TicketNetwork Chief's Arrest Clouds Industry It was the kind of disturbance that could have happened anywhere alcohol flows free. But an outburst early Monday at an Oscars party in Connecticut has also cast a shadow over a fast-growing and controversial side of the entertainment business: the online market for scalped tickets. Donald Vaccaro, chief executive of TicketNetwork, is due in court on Wednesday. Don Vaccaro, the chief executive of TicketNetwork, a national online marketplace for secondhand tickets to concerts and sporting events, was arrested Monday in Hartford and charged with hate crimes, police interference and other offenses. According to a police report, Mr. Vaccaro grabbed a woman inappropriately and then made racial slurs and threatened a security guard at an event attended by the Connecticut lieutenant governor, attorney general and other top state officials. TicketNetwork, which is based in South Windsor, Conn., and says it has $111 million a year in revenue, suffered immediate consequences. On Wednesday, it said it would withdraw from a state program that would have given it up to $7.8 million in low-interest loans and grants to develop hundreds of jobs. Gov. Dannel P. Malloy, who had once praised Mr. Vaccaro as a "serial entrepreneur," called his behavior "disturbing." As news of the arrest spread this week, several elected officials in Connecticut distanced themselves from Mr. Vaccaro, saying that thousands in campaign contributions from him would be given to charity. And his arrest is another blow to scalpers - who prefer to be called brokers - as they try to cultivate an image of professionalism. It follows a report last week by the Connecticut Department of Consumer Protection that detailed how some businesses deceived fans through fake Web sites. Scalping, which by some estimates is a $4.5 billion business nationwide, remains a hot-button issue for consumers who increasingly find the secondary market the only source of tickets to desirable events. "The secondary market is not just everyday folks trying to sell their tickets because they can't go to a show at the last minute," said Representative Bill Pascrell Jr., Democrat of New Jersey, who has proposed legislation to curb scalpers" access to tickets. It's worth billions of dollars a year and is dominated by professional brokers, some of whom use every trick to snatch up hot tickets before the average guy and sell them at a profit. The result is that the average consumer is forced to pay a premium for a ticket they should have the ability to purchase at its face value. The five-page arrest report says that at the party, a benefit for a nonprofit AIDS group, Mr. Vaccaro called the police saying he had been assaulted by a security guard. The guard, according to his account in the report, had pulled Mr. Vaccaro outside after seeing him grabbing a woman "who had a look of terror on her face." Mr. Vaccaro, 49, who the report says was visibly drunk, then threatened the guard with violence and used a racial epithet. He is due in court in Hartford on Wednesday, and has said he will take a leave of absence and seek treatment for alcohol abuse. But the arrest, and the consumer protection report, could complicate the company's political fortunes. TicketNetwork has lobbied aggressively for legislation that would benefit scalpers, like a bill to ban so-called paperless ticketing, a feature promoted by Ticketmaster that lets theater box offices check the names or credit card numbers of attendees rather than issuing a ticket that can be easily resold. A TicketNetwork spokeswoman did not respond to attempts to reach Mr. Vaccaro. Paperless ticketing remains a rarity in the concert business but has been used by Miley Cyrus and others. For Bruce Springsteen's new shows, it has reduced scalping by as much as 75 percent, Ticketmaster said, pointing to the difference in the number of tickets that have turned up on secondary markets for shows in New York - where paperless ticketing is banned - versus other states.