A federal judge this week greenlighted a data-privacy lawsuit that Madison Square Garden once ripped as “the dumbest suit yet.”

In a 27-page opinion released Tuesday, U.S. Magistrate Judge James Cott sided against MSG Entertainment’s motion to dismiss a class-action lawsuit accusing owner James Dolan of violating a city privacy law that prohibits using biometric data for personal gain.

Dolan is under fire for his controversial use of creepy facial-recognition software to bar unwelcome attorneys and critics from entering Madison Square Garden and Radio City Music Hall.

Manhattan federal Judge Lewis Kaplan will decide on Cott’s recommendation, but federal judges typically back magistrate’s opinions.

When The Post first reported on the suit after it was filed in state court in March, MSG execs called it “the dumbest suit yet.” 

The city’s biometrics law is used to prevent entertainment venues and other businesses from selling personal information for profit, but the suit contends it also applies to situations where facial recognition is used to discourage people from suing to save on legal costs.

Cott’s findings leave the door open to MSG being liable to compensate millions of people who’ve attended events at its venues since the law went into effect in July 2021.

If the case is decided in plaintiffs’ favor, it could also all but wipe out businesses’ ability to use facial recognition technology, including retailers seeking to weed out shoplifters.

MSG argued the case should be tossed because it doesn’t get paid selling data collected with the tech to third parties.

But Cott sided with plaintiffs, Aaron Gross and Jacob Blumenkrantz, New Yorkers who’ve attended concerts at the Garden, and claim MSG “profits” from sharing the data “by deterring litigation, and in turn, reducing MSG’s significant legal expenses.”

Cott, however, recommended claims against MSG of civil rights violations and unjust enrichment should be removed from the suit.

In March, a state appellate panel in Manhattan ruled MSG and Dolan can ban lawyers suing them from attending Knicks and Rangers games, concerts, and other events at its venues.

The decision lifted an injunction that had been in place for months after one of the banned attorneys sued MSG.

The suit seeks unspecified monetary damages and an injunction to end MSG Entertainment’s use of facial recognition to ban lawyers, or seek profit.

Gross and Blumenkrantz’s lawyer Israel David declined to comment.

An MSG spokesperson said “our policies and practices are 100% legal, and as we’ve always made clear, we don’t sell or profit from customer data.