By the time shotgun-wielding FBI agents raided his office, Ken Lowson, a former insurance salesman, had become America’s greatest ticket scalper.
From 2001 to 2010, according to the FBI indictment, his company, Wiseguy, had bought and resold 2.5 million tickets and made more than $25 million in profit. The kid from Arizona was living a wild life of drink, drugs and parties in Los Angeles.
He was charged with hacking and defrauding ticket sellers like Ticketmaster. The secret of his success was in the servers the FBI confiscated: computer programs, also known as ticket bots, that automate the process of buying tickets online. The bots grab all the best tickets before human buyers, and then flip them for resale on other sites.
This hyper-charged form of ticket scalping has little in common with the pre-internet era when men in coats sold paper tickets outside of stadiums.
“We were really good and that was probably our downfall,” Ken told Hack.
“We just took it too far and probably pissed off all the other guys trying to do it.”
“I made it too fast and too young and it got to my head.”
We had a lot of fun, I’ll say that.”
Seven years on from that FBI raid, governments and tickets sellers are still struggling to halt Ken’s bot invention. The world’s largest ticket seller, Ticketmaster, stopped 6 billion bot attempts last year, at a rate of more than 11,000 per minute.
The US has outlawed bots, the UK is considering the same, the Australian Senate wants similar legislation, and New South Wales says it’s going to pass its own.
But there are questions over whether these laws work, and whether the real problem with ticketing goes deeper than bot-armed scalpers.
Ken Lowson says he’s reformed after a hallucinatory encounter with Obi-Wan Kenobi in a Calcutta detox retreat. He now wants to help fans and stop scalpers.
He explained to Hack how modern scalping works.
Understanding the bots
Before online ticket sales, concert tickets were typically sold over the phone, or through record shops. Now they can be bought from anywhere in the world. This has massively increased the reach of ticket scalpers, who can target sold-out events in any country, and also allowed them to hide from the authorities of these countries.
According to Ken, scalpers using ticket bots tend to base themselves in small countries without much government oversight – countries that are known as tax havens.
The US enacted a national law outlawing bots in December last year. So far, there have been no prosecutions. High-profile scalping continues.
“Last I heard, the smart ones are moving to places like Gibraltar and Isle of Man and stuff like that – if they’re outside of a nation state’s jurisdiction, and then they’re able to buy then how is a government going to go after somebody?,” he said.
Ticketmaster told Hack that bot traffic often comes from “Eastern Europe”.
Websites like Shows on Sale or Ticket Crusader tell members when tickets are going on sale. They claim they help “beat the bots”, but they can equally be used by scalpers with bots.
One of the top-ranked websites selling bots is registered in Panama – the tiny Caribbean country known for a canal, good beaches, and tax evasion. The website sells a range of bots for $300-$900.
A salesperson from the website said the software works in Australia and users can mask their identities with proxy IP addresses.
“The software doesn’t expose your identity or anything,” the seller wrote in an email.
“We have been around for more than a decade and have been actively supporting our product more than ever.”
No one except God can shut us.”
The seller said the software bypasses the CAPTCHA system, which generates tests that humans can pass but bots cannot (like picking out words behind squiggly lines), by using “third party bypassing companies that type the CAPTCHAS for you”.
That is, there’s a chance there’s a human somewhere, possibly in India, typing numbers and letters into a CAPTCHA box so that a bot, which has been sold in Panama, and possibly launched from Eastern Europe, can buy tickets in Australia.
How were they invented?
The first bots used by Ken’s company were simple programs, like auto-fill, that saved his staff from filling out the same form over and over again.
But he quickly saw their potential and began creating better bots.
“We started out with four computers, and as time went by we got bigger and bigger, we got more programmers, more computers.”
A single bot could open hundreds of windows and run through the process of buying a ticket simultaneously on each window. Ken would assign a “power” to each show – a bot with 300 power meant the equivalent of 300 people buying tickets.
Over time we were able to hit and buy 20,000 tickets in a couple minutes,” he said.
Ken’s company also shaved milliseconds off ticket buying by exploiting the lag – or latency – of data signals crossing the country.
“What we did is we spread 30 servers geographically around the country and every time sure as shit only one of them would get all the seats,” Ken said.
For example, when tickets for the 2006 Rose Bowl – the Superbowl of US college football – went on sale, Wiseguy bought 882 out of 1,000.
The FBI indictment lists other examples: In 2007, Wiseguy bought more than 11,700 Bruce Springsteen tickets, worth about $1.3 million, as well as 1,924 tickets to the New York Yankee playoffs, and 11,984 tickets to Miley Cyrus concerts.
Ken claims Wiseguy “dominated 90 per cent” of ticket sales in America. They sold tickets to other scalpers, or ‘brokers’, who sold directly to fans.
After the FBI raided his office, Ken and his colleagues faced 42 charges of hacking and defrauding ticket sellers. His lawyers argued his bots went through the same ticket-buying process as a human, only much faster. He had not hacked the site.
Ultimately, he accepted a plea deal and stayed out of jail.
“There was never a ticket crime they could get us on, including the bots,” he said.
Not all scalpers use bots
Scalpers with bots are competing for tickets that go on sale to the public, but often this is less than half of all the tickets to an event. The rest are diverted to promoters, agents, labels and fan clubs, or set aside for expensive package deals.
“70 to 80 per cent of your scalped tickets are bought from the inside,” Ken said.
A 2016 investigation by the New York Attorney-General found most tickets are pre-sold.
To re-use the example of the 2006 Rose Bowl, the stadium had 100,000 seats, but only 1000 went on sale to the public.
“My lawyers were like, what about the other 99,000?” Ken said.
The Ticket Brokers Association of Australia (TBA) – the industry body representing ticket scalpers, or ‘brokers’ – says its members don’t use bots and it supports the introduction of anti-bot laws. It also says there’s no solid evidence of bot use in Australia. Neither the NSW Government – which wants to ban bot ticket sales – nor Ticketmaster could provide any figures on bot use in Australia.
Even if bots are being used in Australia, stopping them will not give fans access to all the tickets – many of which are being diverted to presale.
“The bot guys are competing for what is actually sold to the public.”
“Nobody is saying how many they’re selling. If you have a 20,000 seat venue and 18,000 seats are never sold to the public, how can bots be responsible for those?”
“You can’t really kill a poison tree by chipping off its branches.”
“You have to pull it out at the root.
“If they want to make rules they should make them at the primary level.”
‘Total transparency is the answer’
The primary level is where tickets are sold first – websites like Ticketmaster or Ticketek (the two largest ticket sellers in Australia). The secondary market is the resale sites – places like Ticketmaster’s TM+ website or Viagogo or eBay or Gumtree.
Ken points out these resale sites collect a fee for every ticket – in the case of TM+ it can be as high as 15 per cent of the ticket price. This means a ticket seller can “double dip” – collect a fee on the primary market, and then on the secondary. This creates a disincentive to crack down on ticket scalping, or at least introduce more transparency around how many tickets are actually being sold to the public.
“If the sellers are being charged 10 per cent, and the buyers are being charged 10 per cent – these markets are making more than the scalpers,” he said.
“That’s where all the billions are, in the transaction fees.”
The proposed NSW legislation includes giving the Government power to order event organisers to disclose the number of tickets available for sale to the public.
Ticketmaster is owned by Live Nation, the world’s largest events company. Live Nation also owns Australian venues and festivals and manages artists.
Ticketmaster has repeatedly declined Hack’s requests for interviews.
In a written statement, a Ticketmaster spokesperson said: “Ticketmaster has always championed transparency and consumer protection within Australia, across both the primary and secondary markets. We welcome new legislation and we will continue to work with the industry to ensure that tickets get directly into the hands of fans.