This year, we have had the chance to watch exciting sporting events, that include the World Cup (about to reach its culmination in the Spain vs. Netherlands match-up), as well as a 2010 winter Olympics that ended in February with a thrilling overtime game for the hockey gold medal.
So, what do sporting events have to do with the secondary market for insurance products?
Well, there are other secondary markets, some of which provide lessons and insight into the legal and financial principles that apply to the secondary markets for insurance products. One of the other markets is for tickets for sporting events and similar activities, and it just so happens that, just as the 2010 Winter Olympics was underway, a February, 2010 opinion was issued involving the market for the re-sale of tickets to Olympic events.
The opinion, in Roadtrips, Inc. v. The Hutton Group, Inc., Civil Action No. 09-1468 (W.D. Pa. Feb. 22, 2010), illustrates that the meaning of the term "secondary market" is also sometimes the subject of litigation disputes.
In Roadtrips, the question before the court was whether a ticket re-seller had been induced to enter into contracts with a would-be ticket supplier, based on representations concerning the secondary market sources of the tickets for the 2008 Beijing Olympics.
The court considered sworn statements from the plaintiff's president that a "supplier of tickets from the secondary market is not the officially sanctioned ticket agent for the event, and tickets sold on the 'secondary market' are not procured directly from the entity which originally issued the tickets or that entity's authorized re-seller" but that "within the 'secondary market', reliable sources of legitimate tickets exist" and that for Olympic event tickets, these reliable sources include "sponsors and Olympic Family members . . . because they receive legitimate tickets directly from the issuing entity and, from time to time, solicit interested buyers on the secondary market."
The source is an important part of the transaction. As the court said,
Plaintiff alleges that Defendants fraudulently and/or negligently promised to obtain the tickets from certain sources within the secondary market (sponsors, sports federations or some other member of the Olympic Family), but not from other sources (ticket brokers) even though they had no intention of fulfilling this promise. Plaintiff has stated that, if it had known that [one of the Defendants] did not have a binding agreement to obtain the tickets through an Olympic Games sponsor or Olympic Family member, it would not have entered into contracts . . . in the first instance.
These allegations, the court ruled, were sufficient to state a claim and the court denied the Defendants' motion to dismiss.
The secondary market for event tickets — and the many familiar and somtimes cautionary tales of scalpers selling sports or entertainment tickets – provides a reminder that secondary markets transactions can involve legitimate practices, but also may involve legally-questionable or even illegal market conduct.