By Milind Rajratnam
Introduction
Playing a game, which involves winning or losing money or possession. is called “gambling”, and gambling on the outcome of an unpredictable event is called “betting”[1]. Both the terms are inextricably connected and according to the Law Commission of India (hereinafter “LCI”), both the terms are two sides of the same coin[2].
Betting and gambling are intrinsic parts of our lives since ancient times and they find their mention in Indian mythology too, i.e. the game of chaturanga in the Mahabharata[3]. Famous ancient Indian economist Kautilya has also mentioned about betting and gambling in his Arthashastra (treatise on economic policy), and stated that it may be legalized if the state imposes a 5% tax on it[4]. Despite finding its place in the ancient texts, betting and gambling is perceived as an immoral and unethical activity by the Indian society. During the British colonial rule, it was a widely prevalent notion among the common law countries that betting and gambling create a leakage in the financial system where money is exchanged even though no productive activity is taking place. The current Indian jurisprudence is based on the historic treatment given to gambling, with added influence of anti-gambling rhetoric prevalent in the Great Britain at the time of the enactment of the Public Gambling Act, 1867[5].
Restrictions on these offences are one of the major reasons for the emergence of their underground markets which run a billion-dollars parallel economy. According to the International Centre for Sports Security, the illegal betting market in India accounts for more than $150 billion bets per year, and the legalization of betting can bring trillions of tax revenues to the Indian Government[6]. The Federation of Indian Chambers of Commerce and Industry (hereinafter “FICCI”) in its report on sports betting has estimated that the underground betting market of in India is of more than 3,00,000 crore rupees and a total revenue of approximately 19,000 crore rupees is unable to be forfeited by the Indian government due to the prohibition on betting[7].
In this article, the author analyzes the existing legal framework dealing with these activities in India and advocates the need of having a pro-gambling stance coupled with a progressive legislation.
Status Quo in India
Although the United Kingdom has legalized gambling and sports betting through its Gambling Act, 2005[8], India is still following the colonial legislation i.e., the Public Gambling Act, 1867 (hereinafter “PGA”), which prohibits all forms of betting in sports, except horse riding[9]. It is the model law on which other states have based their legislations. To a large extent, this law has failed to deter people from violating the provisions of the PGA, as it prescribes a maximum fine of only 600 rupees and maximum imprisonment of only one month[10].
By virtue of Entry 34, List II of the Seventh Schedule of the Indian Constitution, betting and gambling is a State subject due to which the states in India have either adopted the PGA or have enacted their own legislations[11]. Except for Goa and Sikkim, almost all states have banned all forms of betting and gambling activities. For the legalization of such activities, Goa has enacted the Goa, Daman and Diu Public Gambling Act, 1976[12] and Sikkim has enacted the Sikkim Regulation of Gambling (Amendment) Act, 2005[13].
It is pertinent to note that, although the laws in India have placed expansive restrictions on these activities, they have exempted horse race betting, betting on games of skill, and lotteries from their purview[14].
Game of Skill v. Game of Chance
In India, a differential treatment has been accorded to games of chance and games of skill as most of the anti-gambling legislations, including Section 12 of the PGA, prohibits betting on the former and permits on the latter[15].
The Supreme Court of India (hereinafter “SC”) in Dr. K.R. Lakshamanan v. State of T.N. held that a “game of skill” is the one in which success depends primarily on the training, experience, knowledge, and adroitness of the player[16]. Further, in M.J. Sivani v. State of Karnataka[17], the SC held that a “game of chance” is the one in which success depends solely on chance and betting on such games is prohibited under the PGA.
For determining the nature of a game, the U.S. Supreme Court in Morrow v. State has laid down the ‘predominance test’. It is also known as the ‘dominant factor test’ under which the nature of a game is assessed on the basis of the dominant factor (whether chance or skill) which is responsible for the outcome of the game[18]. The SC has also adopted the predominance test in Manoranjitham Manamyil Mandram v. State of Tamil Nadu[19], and held that there cannot be a blanket direction declaring game of skills and game of chance, it has to be assessed on a case to case basis.
In the K. Satyanarayana case, the SC held that the card game ‘Rummy’ is a game of skill as the fall of the cards has to be memorized and the building up of rummy requires considerable skills in holding and discarding cards[20]. Further in the Lakshamanan Case, horse racing was held to be a game of skills as it is the art of riding of the jockey, and the speed and stamina of the horse acquired by training which decides the outcome of the race. The rationale given by courts in the above cases can be extrapolated to infer that betting should also be allowed on other sports which require colossal amount of skills such as Cricket, which requires a variety of skills i.e., hand-eye coordination, throwing or catching a ball, balance, long-term concentration, etc[21]. But still there are no conclusive guidelines allowing betting on other skill-centric games.
Efforts taken towards legalization
During the Constituent Assembly Debates when all the members of the Constituent Assembly voted against the inclusion of betting and gambling as a state subject, Dr. B.R. Ambedkar took a rigid stand in favor of it, and stated that inclusion of these activities in the State list would empower the states to regulate such activities in order to reap the benefit out of it as betting and gambling is a huge economy in itself[22].
In 2015, Justice R.M. Lodha Committee (hereinafter “the committee”) recommended for the legalization of sports betting[23]. After considering the committee’s report, the SC in BCCI v. Cricket Association of Bihar made a reference to the LCI to examine the matter extensively[24]. In 2018, the LCI in its 276th report recommended for the legalization of betting and gambling. This report also received an overwhelming response in favor of legalization when it was put in the public domain to obtain views of the stakeholders and the public[25].
Conclusion and Way Forward
The proponents of anti-gambling laws argue that it is for the protection of those who are unable to make sound decisions on their own and get addicted to gambling, but this argument goes against the interests of those who are perfectly capable of making sound decisions and act responsibly on their own. It is also argued that the legalization of gambling would reinforce criminal behavior, but there is sufficient evidence which shows that a blanket ban on betting and gambling activities leads to the creation of black markets, and also attracts criminal organizations to regulate them[26].
With respect to the morality issues associated with these offences, it should be taken into consideration that the consumption of alcohol is also regarded as an immoral conduct in the society but the government still doesn’t restrict it, rather it places high tax rates on alcohol consumption and uses it as one of the primary sources of income, e.g. 20 per cent of the revenue in Kerala is generated from liquor sales[27]. The betting and gambling market across the world has increased manifold in the past few decades. Most of the nations across the world have chosen to regulate betting and gambling activities instead of prohibiting them and have imposed taxes on it to reap the benefit out of it, e.g. In 2018, Asia and Europe have recorded approximately 39% and 41% Gross Gambling Yield (GGY) respectively[28].
In terms of revenue, the success of Goa and Sikkim should not be forgotten as after legalization, their governments have generated total revenue of more than INR 41 billion through their betting and gambling market during FY2018-19[29]. If these states which account for less than 1 per cent of the total population of India can generate such amounts of revenue from betting and gambling, then the amount will be much bigger if other states will also legalize it. It will also help the government to channelize this money towards social welfare purposes[30].
The LCI in its 276th report has realized the difficulty associated with putting a complete ban on betting and gambling and has recommended for its regulation rather than prohibition[31]. FICCI has also recommended for its legalization, as it will not only generate a lion’s share of revenue for the government, but will also strike at the underworld’s dominance over the unregulated and illegal gambling industry[32].
The legalization of betting and gambling would also create a number of jobs such as, officers to monitor betting transactions, brokers to regulate the market, casino staff, etc. In most European Countries such as Denmark, Italy, Spain, etc., legalization of sports betting has been proved as an effective way of attracting employment[33]. A number of American states have also been benefited by legalizing sports betting and gambling, e.g. Nevada accounts for more than 30 million visitors for legalized sports betting which in turn provides thousands of employment opportunities[34].
In light of the above analysis, the author recommends that instead of PGA, a model pro-gambling legislation should be enacted for the states, containing the following safeguards;
- Betting and gambling should be allowed to be conducted only by licensed operators, so that the illegal market can be prevented;
- To check on the aspect of addiction, a reasonable cap should be placed on the number of betting transactions that a person can partake in within a particular time frame;
- All the transactions in the betting and gambling markets should compulsorily be made cashless in order to monitor the flow of money and detect black money and money laundering activities;
- To protect the vulnerable sections of the society from the possible ill-effects of gambling, minors and people below the Poverty Line should be debarred from participating in all forms of betting and gambling activities.
From the above discussion, it is evident that the positive benefits of legalizing betting and gambling far outweigh the disadvantages proposed by any critic. The status quo in India vis-à-vis the anti-gambling framework reflects rigidity and obsolescence in the modern dynamic environment. Since it is not possible to prevent betting and gambling completely, India should also adopt the approach that is being followed by several nations and regulate such activities instead of prohibiting them completely.
The author, Milind Rajratnam, is currently a law student at the Dr. Ram Manohar Lohiya National Law University, Lucknow.
[1] Oxford Dictionary of English 68, 322 (3rd ed., 2010).
[2] Law Commission of India, Legal Framework: Gambling and Sports Betting including in cricket in India (Report No. 276, 2018) para 3.3.
[3] Anonymous, Ancient precursors and related games, Encyclopædia Britannica (May 19, 2020, 3:14 AM), available at https://www.britannica.com/topic/chess/Development-of-theory
[4] The State Of Bombay v. R. M. D. Chamarbaugwala, 1957 SCR 874.
[5] Vivek Benegal, Gambling Experiences, Problems and Policy in India: A Historical Analysis, in Addiction 2062, 2067 (Vol. 108, 2013).
[6] International Centre for Sports Security, Protecting the Integrity of Sport Competition -The Last Bet for Modern Sport (May 19, 2020, 3:14 AM), available at http://theicss.org/2019/03/12/icss-protecting-the-integrity-of-sport-competition-the-last-bet-for-modern-sport/
[7] Federation of Indian Chambers of Commerce and Industry, Regulating Sports Betting in India- A vice to be tamed? (May 26, 2020, 4:14 PM), available at http://ficci.in/studies.asp
[8] The Gambling Act 2005, (2005) c 19 (U.K.).
[9] The Public Gambling Act. 1867, Act No. 3 of 1867 (India).
[10] The Public Gambling Act. 1867, § 15, Act No. 3 of 1867 (India).
[11] The Constitution of India, 1950, Schedule VII, List iI, State List, Entry 34 (Betting and Gambling).
[12] The Goa, Daman and Diu Public Gambling Act, 1976, Act No.14 of 1976.
[13] The Sikkim Regulation of Gambling (Amendment) Act, 2005, ACT NO. 23 OF 2005.
[14] Nishith Desai, The Curious Case of the Indian Gambling Laws, Mondaq, (18th May, 2020, 3:14 AM), available at https://www.mondaq.com/india/gaming/871026/the-curious-case-of-the-indian-gaming-laws
[15] The Public Gambling Act. 1867, § 12, Act No. 3 of 1867 (India).
[16] K.R. Lakshmanan (Dr) v. State of T.N., (1996) 2 SCC 226.
[17] M.J. Sivani v. State of Karnataka, (1995) 6 SCC 289.
[18] Morrow v. State, 511 P.2d 127 (1973).
[19] Manoranjitham Manamyil Mandram v. State of Tamil Nadu, (2005) 1 L.W. (Cri) 43.
[20] State of Andhra Pradesh v. K. Satyanarayana, 1968 SCR (2) 387.
[21] K.R. Lakshmanan (Dr) v. State of T.N., (1996) 2 SCC 226.
[22] Constituent Assembly Debates, Book No.2, Vol IX, December 16 1946 speech by Dr. B.R. Ambedkar 66 (Reprint, 2014).
[23] Justice R.M. Lodha Committee, Report of the Supreme Court Committee on Reforms in Cricket 66 (December 18, 2015).
[24] Board of Control for Cricket in India v. Cricket Association of Bihar, (2015) 3 SCC 251.
[25] Law Commission of India, Legal Framework: Gambling and Sports Betting including in cricket in India (Report No. 276, 2018) para 8.3.
[26] Federation of Indian Chambers of Commerce and Industry, Regulating Sports Betting in India- A vice to be tamed? (May 26, 2020, 4:14 PM), available at http://ficci.in/studies.asp
[27] The Times of India, Liquor sales: Kerala govt earns record revenue of ₹14,505 cr (May 26, 2020, 4:14 PM), available at https://timesofindia.indiatimes.com/city/thiruvananthapuram/liquor-sales-kerala-govt-earns-record-revenue-of-14505-crore/articleshow/69182703.cms
[28] European Gaming and Betting Association, An economic and social review of gambling, (18th May, 2020, 3:14 AM), available at https://www.egba.eu/resources/studies/.
[29] Deccan Herald, Goa earned Rs 411 cr revenue from casinos in FY 19 (June 1, 2020, 5;22 PM), available at https://www.deccanherald.com/national/west/goa-earned-rs-411-cr-revenue-from-casinos-in-fy-19-cm-752711.html
[30] Office of the Registrar General & Census Commissioner, 2011- 2022 Census Data, Goa and Sikkim population (India), available at https://www.census2011.co.in/census/state/goa.html.
[31] Law Commission of India, Legal Framework: Gambling and Sports Betting including in cricket in India (Report No. 276, 2018) para 9.9.
[32] Federation of Indian Chambers of Commerce and Industry, Regulating Sports Betting in India- A vice to be tamed? (May 26, 2020, 4:14 PM), available at http://ficci.in/studies.asp
[33] Statista, Gambling industry in Europe – Statistics & Facts (May 29, 2020, 10;22 PM), available at https://www.statista.com/topics/3660/gambling-industry-in-europe/.
[34] American Gaming Association, Wagers in New Legal Sports Betting Markets Exceed Nevada for the First Time (May 22, 2020, 9;22 PM), available at https://www.americangaming.org/new/wagers-in-new-legal-sports-betting-markets-exceed-nevada-for-the-first-time/
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