Sarkozy, now head of the opposition UMP, is accused of discussing the idea of giving a magistrate a lucrative job in exchange for inside information on another corruption investigation related to his campaign financing.
"Contrary to our legitimate hopes, the court has not upheld our calls for dismissal (of these recordings)," said Paul-Albert Iweins, one of Sarkozy's lawyers.
The ruling is another blow to Sarkozy, who returned to frontline politics last year ahead of an expected run for the presidency in 2017.
He was cleared in 2013 of taking advantage of the elderly woman while she was too frail to understand what she was doing.
But during the investigation, fresh allegations surfaced that he had discussed the possibility of giving a magistrate from a top appeals court, Gilbert Azibert, a juicy job in Monaco in return for information on the Bettencourt case.
Sarkozy was charged in July with corruption, influence peddling and violation of legal secrecy over the case.
The former president's legal team has attempted to suppress the recordings, saying they were a breach of lawyer-client privacy rules.
The court of appeal ruled otherwise on Tuesday, but Sarkozy's team is expected to now push their claim to a higher court.
The crimes Sarkozy is accused of carry a theoretical maximum of 10 years in prison but legal experts say a custodial sentence is unlikely even in the event of a conviction.
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