips for consumers purchasing tickets for sporting events on the internet).

[2] See Anupam Varshney, Why Ticketing Industry Needs Blockchain, Coin Telegraph (Sept. 28, 2017), https://cointelegraph.com/news/why-ticketing-industry-needs-blockchain.

[3] See Carmen Reinicke, What to Consider Before Buying a Concert Ticket from a Stranger, CNBC (Aug.  3, 2018), https://www.cnbc.com/2018/07/31/what-to-consider-before-buying-a-concert-ticket-from-a-stranger.html (describing ways consumers can protect themselves before becoming a victim to ticket fraud).

[4] See id.

[5] Aventus Protocol Foundation, 72% of Concert-Goers Would Attend More Events if Purchasing Tickets Online Felt More Secure, Aventus (Sept. 13, 2017), https://blog.aventus.io/72-of-concert-goers-would-attend-more-events-if-purchasing-tickets-online-felt-more-secure-11091fb86d2c.

[6] Susan Adams, A Tech Startup Wants to Use Blockchain to Make Event Tickets Fraud-Proof (And to Sell More Stuff), Forbes (June 15, 2017), https://www.forbes.com/sites/forbestreptalks/2017/06/15/a-tech-startup-upgraded-wants-to-use-blockchain-to-make-event-tickets-fraud-proof-and-to-sell-more-stuff-to-fans/#322aa9807ffa.

[7] Id.

[8] Id.

[9] Aventus Protocol Foundation, supra note 5.

[10] U.S. Securities and Exchange Commission, Investor BulletinInitial Coin Offerings, Investor.gov (July 25, 2017), https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-initial-coin-offerings.

[11] Id.

[12] Aventus Protocol Foundation, supra note 5.

[13] See Della Bezelânskaâ, How Blockchain Can Change the Ticketing Industry, Medium (Sept. 11, 2017), https://blog.crypto.tickets/how-blockchain-can-change-the-event-ticketing-industry-cd8ad8a50ecd.

[14] See id.

[15] See id.

[16] See Jason Robert Trikakis, Problems in Event Ticketing According to HelloSugoi, Medium (Jan. 17, 2018), https://medium.com/hello-sugoi/problems-in-event-ticketing-according-to-hellosugoi-8edbbce28815.

[17] Reinicke, supra note 3.

[18] Aventus Protocol Foundation, supra note 5.

[19] Simorin Pinto, Ticketmaster Acquires Blockchain Startup to Secure Ticket Sales, Innovation Enterprise, https://channels.theinnovationenterprise.com/articles/ticketmaster-acquires-blockchain-startup-to-secure-ticket-sales (last visited Oct. 22, 2018).

[20] See id.

[21] See id.

[22] See Omar Faridi, Ticketmaster Acquires Blockchain Startup Upgraded to Help Prevent Ticket Fraud, Crypto Globe (Oct. 19, 2018), https://www.cryptoglobe.com/latest/2018/10/ticketmaster-acquires-blockchain-startup-upgraded-to-help-prevent-ticket-fraud/.

[23] Id.

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