I divide the class into two groups (male/female, by row, etc.).  I then put an empty garbage can in front of the room and set up a foul line or three point line (use a mark or even a book).  I give 2 or 3 points respectively for making a basket.  In order to attempt a basket you must first answer a review question (1 point for answering the question, 1 point for making the shot).

I use a small rubber or plastic ball.  I am the official of course, so I can call technical fouls for any inappropriate behavior!