Ticket Scalping and Money Laundering: A Connection?

We’ve all heard the stories about scammers who game the digital music services in a variety of ways. We don’t hear much about how money changes hands at ticket resellers. The prices that tickets sell for are frequently out of this world but does anyone ever question exactly why prices are so high?

It would also be worth knowing a little bit more about exactly where these dollars (and they are often denominated in dollars) come from and come to rest. If you were moving these funds through a bank there are suspicious activity reports requirements. On some level banks or near banks (like PayPal) are involved in these transactions so it would be good to know if PayPal treats the sale of a ticket (or an option to buy a ticket) as a reportable transaction as a “payment, transfer, or delivery by, through, or to a financial institution, by whatever means effected.”

How difficult would it be to move tens of thousands of dollars around the world through reselling tickets or options to buy tickets, particularly if you also controlled the bots that swoop in to snarf up the best seats?

Given the new scrutiny that market makers like Stubhub have drawn to themselves with the flurry of activity we saw in Georgia and other states, maybe the legislature should take a closer look at money laundering in the ticket resale business. As David Lowery noted in his written testimony in the Georgia legislature:

Anticorruption Protections:  When observing the amount of money and the number of high value transactions fixed by StubHub and other online marketplaces—effectively in cash—I am struck by the potential for bad actors to use the platform to hide cash transactions.  I see no reason why StubHub should be treated differently than a bank in reporting these transactions to authorities such as the Georgia Bureau of Investigation or the Department of Revenue.

I would encourage the Committee to work with these agencies to determine the need for more detailed reporting of the origin and destination of higher dollar transactions, such as $10,000 in a single deal or series of deals closed by StubHub and its progeny.

One idea would be for a ticket marketplace or other commercial reseller to report to the Department of Revenue (or state sales tax agency) all transactions by any one buyer or seller of tickets that exceed $10,000 in any 12 month period.  That reporting could include the name, address, and bank or credit card information for each such seller or buyer and any other information required by the Department of Revenue.

Seems simple enough.