A TTORNEY S FOR A PPELLANT S A TTORNEY S FOR A PPE L LEE

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 

# Indiana Supreme Court

_________________________________ No. 94S00

- 1010

- CQ

- 544

T OM G EORGE , C HRIS V ITRON , L ORI C HAPKO , AND E DWARD S NEAD , ON B EHALF OF T HEMSELVES AND A LL O THERS S IMILARLY S ITUATED , Appellant s ( Plaintiffs below)
,

v.

N ATIONAL C OLLEGIATE A THLETIC A SSOCIATION , 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. D arrah, District Judge 

_________________________________

April 21 , 2011
Sullivan, Justice.

 Honorable John W . Darrah, District Judge for the Northern District of Illinois, sitting by designation.2

T he NCAA randomly allocated championship sport ing event tickets to applicants who
had offered to purchase tickets by submitting the face value of the tickets alon g with a nonr efundable handling fee

. The face

- value amount (but not the han dling fee) wa s refunded to appl icants whose offers we re not accepted. T he NCAA‟s ticket

- alloca tion process wa s not an illegal lottery under Indiana law because no prize wa s awarde d to those applicants who receive d the o pportunity to pu r chase tickets.

Background

The National Collegiate Athletic Association (“NCAA”) is an organization through which the nation‟s colleges and univ ersities govern their athletic programs. Many NCAA co mpetitions have gained widespread popularity, particularly the w omen‟s and m en‟s NCAA Div ision I basketball tournaments and the NCAA Division I men‟s ice

- hockey championship tou rnament . Due to both the popularity of such events and the limited seating in sports venues, d emand for tickets often e x ceeds supply.

T o distribute tickets to th ese events, the NCAA developed the following ticket

distribution sys tem. The NCAA sets the face value of the tickets to its events many months b efore the event. Would

- be ticket purchasers submit to the NCAA an application offering to pu rchase tickets for a pa r ticular 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

va l ue of the tickets along with a nonrefundable handling or service fee 1 for each offer. When demand exceeds supply, the NCAA uses a random

- selection prog ram to accept o f fers from the pool of offers . Applicants whose offers are accepted receive event tickets via overnight d e livery. Applicants whose offers are rejected receive refunds of the ticket price, though it may take se veral weeks or months. No app licant receives a refund of the handling fee.

1 C ounsel for the plaintiffs has attached several different labels to this fee, including “entry fee.” We refer to it as a “handling fee” throughout this op i nion.3

This ticket

- allocation plan was used for the 2009 NCAA Men‟s Final Four, the cha mpionship round of the men‟s basketball tournament. The NCAA set the face value of the tickets at $150 each, and tickets were so ld in pairs

. Fewer than 5
, 000 tickets were released for sale and

seve r al 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 rejecte d . 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 o ffer, he or she also receive d a refund of the total ticket p rice for the other (rejected) offers
, 3 though it would arrive several months later. Applicants whom had all their offers r e jected also received refunds of the total ticket price offered. No one r e ceived a refund of the handling fees

.

The plaintiffs in t his case submitted offers to the NCAA to purchase tickets for the NCAA Division I men‟s basketball tournament, but their offers were not accepted. T hey submi tted 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 ut ilized. Dissatisfied with not being able to purchase tickets, the plaintiffs filed suit against the
NCAA and Ticketmaster in federal c ourt for the Central District of California . Ticketmaster se ttled with the plaintiffs and venue was transferred to the Southern Di s trict of Indiana.

The plaintiffs allege d several claims, but the underlying basis for all of their claims is the allegation that the NCAA‟s ticket

- distribut ion system constitutes an unlawful lottery under Ind iana law. Judge Lawrence dismissed the complaint with prejudice for fail ure to state a claim
, holding that even if the NCAA was operating an illegal lottery under Indiana law, the plai n tiffs‟
claims were barred by the equitable doctrine of in pari delicto because the plai n tiffs were aware of the essential features of the process when they applied for tickets. George v. Nat‟l Co l legiate Athletic Ass‟n , No. 1:08

- cv

- 1684

- WTL

- JMS, 2010 U.S. Dist. LEXIS 11399 7, 2009 WL

2 A n 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 1 0 offers, one of which was accepted, would receive a $2,700 refund (9 pairs of tickets x $300 per pair).4

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

pa r ticipated in it

.

On appeal, a panel of the Unite d States Court of A ppeals 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

w as a lo t tery under Indiana law; that the process did not fall within the statutory exception for
bona fide bus i ness 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 th is distribution process was a lottery
under I n diana law “is a close one” and that its decision “could have far

- reaching effects.” Id. at 1137. P ursuant to Indiana Appellate Rule 64, it certified the following three questions for our
conside r ation:

1. Do th e plaintiffs‟ allegations about the NCAA‟s method for allocating scarce tickets to championship tournaments describe a lottery that would be unlawful under Ind i ana law?

2. If the plaintiffs‟ allegations describe an unlawful lottery, would the NCAA‟s method f or allocating tickets fall within the Ind. Code § 35

- 45

- 5

- 1(d) exce ption for “bona fide business transactions that are valid under the law of co ntracts”?

3. If the plaintiffs‟ allegations describe an unlawful lottery, do plaintiffs‟ alleg ations show that the ir claims are subject to an in pari del i cto defense as d escribed in Lesher[ v. Baltimore Football Club ] , 496 N.E.2d [ 785, ] 790 n.1 [ (Ind. Ct. App. 1986)], and Swain v. Bu s sell
, 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 sc ope of the Certified Questions.5

We agreed to consider the questions by order dated October 29, 2010, Ind. Appellate Rule 64(B), and following the completion of supplemental b riefing, held oral argument on D ecember 22, 2010.

Discussion

The underlying basis of the plaintiffs‟ claims is the allegation that the NCAA ticket

d istribution process constitutes an unlawful lottery under Indiana law. The first certified que stion asks whether the ticket

- distribution process constitutes a lottery

. If the first question is an swered in the affirmative, we are asked to proceed to the s econd 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
d e termine whether t he 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 se ction 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 a cti v ities over the Internet when they occur in Indiana or when the transaction directly involves a person l o cated 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 cle arly 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 commi tted a crime. We are mindful that our holding may be a relevant precedent when defendants are prosecu ted under this statute.6

adequate and fair notice as to what pr e cisely 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 omi t ted); 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 Legisl ature‟s intent. State v. Oddi

- Smith , 878 N.E.2d 1245, 1248 (Ind. 2008) (citation omitted) . The intent of the Legislature is best gl eaned from the statutory text itself. Id. (citation omitted). When interpreting a statutory provision, we examine the statute as a whole and avoid “excessive

r e liance upon a strict literal meaning or the selective reading of individual words.” Id. (cita tion omitted). Und e fined 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 s tatute. Ind. Code § 1

- 1

- 4

- 1(1) (2005) ; Hinojosa v. State , 781 N.E.2d 677, 680 (Ind. 2003) (citation omitted). Finally, we pr esume 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 omi tted).

A

The statute does not define “lotteries.” See I.C. § 35

- 45

- 5

- 1 (defining other terms). Ind iana courts, including this Court, have been called upon to interpret the meaning of the term “lo ttery” 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 Rive rboat Casino, LLC v. Kephart , 934 N.E.2d 1120, 1121

- 22 (Ind. 2010) (providing brief history of gambling law in Indiana). Our interpretations of t his term, however, have not been consistent.

6 The Indiana Constitutional prohibition on lotteries was repealed by voter referendum in 1988. K e phart
, 934 N.E.2d at 1122.7 A

- 1

In Tinder v. Music Operating
, Inc. , 237 Ind. 33, 142 N.E.2d 610, 614 (1957), we d e fined 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 pro mised 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 hist orically a pplied 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 ve ntured for the chance of obtaining a larger value, either in money or other va luables. ‟ ” (citation omitted)).

I n State v. Nixon , 270 Ind. 192, 384 N.E.2d 152 (1979)
, however, w e departed from the
definition articulated in Tinder . In Nixon , we held that the constitutional prohibition on lotteries

pre vent ed 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 lo tteries “embrace[d] all forms of gaming which, by reason of retainage, s ervice charge
, or odds, preclude the participants, in sustained play, from winning while providing a reasonable expe ctancy of profit for the sponsors.” Id. at 161. In other words, the constitutional prohibition on lotteries was interpreted to prohibit al l forms of commercialized ga m bling.

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 in clude this meaning as a secondary or tertiary defin i tion of
the term. See Merriam

- Webster‟s Collegiate Dictionary 736 (11th ed. 2004) (“an event or a f fair whose outcome is or seems to be determined by chance”) [hereinafter Merriam

- Webster‟s Coll egiate ]; W ebster‟s Third New International Dictionary 1338 (unabridged ed. 1976) (same) [here inafter 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 d etermined by a “lottery”). T his common understanding of “lottery” has also8

been used in judicial opinions. See , e.g. , Hudson v. Michigan , 547 U.S. 586, 595 (2006) ( d escribing 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 cit izens use the judicial system as though it were a lottery )

.

A

- 2

For purposes of Indiana Code section 35

- 45

- 5

- 3, w e do not think the General Assembly intended the term “lot tery” to e mbrace 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 ca s es.

Fir st , 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 “pol i cy” or “numbers games,” both of which are specialized forms of gambling similar to traditional lotteries. 7

Second, the modern common definition of lottery as “a ny matter determined by chance” is too broad. To hold that the General Assembly intended this broad definition would lead to a bsurd 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 d efinition 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
, s upra , at 1338

. Additionally, the leading legal dictionary 8 defines “lottery” as “[a] method of rai s-

7 “Policy” is “[a] type of lottery in which bettors select numbers to b et 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 n umbers will appear from some arbitrarily ch osen source, such as stock

- market indexes or the U.S. Treasury balance.” Id. at 1174. 8 W e generally prefer to consult standard dictionaries when interpreting the undefined terms of a st a tute. Brown , 868 N.E.2d at 467. But the term “lottery” has become a legal term of art, at least with r e spect to laws prohibiting or authorizing lotteries, given that the term has been the subject of many const i tutions,9

ing revenues . . . by sel l ing tickets and giving prizes . . . to those who hold tickets with winning numbers that are drawn at random.” Black‟s Law Dicti onary 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 a n unlawful lo ttery ) , 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 definition). And this definition represents the definition accepted by an “overwhelming majority” of
Amer i can jurisdictions, Opinion of the Justices No. 373 , 795 So. 2d 630, 634

- 35 (Ala. 2001)
, including t he 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 wit h out question.

B

Thus, as used in Indiana Code section 35

- 45

- 5

- 3, the term “lottery” means a scheme for the distribution of prizes b y 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 el ements to a lo t tery: (1) a prize; (2) chance; and (3) consideration. Id.

The NCAA argued in it s 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 focuse s only on the “prize” element.

statutes, and judicial opinions. Cf. Ind. Dep‟t of State Re venue 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 pu r pose is clearly manifest by the statute itself, but techn ical words and phrases having a peculiar and appropriate meaning in law shall be understood a c cording to their tec h nical import.” (citations omitted) ).10 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 Indianap o lis from Baltimore, used a random ized 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

o f fer to pu rchase 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. Approx imately 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 s e lected 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 ha n dling fee. Id.

We summarily affirmed the holding of the Court of Appeals that the ticket

- distribution

process was not a lotte ry. Lesher , 512 N.E.2d at 157, aff‟g 496 N.E.2d at 789

- 90. The C ourt of Appeals rejected the plaintiffs‟ contention that the tickets‟ value had not been established b ecause “the court had before it evidence as to the price voluntarily paid by the purchas ers, 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 t he amount invested. See State v. Tu rlington , 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 t ickets and received in e xchange 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 r e funds.

Id. at 789

- 90.11 B

- 2

The pla intiffs 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 a r gue that because the handling fee is forfeited regardless of the outcome, those receiv ing tickets r eceive 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 s ame amount after the blind draw. Those applicants whose offers to pu r chase tickets are accepted receive tickets for $150 per ticket, whereas those applicants whose o f fers are rejected receive $150 in cash per ticket. Thus, like in Lesher , “ those receivin g tickets got not hing 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 be nefits to succes s ful applicants. Rather, they pl ed that the handling fees grossly exceed the amount needed for shipping and handling and that the handling fees grossly profit the NCAA. Thus, u nder the plaintiffs‟ theory , the majority of the handling fees
, even for successful applicants
, are profits dis tributed to the NCAA ‟s general fund . The fact that the handling fees are usually r efundable under other random ized ticket

- distribution plan s, including Lesher , does not alter the prize analysis. In fact, in those cases, unsuccessful applicants receive mo re than successful a pplicants because they receive the face value of the tickets plus the handling fee, whereas succes sful applicants receive only the tickets, which are worth the face value. Although the nonrefun dable nature of the handling fee may alter the consideration analysis, it does not alter the prize
anal y sis.

The plaintiffs‟ second argument distinguishing Lesher is based on the differing procedu ral posture of this case. In Lesher , the Indiana Court of Appeals was reviewing the trial court‟s

gr ant 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 fo r-

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 su c cessful applicants pay for these benefits through either the handling fee or increased ticket pricing.12

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‟ a llegations are accepted as true and the defendant pr e vails 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) (cit a tions 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 t hough
the tickets in Lesher did not

. The majority of the Seventh Circuit panel agreed with the plai ntiffs ‟ procedural a r gument , holding that “Plaintiffs need only have alleged that the fair

- market
value of the tickets exceeded their face value such that t hose 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, w e agree with Judge Cudahy‟s dissent that this argument concerning th e presence of a secondary market is misleading. See George I , 613 F.3d at 665 (Cudahy, J., dissen t ing).

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 plac e , 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 t he value realized by the NCAA is in fact the face
value of the tick ets. 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 i n a secon dary market
, but , for a plethora of reasons, that resale value may be above o r below the face value

. F or example, the event may be undersold. Even if the event is oversold, there may be no excess
d e mand once the competitors are determined. Other factors may affect the secondary market for tickets, such as the general state of th e economy, weather predictions, or an injury to a star co mpetitor. The speculative nature of the secondary market makes it an inappropriate consider ation
in d e termining the presence of a prize in this case

.13

The plaintiffs argue that this approach will en able scam artists to evade criminal prosec ution, 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 w e 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 verifiable ma r ket 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 ma r ket, except f or routine market fluctuation.

We also conclude that the historical policies underlying the general prohibition s on lott eries are not implicated by the NCAA‟s ticket

- allocation plan . Historically, lotteries were viewed
as the lowest and mos t 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 i nnocuous when placed in contrast with the wide

- spread pestilence of lotter ies. The former are confined to a few persons and p laces, 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 ign o rant and simple.

Phalen v. Virginia
, 49 U.S. (8 How.) 163, 168 (1850) . I n Ni x on , we als o noted,

To dream of riches unearned and the willingness to gamble to achieve them a p pear to be inherent in the nature of man. . . . [This] be comes an injurious nuisance, a “pestilence,” when capitalize d 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.2 d at 160

- 61.14

The NCAA‟s process for all ocating scarce tickets does not implicate any of these pol icies. 10 When submitting offers to purchase tickets, applicant s must submit the face value of the tickets along with the handling fee. Thus, to submit one of fer 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 la rger sum of money

. In order to apply for tickets, the applicant must have an appreciable di s posable 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.” Mor eover, the a pplicants who are successful do not necessarily increase their fortunes; they merely receive a l icense to attend a collegiate sporting event. The prospect of bettering one ‟ s fortunes is entirely speculative at the time applications are submitt ed, and
, to make a profit on the putative secon dary market, the successful ticket purchaser must forego the very benefit acquired through the
ticket

- allocation process

– the l i cense to attend the event.

In sum, it would stretch the definition of “lottery” beyond what the General Assembly i ntended to h o ld that the NCAA‟s t icket

- 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. More over , the NCAA‟s ticket process is not materially differ ent from the process utilized by the Ind ian apolis Colts in Lesher . We note, however, that our holding would not prevent a pros e cutor or plaintiff from attacking a similarly structured scheme that is merely a ruse for a traditional lo ttery. Barring such a ruse, we conclude that where an event coor dinator creates the primary ma rket 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 purchas e 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

- serve d process.15 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

- di stribution plan does not constitute a lottery under Ind iana Code section 35

- 45

- 5

- 3 because there was no “prize” awarded to those whose offers to pu rchase tickets were randomly accepted by the NCAA.

Shepard, C.J., and Dickson, Rucker, and David, JJ., concur.