The Legalisation Of Betting In India

After the 2013 betting scandal, the apex court appointed the Mudgal Committee under Justice Mukul Mudgal to investigate into the allegations.^[1] The committee recommended that betting and spot-fixing must be considered separately. Betting must be regularised and taxed. The Supreme Court soon appointed the Justice Lodha Committee, which dealt with a variety of issues within the BCCI. A small part of the committee's report also dealt with betting, and its observations were similar to the Mudgal Committee. While referring to the Lodha Committee recommendations, the Supreme Court 'made a reference to the Law Commission to examine the issue of legalising betting in India.'^[2]The Law Commission did so in its 276^th report in 2018, and this near-exhaustive document forms the premise of our article.

EXISTING LEGAL FRAMEWORK IN INDIA:

The terms 'betting', 'gambling,' 'gaming,' 'wagering' and 'lottery' are inter-related and often used interchangeably. As per Indian law, a distinction is made between 'betting and gambling' and 'lottery.'The former finds a place in the State List under Entry 34 while the latter is a part of the Union Listunder Entry 40.^[3] Therefore, laws on lottery are framed exclusively by the Union Parliament. Since 'betting and gambling' is part of the State List, various states have their laws to deal with the activity.

Gambling under most gambling laws is defined as the act of betting or wagering for money or money's worth.Most Indian states have adopted the British-era Public Gambling Act 1867^[4], while others have framed their own laws. In most of these laws, horse-racing, games of skill (as opposed to games of chance), and lotteries are excluded and exempted. Horse-racing has been given a special status under most state legislations. The Supreme Court, in K R Lakshmanan vs. State of Tamil Nadu^[5], held horse-racing to be a game of skill. This distinction between games of skill and games of chance is significant since this is also the distinction between legality and illegality of gambling activities in most states.

Most state legislations, which exempt games of skill from within its purview, have not defined what the term means. In some states, like West Bengal and Nagaland, a non-exhaustive list of games which are exempted is part of the law, but these states are exceptions rather than the norm. Therefore, games of skill have been defined through judicial interpretations.

In RMD Chamarbaugawala v. Union of India^[6], the Apex court held that competitions which substantially involve skills are commercial activities, protected under Art. 19(1)(g) of the Indian Constitution. In the K R Lakshmana case, the apex court defined the term, saying that 'although the element of chance necessarily cannot be entirely eliminated(in games of skill), is one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player.' Whether or not a game is skill-based is decided on a case-to-case basis, with due regard to the facts and circumstances.

It must be kept in mind that states like Odisha and Assam consider the act of gambling to be illegal per se and make no distinction between skill and chance. Similarly, in Rajasthan, even skill-based gambling is illegal if conducted in a common gambling house. States like Goa and Sikkim allow casinos to function under certain circumstances. These are just a few of many examples highlighting the diversity in gambling laws across states.

However, the distinction between skill and chance is a recurring theme. Interpretations by various high-courts while applying the skill-test have also added to the confusion.

Within the existing framework, there is no way that the currently flourishing illegal betting industry can function legally within these laws, since most forms of sports betting is chance-based, with a very little element of skill.

Also, the existing framework has failed in curbing the activity because the laws fail to create a deterrence effect. Most of the legislations prescribe a meagre penalty and imprisonment not exceeding a year. Given the amount of money involved, the choice is easy for bookies and gambling houses- they would rather take the risk than be deterred. Admittedly, these legislations have outlived themselves and need to go. The legalisation and regulation of all betting and gambling activities will also do away with the vague 'skill-chance' distinction.

THE QUESTION OF MORALITY SURROUNDING BETTING:

The social stigma associated with betting and gambling is immense. As per ancient Indian texts, gambling was seen as a means to eventual self-destruction. The Law Commission report, however, draws a distinction between activities that cause harm to the society, like trade in contrabands, and activities which harm the individual but whose social impact varies, like gambling. ^[7]

The proponents of legalisation argue that individual autonomy is supreme, and state interference must be minimum. The State must not decide on questions of morality, which is highly subjective, and in this process, adopt a 'one size fits all' approach. They believe that betting and gambling is wrong because it is illegal, not because the activity is inherently immoral.^[8]

Another set of proponents argue on the lines of revenue generation and employment.^[9] While they agree that the activity is immoral, they are willing to prioritise other practical considerations at the expense of this immorality.

The opponents argue precisely the opposite, saying that banning such activities is necessary for maintaining social order and protecting vulnerable classes of the society from destruction. It is well-established that gamblers tend to chase losses until they win a bet or over-estimate their chances of winning a bet under the illusion of control.^[10]

CONSEQUENCES OF LEGALISATION:

The legalization of betting and gambling in India has its own merits too. It can help in putting a significant check on the illegal activities associated with betting and gambling. Unregulated betting is accompanied by the exponential growth of illegal commerce and corrupt practices such as spot-fixing, match fixing et al. It enables the creation of crime syndicates, consisting of loan-sharks and crime-lords, which profit by creating a vicious circle of proliferation of illegal activities. Unregulated betting activities are also termed as 'connecting crimes' that connects the individuals with other criminal activities. More often than not, in an unregulated framework, the greed of investing more into betting or regaining the lost money coerces the individuals to commit other crimes such as chain snatching, looting, stealing etc. Legalization of betting activities will surely help in curbing such menaces.^[11]The absence of a regulatory framework also results in phenomena like "loss chasing" and "illusion of control," as described previously. These unwelcomed contingencies can be countered by bringing in appropriate regulations.^[12]

According to a study conducted by the International Center for Sports Security, the unregulated betting and gambling market in India accounts for more than $150 billion in bets per year. The Federation of Indian Chambers of Commerce and Industry brought out a report where it estimated that the illegal betting market in India is of more than 3, 00, 000 crore rupees, and the Indian government can earn huge chunks of revenue if they decide to legalize and regulate these activities. The massive revenue generated can then be used for various public welfare schemes.

After legalization, betting and gambling activities in India should be controlled by a regulatory body, set up by proper legislation, which will supervise all the activities associated with it. This will not only allow the law enforcement officials to exercise some amount of control over the betting market but will also help in curbing a lot of menaces related to it.^[13]

Betting and gambling activities should be allowed to be undertaken only by licensed operators, and all other entities must be prohibited from doing so. Provisions, which will prevent minors and people under the poverty line from taking part in all kinds of betting and gambling activities, must be implemented. As per the recommendations of the Law Commission Report, individuals below a taxable income level should be allowed to indulge only in 'small gambling' as opposed to 'proper gambling,' which involves high stakes. However, in Indian Hotel And Restaurant v. The State Of Maharashtra, in response to an arbitrary classification of dance bars between those which were allowed and those which were prohibited, the court observed, "the State has failed to justify the classification between the exempted establishments and prohibited establishments on the basis of surrounding circumstances, or vulnerability. The legislation is based on an unacceptable presumption that the so-called elite i.e. rich and the famous would have higher standards of decency, morality or strength of character than their counterparts who have to content themselves with lesser facilities of inferior quality in the dance bars. Such a presumption is abhorrent to the resolve in the Preamble of the Constitution to secure the citizens of India "equality of status and opportunity and dignity of the individual"

The issue of addiction can be addressed by implementing effective steps like putting a reasonable cap on the amount and number of betting transactions that an individual can exert in a particular time frame. Dummy candidates are sometimes used, who will deliberately lose to counter the issue of "loss chasing" and "illusion of control."^[14]

Whether legalized or not, it is always difficult to eradicate all the illegal practices associated with gambling and betting. However, such measures, accompanied by stringent regulations, entailing harsh punishments, will go a long way in reducing the extent to which such practices are carried out in India.^[15]