Regulatory Update – Law Commission Recommendation : Legalisation of Regulated Betting and Gambling Activities,

The Law Commission of India, in its 276th report, has recommended legalisation of regulated betting and gambling activities, asserting that a complete ban has not been returning the desired results. The report states that it is not possible to prevent these activities completely and therefore, the best and most viable option is to effectively regulate them. The Commission suggested in its report that regulated gambling would ensure detection of fraud and money laundering as well. The commission further went on to state that any regulation of gambling would require a three-pronged strategy, reforming the existing gambling (lottery, horse racing) market, regulating illegal gambling and introducing stringent and over- arching regulations.

The study was conducted and the report was formulated in furtherance of the directive issued by the Supreme Court in the case of Board of Control for Cricket in India v. Cricket Association of Bihar & Ors. wherein the commission was directed to study the possibility of legalising betting in India and its positive and negative implications.

Some of the recommendations of the commission as stated in the report are:

  • Legislative Competence of the parliament: Since online betting and gambling are offered and played over media (telephones, wireless, broadcasting and other like forms of communication) which is covered under Entry 31 of List I of the Seventh Schedule to the Constitution, the Parliament has the legislative competence to enact law(s) dealing with the same.
  • The Parliament may also enact a model law for regulating gambling that may be adopted by the States or in the alternative, the Parliament may legislate in exercise of its powers under Articles 249 or 252 of the Constitution include other recommendations from report.
  • Restriction of number of transaction: Gambling and betting, if any, should be offered only by Indian licensed operators from India possessing valid licences granted by the game licensing authority. For participants, there must be a cap on the number of transactions an individual can indulge in these activities in a specific period, i.e., monthly, half-yearly or yearly. The nature of stakes should be restricted to money with a linkage to PAN card and Aadhaar card, and the betting amount should be prescribed by law, having an upper limit on the amount one can legally stake in a gamble, which may be on the basis of the deposit, winnings or losses.
  • The commission has also recommended making the transaction cashless to regulate illegal activities such as money laundering. Similar restrictions should also be prescribed for the purpose of the amount one would be allowed to stake while using electronic money facilities of the likes of credit cards, debit cards, net-banking, etc.
  • Gambling must be classified into two categories, namely ‘proper gambling’ and ‘small gambling’. ‘Proper gambling’ would be characterised by higher stakes. Accordingly, only individuals belonging to the higher income group shall be permitted to indulge in this form of gambling. On the other hand, individuals belonging to the lower income groups will have to confine themselves to ‘small gambling’, not being permitted to stake high amounts (falling within the bracket of ‘proper gambling’).
  • In order to protect the public from the ill-effects of these activities and with a view to have enhanced transparency and state supervision, all betting and gambling transactions should be linked to the operator’s as well as the participant’s/player’s Aadhaar Card/PAN Card.
  • Permissible Personnel: The enactment(s) so made to regulate gambling and betting activities must ensure that vulnerable sections of the society are protected from being exploited by the possible ill-effects of these activities. In particular, the youth and children below the age of 18 years (who may or may not be posing as adults), and those who are below poverty line and to whom as a social welfare measure, Central / State Governments provide subsidies to their Jan Dhan Account for sustenance. Putting such restriction is a must so that the money provided by the Government for their sustenance on different heads under the Direct Benefit Transfer Scheme is not misused in participating in gambling and betting and these vulnerable people are protected from the vice of gambling and betting. In other words, all those who get subsidies or do not fall within the purview of the Income Tax Act or the GST Act should be debarred from participating in online and / or offline gambling platforms.
  • There must be a stringent law(s) in place to regulate Foreign Direct Investment on one hand and to prevent money laundering on the other.
  • The “National Sports Development Code of India, 2011”, which aims at preventing betting and gambling in sports or any other code applicable from time to time, will also require an amendment/modification, to create an exception for the same, if betting and gambling are to be regulated.
  • Match-fixing and sports fraud should be specifically made criminal offences with severe punishments.

Source: http://lawcommissionofindia.nic.in/reports/Report276.pdf

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