A class action suit has been filed against the NCAA and Tickmaster, claiming the two organizations violated racketeering laws by making ticket purchasers pay a non-refundable fee to enter a lottery for the right to purchase tickets to high-profile sporting events including the NCAA Tournament.
"The NCAA and Ticketmaster have come up with a scheme that would make a Vegas bookie blush," said Rob Carey, an attorney representing the named plaintiff. "We will show that this NCAA practice has illegally taken millions of dollars out of consumers' pockets."
Ticketmaster, a subsidiary of InterActiveCorp, and the NCAA have benn named in the lawsuit filed in U.S. District Court, Central District of California. The defendants are located in California and Indiana, two states in which lotteries are illegal unless run by the state or licensed charities.
The NCAA has not seen the lawsuit, according to spokesman Erik Christianson.
"Our practice of dealing with excess demand for an event is standard in the industry," Christianson said. "We have a nonrefundable fee charged to both successful and unsuccessful applicants. Those who do not receive tickets are refunded the ticket price.
"There is no credible suggestion that our public ticket sale can be considered gambling in any way, and we are comfortable with our approach. We believe this complaint is without merit."
According to the lawsuit, the defendants have two types of lotteries, one for the preliminary rounds and one for the Final Four. Fans who want to purchase tickets to preliminary-round NCAA basketball games must participate in a lottery by sending in an application where they pre-pay the ticket price for the games in that round, along with a $10 service fee to take part in the lottery.
If the applicant wins the lottery, the NCAA releases the tickets, but if the applicant is not selected, the NCAA refunds only the ticket price while pocketing the fee.
People can apply for Final Four tickets up to 10 times. The NCAA asks for a $6 handling fee for each entry, along with payment for all 20 tickets.
"The rub is that you are limited to winning once, so if one of your entries is selected, your other nine are null and void, but the other nine entry fees go right into the pockets of the NCAA and Ticketmaster," Carey said.
The NCAA and Ticketmaster require applicants to make what is in effect an interest-free loan to the NCAA for the entire amount the tickets would cost, Carey said. The defendants profit from the interest earned by depositing the full ticket prices sent in by lottery participants and holding the losers' money for months, well beyond the date of the alleged lottery.
The complaint cites cases in which the NCAA and Ticketmaster held funds from losing lottery bids for about five months before refunding the money. In one example, the NCAA stopped accepting applications to an event on May 31, 2006, but reimbursements weren't issued until October of 2006, according to the complaint.
"We plan to show that the defendants created a scheme that lines their own pockets by forcing fans to engage in illegal gambling to try to get game tickets," Carey added. "Gambling can be extremely lucrative for the defendants when you have hundreds of thousands of fans willing to give away $100 or more to win a chance to buy at most two of only 5,000 tickets."
According to the lawsuit, only 4,600 tickets were distributed through the lottery system for the 2008 Final Four in San Antonio, while the NCAA and Ticketmaster received an estimated 100,000 entries.
The lawsuit seeks to represent all fans that submitted an application for tickets to an NCAA championship tournament -- including women's basketball and men's hockey -- and paid a fee to enter a drawing for the right to purchase one or more tickets from 1998 until the present.