The National Collegiate Athletic Association must face a lawsuit by consumers claiming the organization, which stages annual basketball and hockey championships, unlawfully profits from a ticket lottery.

A U.S. appeals court in Chicago today reversed a federal judge’s 2009 dismissal of the case, ruling that the consumers—residents of New York, Arizona and Oregon— adequately alleged that the lottery may violate Indiana law.

The Indianapolis-based organization sells tickets for its top-rank Division I college basketball and hockey championships by accepting applications for more tickets than are actually available. After selecting those who will get them, it retains a $6 to $10 “handling” fee for each entry, the appeals court said.

“Win or lose, the service fee was forfeited by all entrants and retained by the NCAA,” the court said in a 2-1 decision.

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 judges said.

The consumers 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.

Erik Christianson, a spokesman for the association, didn’t immediately reply to an e-mailed request for comment.