The 7th Circuit reversed a federal judge's dismissal of a 2009 case against the National Collegiate Athletic Association (NCAA) filed by a group of consumers from New York, Arizona and Oregon claiming that the Indianapolis-based NCAA's lottery for tickets to sports tournaments produced unlawful profits.
In a 2-1 decision, the court decided to send the case back to lower court because the NCAA's actions may violate Indiana law prohibiting any entity other than the state from running a lottery. The suit is the result of a $6 to $10 "handling fee" charged to entry into the lottery, even for applicants who don't receive tickets. Judge Richard Cudahy dissented, saying that the defendants were aware that a blind lottery was possible and that Indiana's lottery law doesn't apply to sales pursuant of a valid contract.
For its top-rank Division I basketball and hockey games, the NCAA accepts more applications than it has tickets to sell.
Rob Carey, the plaintiffs' attorney, said the process would have been legal had refunds been issued to unsuccessful applicants. The NCAA no longer charges the fee to those who don't receive tickets.
The lawsuit, filed in May 2008, originally named Ticketmaster Entertainment Inc. as a defendant. Ticketmaster, now part of Live Nation Entertainment Inc., settled in 2009 and agreed to refund unsuccessful applicants' handling fees for the preliminary rounds of that year's NCAA basketball tournament.
