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Gambling and Betting: Implications of Legalization in India




Backdrop

Minister of State for Finance recently called for the legalization and regulation of betting and gambling in India.



Introduction

  • Betting can be defined as gambling a sum of money against someone else's based on the outcome of an unpredictable event such as a match, game, fight or race.

  • Betting is identified as an organised commercial agreement between two parties where one party predicts an outcome, keeping in mind various stats, data, analytics etc and the other party either takes it away in case they win or pays the promised amount.

  • Gambling on the other hand is a broader term for activities under the ambit of betting as well as those where the win purely relies on the principle of probability and concept of luck such as in the case of Black Jack, Roulette or any other casino game.

  • Earlier, Gambling and Betting used to be done on physical premises and all the laws were enacted according to that scenario, however, the spectacular evolution of technology in recent times has given birth to the Online Betting/Gambling World and fantasy sports.

  • The term 'Fantasy Sports' has been coined in recent times for the type of games where participants signup on internet gaming websites, create virtual teams of proxies of real players and bet on these teams, generally earning points which are then converted into real money.

  • The Fantasy Sports is a 'game of skill' as the bets are placed based on the performance of players in the actual games.


Laws Governing Gambling in India


  • The legislation concerning Gambling was passed way back in 1867 as Public Gambling Act but with the enforcement of the Constitution of India in 1950, the betting and gambling were placed in the State List. Since then, states have individually been conferred the power to enact gambling/betting laws suitable to their states.

  • Indian laws differentiate each game into two kinds: "Game of Skill" and "Game of Chance". Under the present laws, Gambling doesn't include 1. Betting on Lotteries (registered and regulated under Lottery Laws). 2. Games of Skill (listed under the Public Gambling Act and Court Judgements). 3. Betting on Horse Races. (registered under various laws).

  • Fantasy Sports Betting is, hence, legal in India as its a 'Game of Skill' and the 'Bookies' can't govern or influence such games.

  • Indian states of Nagaland, Goa and Sikkim currently allow gambling in one form or the other whereas states like Telangana, Andhra Pradesh, and Tamil Nadu oppose gambling in any form.

The Pros of legalizing Betting


A Source of Revenue

Statistics from a survey conducted in 2018 by KPMG, a global services network, suggest that the illegal betting market in India is worth more than $150 billion. This market is expanding on a humongous scale and the majority of the stake goes into the black market. If legalized, taxed and regulated, betting market can emerge as a major source of revenue for the Government of India and this money can then be put into good use.



Enforcement of Justice Lodha Committee Recommendation

Cricket is the most widely played and watched sport in India. Cricket, considered a religion, accounts for a large chunk of betting money in the Indian black market. In 2013, the country woke up to a match-fixing scandal in the Indian Premier League causing mass outrage. In 2015, the Supreme Court of India, after the 2013 IPL Betting Scam inquiry, appointed Justice Lodha Committee to analyze and recommend implementable measures for improvement of the Board of Control of Cricket in India (BCCI). As the 2013 Betting Scan unleashed several facets of the evils of betting, the committee recommended the legalization of betting in the game of Cricket, stating that this step would lead to a regulatory framework in the betting regime and will help the government to see betting and spot-fixing as two separate things.

Addressing the issue of Loan Sharking

One of the major side effects of Gambling is addiction. When gambling addicts lose a lot of money, they look for lenders. Lenders offer them loans at sky-high interest rates. This leads to further indebtedness of the gamblers. This process is known as Loan Sharking which can be prevented if betting is made legal.

Better Law Enforcement

A legal framework for betting will enable law enforcement agencies to identify and prevent instances of betting by minors. Furthermore, the agencies can prevent the inconvenience of the public due to problem-gamblers.

The Cons of legalizing Betting

Rise of Corruption and Criminal Activities

The legalization of gambling may lead big players to influence the outcomes of sporting activities in their favour. As a result, there can be a rise in corruption as influencing the results isn't possible without insider trading.

Social Implications

Gambling at large can lead to several social evils. Legal gambling may make people more prone to financial losses, adverse mental health, stress, alcoholism, frustration, greed, anger, etc which can further result in bankruptcy, domestic violence, substance abuse, tax evasion, etc. Furthermore, the National Sports Development Code and the moral values currently prevalent in India don't encourage gambling.

The Way Forward

Appointment of an Independent Committee

The Government must appoint an independent committee exclusively to look at all the aspects of gambling especially legal, social, and economic before taking any step forward towards legalization of betting and gambling, The Committee must include experts from the field, people from the cabinet, judiciary as well as the opposition so that coverage of all aspects is ensured.

A Legislation and an Independent Body

The Government can introduce a Bill in the Parliament and make it binding on the states. Uniformity in the legal framework for gambling will make it easier for the authorities to keep a check on the activities and wrongdoings. Further, a separate body should be constituted to oversee the betting regime so that the process remains unbiased, transparent and free from crime.

Cap on Transactions

The best way to start the regulation process of the betting industry is to put a limit on the amount of money that can be staked in a bet. Also, the government should ensure that there are no legal loopholes in this part of the legislation.

Initial Ban on FDI

Foreign Direct Investment in the initial stages of implementation may lead to money laundering. So, the government should start with an allowance of domestic investment in betting until the law enforcement agencies become familiar with the different kind of malpractices in the systems. Once the legal framework becomes robust, the FDI can be brought slowly and steadily.

Cashless Transactions

As tracking of cash is close to impossible and funding of various illegal activities mostly involves cash transactions, the government must make all these transactions cashless. People must be given multiple options to pay like Net Banking, Debit Cards, Mobile Banking, UPI, Credit Cards etc.