CHICAGO – A federal appeals court in Chicago breathed new life into a lawsuit brought by college sports fans against the National Collegiate Athletic Association.

The plaintiffs first filed suit in May 2008, claiming the NCAA pocketed millions through an illegal lottery for limited tickets to Division I championship games. The alleged lottery required customers to pay the full face value of the tickets prior to the lottery as well as a nonrefundable application fee. The lottery system has been in place since 1994.

Lottery winners received the tickets. Those who were not selected for tickets were refunded the full amount of the cost of the tickets, while the NCAA kept the application fee. Under Indiana law, only the state government may run lotteries. The plaintiffs claim that by distributing tickets to fans through a lottery system that requires a fee to be paid by the all participants, including unsuccessful applicants, the NCAA violated Indiana gambling laws.

A federal judge in Indianapolis dismissed the suit on all counts in 2009, ruling that the plaintiffs could not pursue the claim because they were equally involved in the illegal gambling. The plaintiffs appeal was heard by the 7th Circuit Court of Appeals in Chicago in late March. The appeals court reversed the earlier decision to dismiss the suit and returned the case back to the Indianapolis court.

In its July 16 decision, the appeals court also ruled that:

• Plaintiffs have sufficiently argued that the NCAA's ticket distribution process may meet the three elements necessary to establish a lottery: a prize, an element of chance and consideration for the chance to win a prize.
• The NCAA's claim that its ticket distribution process is exempt under Indiana's definition of "gambling" does not hold water.
• The Indianapolis court erred when it ruled that the plaintiffs were equally at fault for their participation in the NCAA's scheme because they knew they were participating in a game of chance.

"The court recognized that customers ordering on the NCAA Web site were not knowingly gambling," said lead plaintiffs' attorney Rob Carey. "It also recognized that the entire process would have been legal if the NCAA had simply refunded the so-called handling fee."

The suit now moves into the discovery phase. Attorneys for both sides will exchange all potentially relevant documents and information regarding the case.

"Now we know get to find out exactly how the NCAA conducts the lottery and distributes tickets," Carey said. "We've said all along that there is manipulation and misrepresentation involved. Now the sun gets to shine in. It's a good day for consumers."

Once the discovery phase is complete, plaintiffs' attorneys intend to motion the court to certify the case as a federal class-action lawsuit, given the high number of potential plaintiffs who may have participated in the NCAA's ticket-distribution lottery over the years.

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