(CN) – The 7th Circuit has agreed to rehear a class action accusing the NCAA of operating an “illegal lottery” with its system of selling tickets to Final Four men’s basketball games. The court voided its earlier decision reinstating the case and asked the Indiana Supreme Court to clarify questions of state law.
Unlucky ticket seekers sued the league and Ticketmaster, claiming the ticket-distribution system for Final Four games is an illegal lottery.
Applicants last year were required to deposit the full face value of the tickets for each entry submitted, plus a $6 service fee. Ten entries were allowed per person, so a pair of $150 tickets would require a down payment of $3,060 in order to maximize the chances of winning.
Losers were refunded the cost of the tickets, but not the service fees. An unlucky applicant who entered 10 times would have to forfeit $60 without receiving a ticket.
An Indiana federal judge threw out the case, saying that by entering the lottery, ticket seekers were guilty of knowingly participating in an illegal activity.
In a split-panel decision, the 7th Circuit in Chicago reversed and reinstated the class action, finding that the system qualified as a lottery and that the plaintiffs had not waived their right to sue because they did not know their actions were illegal.
The federal appeals court has now voted to rehear the case, vacating its earlier decision and asking the Indiana Supreme Court to clarify questions about applicable laws.
The 7th Circuit certified the following questions to the state high court:
“1. Do the plaintiffs’ allegations about the NCAA’s method for allocating scarce tickets to championship tournaments describe a lottery that would be unlawful under Indiana law?
“2. If the plaintiffs’ allegations describe an unlawful lottery, would the NCAA’s method for allocating tickets fall within the Ind. Code § 35-45-5-1(d) exception for ‘bona fide business transactions that are valid under the law of contracts’?
“3. If the plaintiffs’ allegations describe an unlawful lottery, do plaintiffs’ allegations show that their claims are subject to an in pari delecto defense?”
The class contains hundreds of thousands of potential members, according to the plaintiffs’ estimates.