New York Gov. Kathy Hochul (D) has signed first-in-the-nation legislation banning online squatters from snapping up and selling restaurant reservations, cracking down on a new population of middlemen who cost restaurants and patrons before the first bite is served.
The measure will prohibit third-party companies that use bots powered by artificial intelligence from arranging or selling restaurant reservations to prospective diners without an establishment’s permission. The bill aims to cut out some of the same bots and scalpers who have caused prices for live events and concerts to skyrocket.
Supporters say it is meant to help restaurants guarantee those who have made reservations show up, and to help the consumers who want access to some of the country’s best establishments without the added cost imposed by those who swoop in the moment a reservation becomes available.
“You have these third-party vultures, creating a black market, encouraging people to make reservations for the purpose of selling [them],” Assemblymember Alex Bores (D), the bill’s primary sponsor, told Pluribus News in a recent interview.
“It hurts restaurants because there are much higher cancellations. It hurts workers because when the table is cancelled, even if there’s a fine for the table, workers don’t get tips. And it hurts consumers, people that just want to go have a special meal with their family,” Bores said.
The practice of scooping up restaurant reservations for resale has existed since online platforms such as OpenTable and Resy came into being. It exploded during and after the pandemic, as restaurant tables became more limited.
The bill would impose a civil penalty of up to $1,000 per day on those who snap up reservations for the sole purpose of reselling them. The bill does not apply to restaurants themselves, if they choose to sell reserved spaces.
Restauranteurs say the explosion of bots is impacting their bottom lines.
“Unfortunately, AI bots have exploited [restauranteurs’] hard work by hoarding these coveted reservations and selling them for a profit, all without the knowledge of the restaurant,” said Melissa Fleischut, president of the New York State Restaurant Association, which backed the bill. “Food and beverage orders, employee schedules, and many other aspects of a restaurant rely on accurately predicting how many customers will show on a given night.”
The measure was passed in unanimous votes earlier this year.