In this article, Aklovya Panward of INLU discusses Regulations needed if India legalizes sports betting.

Introduction

The apex court recently decided to ponder upon the legalization of betting and gambling in sports which is at the present time prohibited and punishable under law. The reason for this decision is the losses occurred to the country due to unregulated betting. It has been estimated that the legalization of betting would be beneficial for the country as it will generate a revenue of around rupees 12000 crores. This amount will be both from gambling and bet altogether.

The government is envisaging positive outcomes behind these decisions. There is a speculation that legalizing betting and gambling will help the government to distinguish between harmless batting and corrupt activities like match fixing. It will also provide credibility to the game because now the government will have more control over the sport. It will also provide credibility to the game because the government will have more control over the unwanted elements which are existing in the betting business. Now due to un-regulation various shady transactions are taking place whether it be by huge crime syndicates or by the Mafia who are controlling this business. Law Commission of India is already going through the issue and it has issued a public notice inviting suggestion from stakeholder and the general public, the main question which law commission of India has put is whether gambling and betting should be legalized or not.

Due to ethical and moral reasons, gambling and betting are banned in most of the countries. Even after getting banned, it is already happening through the internet and that is why there is a need of prior regulation and an updated law. Legalization of betting could regulate an informal industry of rupees 300,000 Crores.

One such example of immense betting in sports is of cricket, it is always surrounded by scandals of spot fixing.

Before legalizing betting and gambling there is amendment required in certain provisions and laws. Example: Indian Contract act-It treats an agreement based on a wager as void.

Multiple problems that arises from criminalisation of unregulated sports betting

Due to unregulated gambling and betting market, there is a lack of information about this industry and it gives rise to black marketing. There is no record of the people who are gambling whether they are minor or gambling addict due to which this threat cannot be combat. Not only this, the flow of money also can’t check whether it is being used for other illegal services. This also leads to match fixing because the betting pattern cannot be understood till the time it is running in the underground market.  It is estimated that Govt. can earn Rs. 12,000-Rs. 20,000 Crores as taxes which now going in vain. Regulating betting provides the framework to address all of these problems.

SCENARIO IN OTHER COUNTRIES

There are 3 parts in which countries can be divided:

1. Complete Ban- the Middle East and South East Asia, they consider gambling and betting as sinful due to religious influences.
2. Partial Ban-Most of the countries remain between 2 extremes these states neither tight the grip nor lose it. In these countries, the Government pursues a framework which legalises gambling but also seeks to regulate and control gambling with an idea of generating revenues and taxes. They use this revenue for the purpose of a social issues like the funding of the industry itself, sports or cultural and charitable causes. States which license gambling include the UK, many European states, Australia, and a number of States in the USA.
3. Liberal from the ban- The US State of Nevada, the Island of Macau and some small island states where online gambling is licensed. As they consider it as an export industry from where trade and revenue can be dug out.

Most countries, however, operate somewhere between these two extremes.

REGULATORY SYSTEM IN OTHER COUNTRIES

Common characteristics of the regulatory system of the countries:

1. Statutory regulatory bodies or gambling commissions created by the states- They distribute licenses.
2. The national regulatory-

• It can regulate disputes in a condition where there will be breach involving at more than one state’s jurisdiction.
• It can formulate frameworks for the common people for dispensing information about betting, the places of betting and the events of the betting.
• The regulator authorizes by the center can keep a check on the operator’s activity and can go for inspection at the operator’s premises to have cooperation from him.
• It also provides information related to remedies, warnings, and penalties related to the issue. They can also suspend licenses and initiate criminal prosecution.

THE LAWS RELATED TO BETTING IN INDIA

The State of Sikkim has amended the “Sikkim Online Gaming (Regulation) Rules 2009”.It Legalises sports betting in the state with the provision of license.

Some of other State laws are: “The West Bengal Gambling and Prize Competitions Act, 1957, the Bombay Prevention of Gambling Act, 1887, the Madhya Bharat Gambling Acts, 1949, the Punjab Public Gambling Act, 1961, the UP Public Gambling Act, 1867, the Kerala Gambling Act, 1960, the Karnataka Gambling Law/Act, Goa, Daman and Diu Public Gambling Act, 1976, Sikkim Online Gaming (Regulation) Act, 2008, Madras City Police Act, 1888 to name a few.”

REGULATORY REGIMES NEEDED FOR SPORTS BETTING.

Regulatory regime consists of two aspects: One being the “regulatory scope” and other is the “regulatory stringency”. First, will be defined as the area covered by the regulation while the latter one characterizes the degree to which the organization’s behavior is constrained by the regulation. It is measured by the power of the regulator.

Regulatory scope

Establishment of Regulatory Environment

Before making any regulation there is a need to understand the object of regulation. Once the objective is been set then the environment of regulation will be easy to develop. Establishing a regulatory environment requires that one first defines the specific object to be regulated. Within the wider ambit of gambling and betting in sports, the core issue is to determine whether a game is a “game of chance” or “game of skills”. It is important to note that the Public Gambling Act, 1867 provides that the provisions of the Act shall not be applied to any games of skill. The Hon’ble Supreme Court in the case of Dr. K.R Lakshmanan vs. State of Tamil Nadu (AIR 1996 SC 1153) regarded horse racing as a game of skill and observed as follows: “Betting on horse racing or athletic contests involves the assessment of a contestant’s physical capacity and the use of other evaluative skills. Horse racing is an organized institution. There is nothing illegal in horse racing: it is a Lawful sport. We have no hesitation in reaching the conclusion that the horse-racing is a sport which primarily depends on the special ability acquired by training. It is the speed and stamina of the horse, acquired by training, which matters. Jockeys are experts in the art of riding. Between two equally fast horses, a better-trained jockey can touch the winning-post. In view of the discussion and the authorities referred to by us, we hold that the horse-racing is a game where the winning depends substantially and preponderantly on skill.”

In the case of State of Andhra Pradesh vs. K. Satya Narayana (AIR 1968 SC 825), the Hon’ble Supreme Court held that “The “three cards” game which goes under different names such as “flush”, “brag” etc., is a game of pure chance. Rummy, on the other hand, is mainly and preponderantly a game of skill.”

These case has provided the framework that what should be the object of the regulation of betting and gambling in India. As B.S. Chauhan the appointed chairperson of Law Commission of India said in a seminar.

“Development of gambling industry in India requires a three-pronged strategy reforming the existing gambling (lottery, horse racing) market and legalizing the present illegal market (introducing new products) while introducing stringent and overarching regulations,” he had said at a seminar.

The determining principle that what is the game of chance or of skill should be left to the government to define. If the principle is that the game of skill should be out of the ambit of the law then there must be a classification of games on this basis. As the game of chance can be arbitrary according to the international perspective. In this matter, some states of the U.S., France, Switzerland, or Italy, attempt to assess the detailed levels of both chance and skill to determine whether a particular activity should be regulated or not by the gambling laws.

Understanding the types of Sports betting

The state should decide that what forms of sports betting they are willing to allow. In India, there should be a detailed regulation on what forms of betting or gambling can take place.It depends on the ability of the government to maintain the records and data of a particular event taking place. As, in Switzerland, live betting and exchange betting are prohibited, however in the United Kingdom, all forms of betting can be found.

Gambling and betting on particular events have various forms

Traditional betting-It refers to betting with probabilities on the winner of a specific match,

Spread betting-In this form of betting odds are on the difference of the final results between two teams or players.

Pari-mutuel bet-In this betting the probabilities initially set as equal across the various contestants and then altered according to the accrual of bets from numerous actors.

Live betting is made when the game is in live form and teams are playing and the odds are therefore altered in the real time according to progress in the match.

Exchange betting-In this betting nobody is officially setting the odds, but it is the punters themselves who agrees or discard the offers of odds proposed by other players.

Which betting mode can be obtainable to customers differs from nation to nation.

Access to the market

One important thing government have to keep in mind before making the regulation for legalizing betting and gambling is the access to the market. In sports betting there are various types in which market access can occur. It can be-

1. An exclusive right attributed to one organization– In Switzerland, two publically owned organizations have the right to offer sports betting.In France, the Pari Mutuel Urbain (PMU) offers to bet on horse races while the national lottery organization, Française des Jeux (FDJ), offers sports betting.
2. Establishing a monopoly– In Germany, Oddset is a state monopoly founded by the sixteen Länder to operate sport betting games throughout the country.
3. License system that allows a limited or unlimited number of sport betting operators– In the UK, and Austria. In contrast, French online sports betting market is based on an open number license system.

It depends on the Indian Government whether they want to monopolize it or want to form an organization for the same.

Profit to the public

Before making any regulation there must be some provisions for public benefit. As In Switzerland, the profits produced by the Loterie Romande and Swisslos out of sports betting are allocated to the professional and amateur sport.Similarly, In Germany, Oddset is allocating the revenue generated in each Land to the regional authority that uses it for different ends such as social projects, the state budget or the sport. In France, the FDJ allocates a share of the revenues to the state budget which can then be used for sport, whereas the revenues of the PMU are mostly the revenues to the state budget which can then be used for sport, whereas the revenues of the PMU are mostly attributed to the equine industry. In the UK and Austria profits are not used for a public end directly.

Regulatory Stringency

Power of the regulators

In other countries the national regulatory have the following power:

The national regulatory-

• It can regulate disputes in a condition where there will be breach involving at more than one state’s jurisdiction.
• It can formulate frameworks for the common people for dispensing information about betting, the places of betting and the events of the betting.
• The regulator authorizes by the center can keep a check on the operator’s activity and can go for inspection at the operator’s premises to have cooperation from him.
• It also provides information related to remedies, warnings, and penalties related to the issue. They can also suspend licenses and initiate criminal prosecution.

In the UK, the Gambling Commission, an independent body controlling and monitoring the gambling sector (at the exception of the National Lottery).

In Italy, the “Amministrazione Autonoma dei monopoli di Stato” (AAMS).In Switzerland, the Comlot, the independent commission established on the cantonal level, is responsible for licensing new games and monitoring the sports betting sector, but cannot license operators. In Germany, the regulators are established on the level of the Länder and take various forms. In Bavaria, for example, the monitoring body is the Staatliche Lotterieverwaltung which is part of the State’s administration.

References

• Amit Anand Chaudhary,Can betting in sports be legalised? SC agrees to examine issue – Times of India, The Times of India (2017),http://timesofindia.indiatimes.com/sports/cricket/news/can-betting-in-sports-be-legalised-sc-agrees-to-examine-issue/articleshow/58421201.cms.
• Jatin Gandhi, Casinos, sports betting to be legalised in India? Law panel examining the issue, http://www.hindustantimes.com/(2017),http://www.hindustantimes.com/india-news/casinos-sports-betting-to-be-legalised-in-india-law-panel-examining-the-issue/story-RUrXc21Q94LTQKhrHJlxTO.html .
• REGULATING SPORTS BETTING IN INDIA,FREQUENTLY ASKED QUESTIONS, 1-4, http://ficci.in/sector/37/add_Docs/ficci-faq-on-sports-betting.pdf (last visited Jul 14, 2017).
• Lea Meyer & Jean Patrick Villeneuve, What are the odds? National gambling regulation and the globalised betting industry org(2017),http://www.irsv.org/index.php?option=com_content&view=article&id=146%3Awhat-are-the-odds-national-gambling-regulation-and-the-globalised-betting-industry&catid=73%3Anumero-7–controler-et-punir&lang=en (last visited Jul 14, 2017).
• Heena Chheda & Mirat Patel,Gambling And Betting Laws In India, 2, http://www.hariani.co.in/newsletters/31207_August_7_2013.pdf (last visited Jul 14, 2017).