ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
William N. Riley George T. Patton, Jr.
Joseph N. Williams Peyton L. Berg
Brad A. Catlin Indianapolis, Indiana
Indianapolis, Indiana
Douglas N. Masters
Leonard W. Aragon Chicago, Illinois
Robert B. Carey
Phoenix, Arizona Michael Mallow
Benjamin King
Los Angeles, California
______________________________________________________________________________
In the FILED
Indiana Supreme Court Apr 21 2011, 9:37 am
_________________________________ CLERK
of the supreme court,
court of appeals and
tax court
No. 94S00-1010-CQ-544
TOM GEORGE, CHRIS VITRON,
LORI CHAPKO, AND EDWARD SNEAD,
ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED,
Appellants (Plaintiffs below),
v.
NATIONAL COLLEGIATE ATHLETIC
ASSOCIATION,
Appellee (Defendant below).
_________________________________
Certified Question from the United States Court of Appeals for the Seventh Circuit, No. 09-3667
The Honorable Richard D. Cudahy, Circuit Judge
The Honorable Michael S. Kanne, Circuit Judge
The Honorable John W. Darrah, District Judge
_________________________________
April 21, 2011
Sullivan, Justice.
Honorable John W. Darrah, District Judge for the Northern District of Illinois, sitting by designation.
The NCAA randomly allocated championship sporting event tickets to applicants who
had offered to purchase tickets by submitting the face value of the tickets along with a nonre-
fundable handling fee. The face-value amount (but not the handling fee) was refunded to appli-
cants whose offers were not accepted. The NCAA‟s ticket-allocation process was not an illegal
lottery under Indiana law because no prize was awarded to those applicants who received the op-
portunity to purchase tickets.
Background
The National Collegiate Athletic Association (“NCAA”) is an organization through
which the nation‟s colleges and universities govern their athletic programs. Many NCAA com-
petitions have gained widespread popularity, particularly the women‟s and men‟s NCAA Divi-
sion I basketball tournaments and the NCAA Division I men‟s ice-hockey championship tour-
nament. Due to both the popularity of such events and the limited seating in sports venues, de-
mand for tickets often exceeds supply.
To distribute tickets to these events, the NCAA developed the following ticket-
distribution system. The NCAA sets the face value of the tickets to its events many months be-
fore the event. Would-be ticket purchasers submit to the NCAA an application offering to pur-
chase tickets for a particular event. Each applicant may submit only one application, but, for at
least some events, an applicant can submit multiple offers on a single application, though only
one offer can be accepted. When submitting an application, the applicant must submit the face
value of the tickets along with a nonrefundable handling or service fee1 for each offer. When
demand exceeds supply, the NCAA uses a random-selection program to accept offers from the
pool of offers. Applicants whose offers are accepted receive event tickets via overnight delivery.
Applicants whose offers are rejected receive refunds of the ticket price, though it may take sev-
eral weeks or months. No applicant receives a refund of the handling fee.
1
Counsel for the plaintiffs has attached several different labels to this fee, including “entry fee.” We refer
to it as a “handling fee” throughout this opinion.
2
This ticket-allocation plan was used for the 2009 NCAA Men‟s Final Four, the cham-
pionship round of the men‟s basketball tournament. The NCAA set the face value of the tickets
at $150 each, and tickets were sold in pairs. Fewer than 5,000 tickets were released for sale and
several hundred thousand people submitted offers. Each applicant could submit up to 10 offers
to purchase a pair of tickets, but if one offer was accepted, the remaining offers were rejected. A
handling fee of $6 was charged for each offer.2 If an applicant‟s offer was accepted, he or she
would receive game tickets via overnight mail, and if that applicant had made more than one of-
fer, he or she also received a refund of the total ticket price for the other (rejected) offers,3
though it would arrive several months later. Applicants whom had all their offers rejected also
received refunds of the total ticket price offered. No one received a refund of the handling fees.
The plaintiffs in this case submitted offers to the NCAA to purchase tickets for the
NCAA Division I men‟s basketball tournament, but their offers were not accepted. They submit-
ted their applications knowing both that the handling fee was nonrefundable and that there was a
possibility demand would exceed supply and that the random-selection process would be uti-
lized. Dissatisfied with not being able to purchase tickets, the plaintiffs filed suit against the
NCAA and Ticketmaster in federal court for the Central District of California. Ticketmaster set-
tled with the plaintiffs and venue was transferred to the Southern District of Indiana.
The plaintiffs alleged several claims, but the underlying basis for all of their claims is the
allegation that the NCAA‟s ticket-distribution system constitutes an unlawful lottery under Indi-
ana law. Judge Lawrence dismissed the complaint with prejudice for failure to state a claim,
holding that even if the NCAA was operating an illegal lottery under Indiana law, the plaintiffs‟
claims were barred by the equitable doctrine of in pari delicto because the plaintiffs were aware
of the essential features of the process when they applied for tickets. George v. Nat‟l Collegiate
Athletic Ass‟n, No. 1:08-cv-1684-WTL-JMS, 2010 U.S. Dist. LEXIS 113997, 2009 WL
2
An applicant submitting only one offer was required to submit with the application $306 ($150 x 2 + $6)
whereas an applicant submitting 10 offers was required to submit with the application $3,060 (($150 x 2)
x 10 + ($6 x 10)).
3
An applicant who submitted 10 offers, one of which was accepted, would receive a $2,700 refund (9
pairs of tickets x $300 per pair).
3
6965794 (S.D. Ind. Sept. 25, 2009).4 In other words, assuming the ticket-distribution process
was an unlawful lottery, the plaintiffs could not seek help from the court because they knowingly
participated in it.
On appeal, a panel of the United States Court of Appeals for the Seventh Circuit, in a 2-1
decision, reversed. George v. Nat‟l Collegiate Athletic Ass‟n (George I), 613 F.3d 658 (7th Cir.
2010). Over the dissent of Judge Cudahy, the majority held that the ticket-distribution process
was a lottery under Indiana law; that the process did not fall within the statutory exception for
bona fide business transactions; and that the in pari delicto defense was not available because the
NCAA had a greater degree of fault than the plaintiffs. Id. at 661-64.
The same panel, however, granted the NCAA‟s petition for rehearing and vacated its
prior decision. George v. Nat‟l Collegiate Athletic Ass‟n (George II), 623 F.3d 1135 (7th Cir.
2010) (per curiam). It noted both that the question whether this distribution process was a lottery
under Indiana law “is a close one” and that its decision “could have far-reaching effects.” Id. at
1137. Pursuant to Indiana Appellate Rule 64, it certified the following three questions for our
consideration:
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) excep-
tion for “bona fide business transactions that are valid under the law of con-
tracts”?
3. If the plaintiffs‟ allegations describe an unlawful lottery, do plaintiffs‟ allega-
tions show that their claims are subject to an in pari delicto defense as de-
scribed in Lesher[ v. Baltimore Football Club], 496 N.E.2d [785,] 790 n.1
[(Ind. Ct. App. 1986)], and Swain v. Bussell, 10 Ind. 438, 442 (1858)?
Id. at 1137-38.
4
Judge Lawrence also dismissed for failure to plead with particularity a claim of fraud, see Fed. R. Civ.
P. 9(b), but this issue is not within the scope of the Certified Questions.
4
We agreed to consider the questions by order dated October 29, 2010, Ind. Appellate
Rule 64(B), and following the completion of supplemental briefing, held oral argument on De-
cember 22, 2010.
Discussion
The underlying basis of the plaintiffs‟ claims is the allegation that the NCAA ticket-
distribution process constitutes an unlawful lottery under Indiana law. The first certified ques-
tion asks whether the ticket-distribution process constitutes a lottery. If the first question is ans-
wered in the affirmative, we are asked to proceed to the second question and determine whether
the NCAA‟s ticket process falls within the statutory exception for bona fide business transactions
valid under the law of contracts. If it does not, we are asked to proceed to the third question and
determine whether the plaintiffs‟ claims are barred by the equitable doctrine of in pari delicto, as
set forth in Swain v. Bussell, 10 Ind. 438, 442 (1858), and subsequent cases.
I
To answer the first certified question, we consider the meaning and scope of Indiana
Code section 35-45-5-3, which makes it a felony to conduct lotteries in Indiana. 5 That statute
provides, in relevant part, that “[a] person who knowingly or intentionally . . . conducts lotteries
or policy or numbers games or sells chances therein . . . commits professional gambling, a Class
D felony.” Ind. Code § 35-45-5-3(a)(4) (2008). Subsection (b) extends this proscription to ac-
tivities over the Internet when they occur in Indiana or when the transaction directly involves a
person located in Indiana. I.C. § 35-45-5-3(b)(4).
Because this is a penal statute, it is to be construed strictly. FCC v. Am. Broad. Co., Inc.,
347 U.S. 284, 296 (1954); Brown v. State, 868 N.E.2d 464, 470 (Ind. 2007) (citation omitted).
Due process requires that a penal statute clearly define the prohibited conduct so that it provides
5
Although this is a civil case, Indiana Code section 35-45-5-3 is a penal statute. In other words, we are
asked to determine whether the allegations of the plaintiffs‟ complaint establish that the NCAA commit-
ted a crime. We are mindful that our holding may be a relevant precedent when defendants are prosecut-
ed under this statute.
5
adequate and fair notice as to what precisely is proscribed. Id. at 467; see also Healthscript, Inc.
v. State, 770 N.E.2d 810, 815-16 (Ind. 2002) (explaining the void-for-vagueness doctrine, the
rule of lenity, and the fair-notice requirement). On the other hand, penal statutes should not be
read so narrowly as to exclude cases they fairly cover. Sales v. State, 723 N.E.2d 416, 420 (Ind.
2000) (citation omitted); Short v. State, 234 Ind. 17, 122 N.E.2d 82, 85 (1954) (citation omitted).
Our primary goal in construing statutes is to determine and give effect to the Legisla-
ture‟s intent. State v. Oddi-Smith, 878 N.E.2d 1245, 1248 (Ind. 2008) (citation omitted). The
intent of the Legislature is best gleaned from the statutory text itself. Id. (citation omitted).
When interpreting a statutory provision, we examine the statute as a whole and avoid “excessive
reliance upon a strict literal meaning or the selective reading of individual words.” Id. (citation
omitted). Undefined words are given their plain, ordinary, and usual meaning, unless it would be
plainly repugnant to the Legislature‟s intent or the context of the statute. Ind. Code § 1-1-4-1(1)
(2005); Hinojosa v. State, 781 N.E.2d 677, 680 (Ind. 2003) (citation omitted). Finally, we pre-
sume that the Legislature intended for the language to be applied logically and consistent with
the underlying goals and policies of the statute. Oddi-Smith, 878 N.E.2d at 1248 (citation omit-
ted).
A
The statute does not define “lotteries.” See I.C. § 35-45-5-1 (defining other terms). Indi-
ana courts, including this Court, have been called upon to interpret the meaning of the term “lot-
tery” on many occasions since at least 1851, when the Indiana Constitution was ratified with a
provision that prohibited the General Assembly from authorizing lotteries.6 See Caesars River-
boat Casino, LLC v. Kephart, 934 N.E.2d 1120, 1121-22 (Ind. 2010) (providing brief history of
gambling law in Indiana). Our interpretations of this term, however, have not been consistent.
6
The Indiana Constitutional prohibition on lotteries was repealed by voter referendum in 1988. Kephart,
934 N.E.2d at 1122.
6
A-1
In Tinder v. Music Operating, Inc., 237 Ind. 33, 142 N.E.2d 610, 614 (1957), we defined
a lottery as “„[a] scheme for the distribution of prizes by lot or chance,‟” especially “„a scheme
by which one or more prizes are distributed by chance among persons who have paid or prom-
ised a consideration for a chance to win them.‟” Id. at 614 (quoting Webster‟s New International
Dictionary). This was the common and plain definition of “lottery” and the one historically ap-
plied by Indiana courts. Id.; see also Hudelson v. State, 94 Ind. 426, 429 (1884) (“„A lottery is a
scheme for the distribution of prizes by chance – a game of hazard, in which small sums are ven-
tured for the chance of obtaining a larger value, either in money or other valuables.‟” (citation
omitted)).
In State v. Nixon, 270 Ind. 192, 384 N.E.2d 152 (1979), however, we departed from the
definition articulated in Tinder. In Nixon, we held that the constitutional prohibition on lotteries
prevented the General Assembly from authorizing pari-mutuel wagering on horse races. Id. at
162. We interpreted the term “lottery” broadly, holding that the constitutional prohibition on lot-
teries “embrace[d] all forms of gaming which, by reason of retainage, service charge, or odds,
preclude the participants, in sustained play, from winning while providing a reasonable expec-
tancy of profit for the sponsors.” Id. at 161. In other words, the constitutional prohibition on
lotteries was interpreted to prohibit all forms of commercialized gambling.
Because the term is undefined in the statute, we must also consider its plain and ordinary
meaning. In common parlance, the term “lottery” has come to represent any matter left to
chance. Many standard dictionaries include this meaning as a secondary or tertiary definition of
the term. See Merriam-Webster‟s Collegiate Dictionary 736 (11th ed. 2004) (“an event or affair
whose outcome is or seems to be determined by chance”) [hereinafter Merriam-Webster‟s Colle-
giate]; Webster‟s Third New International Dictionary 1338 (unabridged ed. 1976) (same) [herei-
nafter Webster‟s Third]. Indeed, the General Assembly has used the term “lottery” consonant
with this more general definition in other sections of the Indiana Code. See, e.g., Ind. Code § 3-
10-1-18(b) (2005) (providing that, for certain elections, candidates‟ names appear on ballots in a
randomized order determined by a “lottery”). This common understanding of “lottery” has also
7
been used in judicial opinions. See, e.g., Hudson v. Michigan, 547 U.S. 586, 595 (2006) (de-
scribing a criminal defendant‟s invocation of the Fourth Amendment exclusionary rule for a
knock-and-announce violation as a lottery with minimal cost and an enormous jackpot); Risk v.
Schilling, 569 N.E.2d 646, 648 (Ind. 1991) (Givan, J., dissenting) (lamenting that too many citi-
zens use the judicial system as though it were a lottery).
A-2
For purposes of Indiana Code section 35-45-5-3, we do not think the General Assembly
intended the term “lottery” to embrace all forms of commercialized gambling, as was held in
Nixon, or to include all matters of chance, as has become the common definition of the term.
Rather, we think it intended “lottery” to have the definition adopted in Tinder and prior cases.
First, the definition articulated in Nixon would render most of the remainder of Indiana
Code section 35-45-5-3 superfluous and unnecessary. If the General Assembly had intended
“lottery” to have the definition articulated in Nixon, it would not have listed the varying forms of
conduct as it did. It also would not have included “lotteries” with “policy” or “numbers games,”
both of which are specialized forms of gambling similar to traditional lotteries.7
Second, the modern common definition of lottery as “any matter determined by chance”
is too broad. To hold that the General Assembly intended this broad definition would lead to ab-
surd results because the statute would proscribe all things in this State that are left to chance but
not specifically exempt. Moreover, although this broader definition is a common alternative de-
finition in modern English dictionaries, the primary definition of “lottery” is similar to that
quoted in Tinder. See, e.g., Merriam-Webster‟s Collegiate, supra, at 736; Webster‟s Third, su-
pra, at 1338. Additionally, the leading legal dictionary8 defines “lottery” as “[a] method of rais-
7
“Policy” is “[a] type of lottery in which bettors select numbers to bet on and place the bet with a []policy
writer.” Black‟s Law Dictionary 1276 (9th ed. 2009). And a “numbers game” is “[a] type of lottery in
which a person bets that on a given day a certain series of numbers will appear from some arbitrarily cho-
sen source, such as stock-market indexes or the U.S. Treasury balance.” Id. at 1174.
8
We generally prefer to consult standard dictionaries when interpreting the undefined terms of a statute.
Brown, 868 N.E.2d at 467. But the term “lottery” has become a legal term of art, at least with respect to
laws prohibiting or authorizing lotteries, given that the term has been the subject of many constitutions,
8
ing revenues . . . by selling tickets and giving prizes . . . to those who hold tickets with winning
numbers that are drawn at random.” Black‟s Law Dictionary 1032 (9th ed. 2009).
Finally, the definition articulated in Tinder has been consistently used by the Indiana
Court of Appeals, notwithstanding Nixon. See, e.g., Pruitt v. State, 557 N.E.2d 684, 690-91
(Ind. Ct. App. 1990) (holding that a bingo game that awarded prizes and for which consideration
was paid was an unlawful lottery), trans. denied; Lashbrook v. State, 550 N.E.2d 772, 775-76
(Ind. Ct. App. 1990) (holding that a pyramid scheme constituted a “lottery” under a similar defi-
nition). And this definition represents the definition accepted by an “overwhelming majority” of
American jurisdictions, Opinion of the Justices No. 373, 795 So. 2d 630, 634-35 (Ala. 2001),
including the United States Supreme Court, FCC v. Am. Broad. Co., Inc., 347 U.S. at 290. We
also note that the parties in this case and the Seventh Circuit panel relied upon this definition,
seemingly without question.
B
Thus, as used in Indiana Code section 35-45-5-3, the term “lottery” means a scheme for
the distribution of prizes by lot or chance among those who provided or promised to provide
consideration. Tinder, 142 N.E.2d at 614. Under this definition, there are three essential ele-
ments to a lottery: (1) a prize; (2) chance; and (3) consideration. Id.
The NCAA argued in its briefs to the Seventh Circuit that none of the three elements
were present in the ticket-distribution process. The majority of the panel concluded that all three
elements were present. See George I, 613 F.3d at 661-62. In this Court, the NCAA focuses only
on the “prize” element.
statutes, and judicial opinions. Cf. Ind. Dep‟t of State Revenue v. Colpaert Realty Corp., 231 Ind. 463,
109 N.E.2d 415, 418-19 (1952) (“In construing statutes, words and phrases will be taken in their plain or
ordinary and usual sense unless a different purpose is clearly manifest by the statute itself, but technical
words and phrases having a peculiar and appropriate meaning in law shall be understood according to
their technical import.” (citations omitted)).
9
B-1
The Indiana Court of Appeals considered a similar challenge in Lesher v. Baltimore
Football Club, 496 N.E.2d 785 (Ind. Ct. App. 1986), summarily aff‟d in relevant part by 512
N.E.2d 156, 157 (Ind. 1987). In Lesher, the Indianapolis Colts, who had recently relocated to
Indianapolis from Baltimore, used a randomized ticket-allocation process similar to that used by
the NCAA in this case. See id. at 787-88. The plaintiffs submitted an application containing an
offer to purchase Colts season tickets, along with a check for the face value of the tickets and a
small handling fee. Id. at 787. The checks were negotiated and held in the Colts‟ account, and
the Colts gained investment income on the deposited funds. Id. Approximately 52,000 seats
were made available, but at the end of the application period, ticket demand was three times the
supply. Id. at 788. Applicants were made aware that a “blind lottery” would be possible. Id.
The applicants selected in the blind draw received tickets, and applicants who did not receive
tickets received a refund of both the face value of the tickets and the handling fee. Id.
We summarily affirmed the holding of the Court of Appeals that the ticket-distribution
process was not a lottery. Lesher, 512 N.E.2d at 157, aff‟g 496 N.E.2d at 789-90. The Court of
Appeals rejected the plaintiffs‟ contention that the tickets‟ value had not been established be-
cause “the court had before it evidence as to the price voluntarily paid by the purchasers, e.g., the
market price.” Lesher, 496 N.E.2d at 789 (citation omitted). The plaintiffs had failed to bring
forward evidence that disputed the fact of value. Id. The court concluded that there was no
prize:
A prize is something of more value than the amount invested. See State v. Tur-
lington, 204 S.W. 821 (Mo. Ct. App. 1918). Lesher and Dillon did not venture
small sums for the chance of obtaining a larger value. Hudelson v. State, 94 Ind.
426, 429 (1884). Rather, they invested the price of the tickets and received in ex-
change either the tickets or the entire amount invested. Therefore, since the price
paid equals the market value, those receiving tickets got nothing of greater value
than those who received refunds.
Id. at 789-90.
10
B-2
The plaintiffs make two primary arguments in an attempt to distinguish the NCAA‟s
ticket-allocation process from the Colts‟ ticket-allocation process in Lesher.9 First, they argue
that because the handling fee is forfeited regardless of the outcome, those receiving tickets re-
ceive something of greater value than those who lost the handling fee and were not permitted to
purchase tickets. We disagree.
Contrary to the plaintiffs‟ argument, the fact that the fee is nonrefundable means that both
groups receive the same amount after the blind draw. Those applicants whose offers to purchase
tickets are accepted receive tickets for $150 per ticket, whereas those applicants whose offers are
rejected receive $150 in cash per ticket. Thus, like in Lesher, “those receiving tickets got noth-
ing of greater value than those who received refunds.” 496 N.E.2d at 790. Additionally, the
plaintiffs have not alleged that their nonrefundable handling fees go toward providing extra ben-
efits to successful applicants. Rather, they pled that the handling fees grossly exceed the amount
needed for shipping and handling and that the handling fees grossly profit the NCAA. Thus, un-
der the plaintiffs‟ theory, the majority of the handling fees, even for successful applicants, are
profits distributed to the NCAA‟s general fund. The fact that the handling fees are usually re-
fundable under other randomized ticket-distribution plans, including Lesher, does not alter the
prize analysis. In fact, in those cases, unsuccessful applicants receive more than successful ap-
plicants because they receive the face value of the tickets plus the handling fee, whereas success-
ful applicants receive only the tickets, which are worth the face value. Although the nonrefund-
able nature of the handling fee may alter the consideration analysis, it does not alter the prize
analysis.
The plaintiffs‟ second argument distinguishing Lesher is based on the differing procedur-
al posture of this case. In Lesher, the Indiana Court of Appeals was reviewing the trial court‟s
grant of summary judgment for the Colts. The plaintiffs in this case argue that the face value of
the Colts tickets was held to be market value only “[b]ecause [the plaintiffs] did not come for-
9
The plaintiffs also argue that the overnight delivery of tickets and the premium seating are “prizes.”
Under the analysis used in Lesher, these clearly are not prizes because successful applicants pay for these
benefits through either the handling fee or increased ticket pricing.
11
ward with evidence disputing the fact of value.” Lesher, 496 N.E.2d at 789. The procedural
posture of this case, on the other hand, is the motion-to-dismiss stage, wherein the plaintiffs‟ al-
legations are accepted as true and the defendant prevails only if those allegations fail to state a
cognizable claim. See Fed. R. Civ. P. 12(b)(6); Tamayo v. Blagojevich, 526 F.3d 1074, 1081
(7th Cir. 2008) (citations omitted). They argue that they have alleged that the market value of
the tickets was far greater than the face value and thus the tickets constitute a prize, even though
the tickets in Lesher did not. The majority of the Seventh Circuit panel agreed with the plain-
tiffs‟ procedural argument, holding that “Plaintiffs need only have alleged that the fair-market
value of the tickets exceeded their face value such that those tickets constitute something of more
value than the amount invested.” George I, 613 F.3d at 662. We respectfully disagree.
We note, as a preliminary matter, that although the plaintiffs in Lesher did not present
evidence that market value exceeded face value, basic economics suggests that the tickets in
Lesher were worth more on the secondary market because demand exceeded supply three-fold.
496 N.E.2d at 788. And, in any event, we agree with Judge Cudahy‟s dissent that this argument
concerning the presence of a secondary market is misleading. See George I, 613 F.3d at 665
(Cudahy, J., dissenting).
In cases like this and Lesher, the critical fact is that no market for tickets exists until the
event coordinator issues the tickets in the first place, so, as a matter of law, the face value of the
tickets equals the fair-market value of the tickets on the primary market. Here, the NCAA
created the primary market for the tickets, and the value realized by the NCAA is in fact the face
value of the tickets. But for the NCAA issuing tickets to one of its events, there could never be a
secondary market. Once the NCAA sells tickets, the tickets will have a resale value in a second-
ary market, but, for a plethora of reasons, that resale value may be above or below the face value.
For example, the event may be undersold. Even if the event is oversold, there may be no excess
demand once the competitors are determined. Other factors may affect the secondary market for
tickets, such as the general state of the economy, weather predictions, or an injury to a star com-
petitor. The speculative nature of the secondary market makes it an inappropriate consideration
in determining the presence of a prize in this case.
12
The plaintiffs argue that this approach will enable scam artists to evade criminal prosecu-
tion, for example, by charging a $10 entry fee for a chance to win the right to purchase a
$100,000 gold coin for $20. If enough people participated, the scam artist could make millions
in the entry fees and give up a coin worth only $100,000. And the winner of the drawing would
merely be obtaining the right to purchase something. But we think schemes like those suggested
by the plaintiffs are readily distinguishable from ticket-distribution plans like the NCAA‟s. In
the gold-coin scheme, the scam artist is not setting the primary market. There is already a verifi-
able market against which the value of the coin may be measured, and there is little speculation
as to what the coin will be worth on the secondary market, except for routine market fluctuation.
We also conclude that the historical policies underlying the general prohibitions on lotte-
ries are not implicated by the NCAA‟s ticket-allocation plan. Historically, lotteries were viewed
as the lowest and most pernicious form of gambling and were thus treated most harshly under the
law. Nixon, 384 N.E.2d at 160.
Experience has shown that the common forms of gambling are comparatively in-
nocuous when placed in contrast with the wide-spread pestilence of lotteries. The
former are confined to a few persons and places, but the latter infests the whole
community: it enters every dwelling; it reaches every class; it preys upon the hard
earnings of the poor; it plunders the ignorant and simple.
Phalen v. Virginia, 49 U.S. (8 How.) 163, 168 (1850). In Nixon, we also noted,
To dream of riches unearned and the willingness to gamble to achieve
them appear to be inherent in the nature of man. . . . [This] becomes an injurious
nuisance, a “pestilence,” when capitalized upon by those who do not gamble or
play the game at all but make an unconscionably profitable business of providing
the temptation, lure of profits that are out of all proportion to investment, labor
and skill involved, to the weak and unwary.
384 N.E.2d at 160-61.
13
The NCAA‟s process for allocating scarce tickets does not implicate any of these poli-
cies.10 When submitting offers to purchase tickets, applicants must submit the face value of the
tickets along with the handling fee. Thus, to submit one offer to purchase a pair of tickets to the
2009 Men‟s Final Four, an applicant was required to submit $306 ($300 for two tickets and a $6
handling fee). This is significantly different from submitting a $1 or even a $10 fee for a chance
at winning a much larger sum of money. In order to apply for tickets, the applicant must have an
appreciable disposable income or other substantial means. The NCAA‟s ticket process therefore
does not “reach[] every class” or “prey[] upon the hard earnings of the poor.” Moreover, the ap-
plicants who are successful do not necessarily increase their fortunes; they merely receive a li-
cense to attend a collegiate sporting event. The prospect of bettering one‟s fortunes is entirely
speculative at the time applications are submitted, and, to make a profit on the putative second-
ary market, the successful ticket purchaser must forego the very benefit acquired through the
ticket-allocation process – the license to attend the event.
In sum, it would stretch the definition of “lottery” beyond what the General Assembly in-
tended to hold that the NCAA‟s ticket-distribution plan is a proscribed lottery under Indiana
Code section 35-45-5-3. The NCAA creates the primary market by issuing tickets in the first
place, and it sets the price for these events many months in advance. In setting the price, the
NCAA reasonably calculates what the fair-market value at the time of the event will be. Moreo-
ver, the NCAA‟s ticket process is not materially different from the process utilized by the Indi-
anapolis Colts in Lesher. We note, however, that our holding would not prevent a prosecutor or
plaintiff from attacking a similarly structured scheme that is merely a ruse for a traditional lot-
tery. Barring such a ruse, we conclude that where an event coordinator creates the primary mar-
ket for event tickets, the fair-market value of the tickets is equal to their face value. In this case,
there was no “prize” and hence no “lottery” because at the time applicants submitted to the
NCAA their offers to purchase tickets, the market value equaled the face value of the tickets.
Thus, as a matter of law, the NCAA‟s ticket-distribution plan is not a lottery.
10
In fact, the NCAA‟s plan appears to be a reasonable method of addressing a difficult problem, and it
seems to distribute tickets in a more fair and civilized manner than a first-come-first-served process.
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II
Both the second and the third certified questions are conditioned on a finding that the
NCAA‟s ticket-distribution plan constitutes a “lottery” under Indiana law. Because we hold that
the plaintiffs have not alleged such a lottery, we have no occasion to consider these last two
questions.
Conclusion
We hold that the NCAA‟s ticket-distribution plan does not constitute a lottery under Indi-
ana Code section 35-45-5-3 because there was no “prize” awarded to those whose offers to pur-
chase tickets were randomly accepted by the NCAA.
Shepard, C.J., and Dickson, Rucker, and David, JJ., concur.
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