SeatGeek executives were scrambling to recover from an unforced error earlier this month when two discount codes leaked on social media granting users $500 discounts on the secondary ticketing marketplace. After about a half-hour of frenzied buying, the ticket resale site was forced to cancel thousands of sales and cover costs incurred by untold numbers of brokers.
The source of those troublesome codes? SeatGeek created the codes for a business conference for Major League Baseball box office managers and ticketing staff, sources tell Billboard — three months after SeatGeek signed a reported $100 million, five-year deal to take over from rival StubHub as the league’s official ticket reseller.
The $500 discount codes — “MLB1” and “MLB2” — were originally given out as prizes for a team building exercise during the event on May 3 at Globe Life Stadium in Arlington, Texas, home to the Texas Rangers. Known to most in the sports ticketing industry as the Baseball Ticketing and Marketing Meetings, the summit is a typically low key affair where baseball ticketing staff come together to network, share ideas and meet with league vendors. SeatGeek representatives were present at the meeting to discuss their new agreement with the league, according to multiple sources. The two discount codes did not include any expiration date or limit on how many times they could be used.
Nine days after the summit, the codes leaked onto the internet and quickly spread across social media. The first instance of the code sharing on Twitter on May 12 at 11:29 p.m. EST appears to have come from an account linked to a sports gambler named Drew Morgan, writing, “I just got 2 tickets to 2 different Steelers games 100% free on SeatGeek. Sounds too good to be true but there was zero catch at all.”
Three minutes later, an account calling itself “Lord Restock” with 168,000 followers posted the codes, kicking off a frenzy of fans using the codes to buy tickets to sporting events, SZA concerts and more.
Around midnight, SeatGeek staff noticed the frenzied use of the $500 discount code and took the SeatGeek site offline to investigate what was happening. The site remained offline for several hours before the issue with the codes was identified and the codes were deactivated.
A SeatGeek spokesperson declined to comment on specifics about the code leaks, but told Billboard in a statement, “Last week, some fans made purchases on our site using an ineligible promo code that was wrongfully distributed without authorization. Tickets acquired via these purchases are not valid and we are working to resolve each situation accordingly.”
Officials with Major League Baseball did not respond to Billboard’s inquiries about the SeatGeek ticket codes and how they leaked online.
In the days following, SeatGeek staff began contacting ticket sellers on the site, laying out plans to cancel any transactions that used the leaked discount codes, refund any money that was spent in transactions using the codes and claw back any tickets possible before they reached fans.
“At this stage, we have been able to contain the impact to SeatGeek, but that came at the cost of an operational burden that you have all helped us to shoulder,” company co-founder Russ D’Souza wrote in an email to ticket broker Randall Smith, CEO of America’s Top Tix, and obtained by Billboard.
SeatGeek operates as both a primary ticketing site for a number of sports teams, as well as a massive secondary ticketing site where tens of thousands of brokers list tickets for resale for concerts, sporting events and festivals. The company implemented a triage system to respond to the code leak, where sales made for teams that use the SeatGeek ticketing system could easily be canceled and reversed. Sales for tickets that haven’t been delivered yet will also be canceled.
Tickets originally issued by rival companies like Ticketmaster, however, were more difficult to claw back. While Ticketmaster technology does allow resellers to digitally transfer tickets from seller to buyer – a process SeatGeek can automate to occur immediately after a sale on its site is made – it can’t transfer the ticket back to the seller if an error is discovered. Because of this, SeatGeek is now covering any losses incurred by brokers who now must reselling tickets issued by Ticketmaster and other services.
As a result, dozens and maybe hundreds of fans who received Ticketmaster-issued tickets using the SeatGeek discount code are now in possession of tickets that can’t be canceled. Since the code was discovered and taken down, many of these fans have taken to Twitter asking other fans if they think the tickets are still valid.
Brokers on the site are also angry, saying SeatGeek took too long to respond to the crisis and should have to pay the same 100% fine it charges its own sellers when customer service mistakes are made.
“If a broker makes an error and cancels an order, they are penalized. If the exchange that dings you makes an error, they unilaterally effectuate a mutual cancelation without consent of the broker,” one reseller wrote on a forum for brokers. “It is a totally one-sided relationship, and I really hope customers, brokers, or both bring a well-deserved class action against SG.”
SeatGeek is the second largest ticket resale site in the United States and last year raised $238 million in Series E funding. A recently abandoned effort to take the company public valued it at $1.35 billion.