ILNews

7th Circuit reverses dismissal of NCAA illegal ticket-lottery suit

Back to TopE-mailPrintBookmark and Share

The 7th Circuit Court of Appeals has allowed a proposed class action case claiming the National Collegiate Athletic Association operates an illegal lottery to sell tickets to certain sporting events to go forward.

Judge William T. Lawrence of the U.S. District Court, Southern District of Indiana, Indianapolis Division, had dismissed all of the plaintiffs’ claims with prejudice on the NCAA’s motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). Plaintiffs Tom George and others applied for tickets to NCAA men’s basketball games through NCAA-owned websites. In order to apply for tickets for the men’s Final Four, applicants may submit a single application with up to 10 entries and the full face value of the tickets plus a $6 non-refundable handling fee. Applicants can only win once and would get at most two tickets. Refunds would be sent to applicants according to whether they won or not, but the $6 handling fee on each entry would not be returned.

The plaintiffs alleged the ticket-distribution system constitutes an unlawful lottery because there are far more applicants than tickets available and the handling fee bears no relation to the cost of running the lottery. They also sued Ticketmaster and settled on most of the charges.  

In Tom George, et al. v. National Collegiate Athletic Association 09-3667, the majority on the 7th Circuit found distinction between the instant case and Lesher v. Baltimore Football Club, 496 N.E.2d 785, 789 (Ind. Ct. App. 1986), on which the District Court relied to dismiss the case. In Lesher, all applicants submitted the face value of tickets sought plus a handling fee. Losers were reimbursed the full amount, plus the fee. The Lesher court held the process wasn’t a lottery because no prize had been awarded and ticket winners got nothing of greater value because losers received a full refund.

But in the instant case, the NCAA kept the handling fee. The plaintiffs also alleged the existence of a prize not present in Lesher: the scarcity of the tickets makes those tickets far more valuable than the cost to purchase.

The plaintiffs have alleged all elements of a lottery: they paid a per-ticket or per-entry fee (consideration) to enter a random drawing (chance) in hopes of obtaining scarce, valuable tickets (a prize), wrote Judge John W. Darrah of the Northern District of Illinois, who is sitting by designation.

The majority also found the District Court erred in holding that the doctrine of in pari delicto barred the plaintiffs from seeking relief from the court.

“Indiana law makes it unlawful to conduct lotteries or otherwise gamble knowingly. As alleged, the NCAA’s act of knowingly conducting an unlawful lottery demonstrates a greater degree of fault than Plaintiffs’ act of unwittingly entering that lottery,” wrote the judge.

Since the plaintiffs had sufficiently alleged the NCAA operated an unlawful lottery, the 7th Circuit reversed the order on all counts and remanded for further proceedings.

Judge Richard Cudahy dissented, finding the instant case indistinguishable from Lesher.

“There are other reasons for excluding this process of ticket distribution from being classified as an illegal ‘lottery,’” he wrote. “One of these is the statutory exemption for ‘bona fide transactions that are valid under the law of contracts.’ This is a very open-ended exemption that is easily applicable to this device -- incidental to allocating scarce tickets for popular sports events.”
 

ADVERTISEMENT

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. "Am I bugging you? I don't mean to bug ya." If what I wrote below is too much social philosophy for Indiana attorneys, just take ten this vacay to watch The Lego Movie with kiddies and sing along where appropriate: https://www.youtube.com/watch?v=etzMjoH0rJw

  2. I've got some free speech to share here about who is at work via the cat's paw of the ACLU stamping out Christian observances.... 2 Thessalonians chap 2: "And we also thank God continually because, when you received the word of God, which you heard from us, you accepted it not as a human word, but as it actually is, the word of God, which is indeed at work in you who believe. For you, brothers and sisters, became imitators of God’s churches in Judea, which are in Christ Jesus: You suffered from your own people the same things those churches suffered from the Jews who killed the Lord Jesus and the prophets and also drove us out. They displease God and are hostile to everyone in their effort to keep us from speaking to the Gentiles so that they may be saved. In this way they always heap up their sins to the limit. The wrath of God has come upon them at last."

  3. Did someone not tell people who have access to the Chevy Volts that it has a gas engine and will run just like a normal car? The batteries give the Volt approximately a 40 mile range, but after that the gas engine will propel the vehicle either directly through the transmission like any other car, or gas engine recharges the batteries depending on the conditions.

  4. Catholic, Lutheran, even the Baptists nuzzling the wolf! http://www.judicialwatch.org/press-room/press-releases/judicial-watch-documents-reveal-obama-hhs-paid-baptist-children-family-services-182129786-four-months-housing-illegal-alien-children/ YET where is the Progressivist outcry? Silent. I wonder why?

  5. Thank you, Honorable Ladies, and thank you, TIL, for this interesting interview. The most interesting question was the last one, which drew the least response. Could it be that NFP stamps are a threat to the very foundation of our common law American legal tradition, a throwback to the continental system that facilitated differing standards of justice? A throwback to Star Chamber’s protection of the landed gentry? If TIL ever again interviews this same panel, I would recommend inviting one known for voicing socio-legal dissent for the masses, maybe Welch, maybe Ogden, maybe our own John Smith? As demographics shift and our social cohesion precipitously drops, a consistent judicial core will become more and more important so that Justice and Equal Protection and Due Process are yet guiding stars. If those stars fall from our collective social horizon (and can they be seen even now through the haze of NFP opinions?) then what glue other than more NFP decisions and TRO’s and executive orders -- all backed by more and more lethally armed praetorians – will prop up our government institutions? And if and when we do arrive at such an end … will any then dare call that tyranny? Or will the cost of such dissent be too high to justify?

ADVERTISEMENT