An Indianapolis Star report

A federal appeals court in Chicago Friday has instructed an Indianapolis federal judge to give a hearing to a class-action lawsuit calling the NCAA's system of tournament ticket distribution a form of unlicensed gambling.

A judge last year dismissed the lawsuit.

At issue in the suit is a non-refundable $6 or $10 fee for entries in the NCAA's public lotteries that offer the right to buy face-value tickets to events such as the Final Four.

Retention of that money, coupled with the awarding to some participants a "thing of greater value than its price" — the ticket — may violate Indiana's law barring any entity other than the state from running a lottery, the appeals court said in its decision.

The lawsuit contends the system is unlicensed gambling designed to pad the NCAA's coffers. The NCAA said the fees are for administering a process that fairly distributes tickets to the public.

The consumers — residents of New York, Arizona and Oregon — are seeking national class-action, or group, status for anyone who has paid the lottery entry fee since May 1998, plus an award of compensatory and punitive damages.

"The NCAA is disappointed by and disagrees with the court's decision, and we are considering our options," spokesman Erik Christianson said. "The NCAA provides an appropriate, fair and legal mechanism to distribute tickets that gives fans the opportunity to participate in championship events."

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