And ND has 8,000 undergrads, whereas IU has 40,000. So they're not competing for the same students near as often as Utah and BYU are. Notre Dame's just not a possibility for a lot of Indiana kids.
Not only is BYU the school of choice for many of the most talented kids in Utah, it's actually cheaper than Utah too. If Notre Dame announced that it was increasing its undergraduate enrollment to 40,000 and decreasing its tuition to $5k per year, you can bet that administrators at Indiana (and Purdue, and Michigan, and Wisconsin, and Ohio State, etc.) would not be thrilled.