User blog comment:Varkanax39/Please read this/@comment-4117170-20111104171155/@comment-1788742-20111104171937

According to Wikia's Terms of Use, if you add content to Wikia, it is free to be redistributed at will in any other format, provided you give credit to the author(s) and the Wikia company for creating the story/article originally. It even says when you edit: "Contributions licensed as CC-BY-SA" which means, if you read the license, it can be redistributed at will for profit as long as credit to the creator and Wikia is provided.

However, Wikia staff is not sure these books are licensed properly, or if they give proper credit to the authors. You already make Wikia money every time you make an edit anyway, and thus earning a profit on content you wrote too, there's nothing different with making money on a book than there is with making money on selling ads.

The staff has order one of these "books" to verify they are sourced appropriately, that is, they explicitly state that all of the content was published on Wikia and created by the editors on Wikia. So, yes, it's legal. It's not a good situation, but, sadly enough, it is legal...