Risks from overselling tickets to entertainment events

The cultural and entertainment industry has experienced a robust resurgence in recent years, particularly in the live performance market, where tickets are often in extremely high demand. However, beneath this prosperity, certain disruptive factors have emerged.

In pursuit of maximising unilateral economic interests, many entertainment companies have violated regulations by overprinting and overselling tickets for live events. Such conduct not only disrupts the normal order of the entertainment market, but also exposes companies to both administrative penalties and criminal liability.

Potential risks

Currently, there are two main models for the design, printing and sale of tickets: one in which the organiser is solely responsible; and another in which the organiser co-operates with a ticketing platform, where responsibilities for ticket sales and management are stipulated by agreement. Regardless of the model, under the Regulations on the Administration of Commercial Performances (2020 Revision), the organiser bears primary responsibility for ticket management.

According to article 21 of the regulations, before organising a performance, the organiser must report the venue’s audience capacity to the local public security bureau for approval. The public security bureau will determine the audience and buffer zones based on the venue’s actual conditions, including area, safety facilities and evacuation routes.

Finally, the organiser must print and sell tickets strictly in accordance with the approved audience number and designated zones deemed essential for ensuring the safe and orderly conduct of the event.

If the organiser prints or sells tickets in excess of the approved audience number or outside the designated zones (i.e. by overselling or selling tickets for areas unapproved for sale), a series of serious consequences may arise, including the following risks.

Administrative penalties. The organiser may face administrative penalties for overselling or selling tickets for areas unapproved for sale. Under article 51 of the regulations, the public security bureau at county level or above will impose strict measures, including orders to rectify, confiscation of illegal gains, and fines of not less than three times and not more than five times the illegal gains.

Where there are no illegal gains or the amount is less than RMB10,000 (USD1,392), a fine of not less than RMB30,000 and not more than RMB50,000 will be imposed.

In cases of serious consequences, the organiser’s commercial performance permit may be revoked. Once revoked, the organiser loses the qualification to stage performances, which will have a significant adverse impact on future business activities.

Criminal liability. In addition to administrative penalties, overselling or selling tickets for areas unapproved for sale may constitute a criminal offence.

In confined or limited spaces, excessive audience numbers and high interactivity can easily lead to crowding. In an excited atmosphere, this may result in individual hypoxia or suffocation, or even mass stampedes, causing casualties.

Should such incidents occur, the organiser’s responsible persons and other directly liable individuals may be suspected of committing the crime of causing a major liability accident under article 134 of the Criminal Law.

Furthermore, if the organiser knowingly oversells tickets for additional profit despite limited venue capacity – resulting in some audience members being unable to enter or effectively view the performance – this may be deemed as having the intent of illegally obtain property. Where the illegal gains are substantial, the organiser and relevant personnel may be found guilty of contract fraud under article 224 of the Criminal Law.

Risk prevention

To effectively prevent these risks and ensure the smooth conduct of performances, organisers should strictly comply with relevant regulations and implement the following measures.

• Safety inspection of venues. Organisers should conduct safety inspections of venues in advance, including fire safety facilities, security plans, firefighting and emergency evacuation procedures. They should also sign safety responsibility agreements with venue operators regarding emergency incidents to ensure prompt and effective responses. For performances in public places, organisers must obtain the necessary approvals and formulate safety plans in accordance with relevant regulations.
• Approval of audience numbers. Organisers must submit the venue’s audience capacity for approval by the public security bureau, which will designate audience and buffer zones. Tickets must be printed and sold strictly in accordance with the approved audience number and designated zones. No tickets may be sold in excess of the approved number or outside the designated areas.
• Supervision of ticketing platforms. Where organisers co-operate with ticketing platforms, responsibilities must be clearly defined in the agreement. Organisers should supervise the entire process of ticket printing and sales, maintain regular communication and co-ordination, and monitor ticket sales to strictly prevent overselling or selling for the approved areas.
• Flexible control of audience entry. Organisers should deploy professional security personnel to manage entry. Once the approved audience number is reached, ticket verification must cease immediately, even if some ticket holders have not yet entered, and the public security bureau must be notified. If crowding or disorder occurs outside the venue, or individuals incite disturbances, organisers must promptly maintain order and report to the public security bureau, co-operating in maintaining order and handling the aftermath.
• Active fulfilment of civil compensation obligations. If overselling or selling beyond approved areas causes losses to audience members, organisers should actively fulfill compensation obligations, such as refunds or providing performance-related gifts, to avoid escalating disputes and negative impacts due to improper handling.

Han Meijun is a partner at Starrise Law Firm