New York Attorney General Eric Schneiderman is conducting an antitrust investigation of the NFL and its practice of imposing "price-floors" on certain tickets as part of an ongoing probe into the online ticketing market, a source said on Thursday.
The antitrust investigation grew out of a probe by the attorney general's office into irregularities in the ticketing industry, which found that ticket brokers were using illegal software programs to snap up thousands of tickets and reselling them with huge price markups.
The source familiar with the NFL antitrust probe, who asked not to be identified because of the non-public nature of the matter, said it was spurred by a flood of complaints about use of the illegal software known as ticket bots.
A report released on Wednesday by Schneiderman's office detailed how the National Football League, and sports teams like the New York Yankees, implement rules barring sales of tickets below a certain price level on official sites.
"Price floors may make it impossible to obtain tickets on the team-promoted Ticket Exchange platform for below face value when demand decreases," like during games at the end of a sports season between teams not headed to the playoffs, the report said.
The NFL did not immediately respond to a request for comment on the antitrust investigation.
A New York Yankees spokesperson said its voluntary program Yankees Ticket Exchange was set up, in part, because of fraud by principle entities in the secondary market and added that they wondered why the report had no mention of where most significant frauds in the marketplace occurs.
The report also says that excessive service charges for tickets, "may constitute evidence of abuse of monopoly power, especially as they relate to the resale of sports tickets."
Problems in the ticket industry extend beyond sports to popular concerts and theater productions, the attorney general's office report said.
Bots, illegal computer programs that automate the process of searching for and buying tickets to events on ticket vendor platforms, were used by brokers to purchase large volumes of tickets, which were later marked up sometimes by more than 1,000 percent to yield easy profits, the attorney general said.
In one example cited by Schneiderman, a single broker bought 1,012 tickets in one minute to a Dec. 8, 2014 concert of the band U2, despite a claim by the ticket vendor that there was a four-ticket limit. By the end of the day, that same broker had bought more than 15,000 tickets to U2's shows across North America.
The report recommended imposing criminal penalties for using 'bots' to buy tickets in bulk and capping the amount ticket resellers can markup prices.
(Reporting by Mica Rosenberg in New York, Sarah N. Lynch in Washington DC and Sangameswaran S in Bengaluru; Editing by Noeleen Walder, Tom Brown and Gopakumar Warrier)