Law Commission sees gambling merit, but no decision yet

India’s powerful Law Commission acknowledges that the government would raise substantial revenue from regulating the country’s estimated $60 billion gambling industry, but hasn’t decided whether to throw its weight behind efforts to legalize the sector.

Justice Balbir Singh Chauhan told a recent conference hosted by the All India Gaming Federation and the Federation of Indian Chambers of Commerce and Industry in New Delhi that the industry required proper regulation, rather than a complete ban in most states as is the case presently. However, he added that the Law Commission which is looking into the matter is “yet to make up its mind.”

Casino gambling is banned across India, apart from in the state of Goa and the territory of Daman, while online gambling is allowed in Sikkim and Nagaland. If legalized, analysts estimate it could rapidly become one of the biggest markets in Asia, if not globally.

Chauhan estimated that about $2.6 billion could be raised by legalizing and taxing the industry, but added it may come “at the cost of public morality and health. It may lead to the demand to regulate prostitution,” he said.

According to Justice Chauhan, “political will and the philosophy of the party in power” held the key to any such move. Nevertheless, he observed that the revenue that could be generated “was a huge amount to spend on public welfare.”

Several legal experts weighed in on the subject of legalization and regulation of the industry at the conference. They noted that the industry needs a strong overall framework, rather than relying on a patchwork of exceptions to govern the industry.

Ranjana Adhikari, co-head Media Entertainment and Gaming Practice at the reputed Mumbai-based firm Nisith Desai Associates, went into the finer points of legislation in Sikkim and Nagaland. She pointed out that there was a lack of clarity on whether the provisions could be implemented in the rest of the country, especially those dealing with licensing online operators outside the borders of the states issuing them, especially in the case of Nagaland.

Goa casino fees rise for third year

Fees for onshore and offshore casinos have been raised for the third year in a row. Fees for the renewal of licenses went from Rs 2 million (US$31,125) to Rs 3 million, while transfer fees for onshore and offshore casinos were raised to Rs 100 million and Rs 200 million respectively. The current FY 2016-17 had imposed Rs 200,000 as an application fee for transfer and Rs 50 million crore upon approval from the government. The annual recurring fees for landbased casinos were also hiked by Rs 5 million, whereas offshore casinos will need to pay depending on the passenger capacity.

Nagaland uncovers lottery scam

The Comptroller and Auditor General (CAG) of India has uncovered a massive loss in revenue for the Nagaland state government due to irregularities in the conduct of Nagaland State lotteries. According to local media reports, the distributors made “huge profit” from the sale of state lotteries, whereas the revenue of the state government was in the form of (Minimum Guaranteed Revenue) MGR only. Out of the total sales of Rs 176.5 billion from the 2010-16 period, distributors only deposited Rs 569.3 million to the state, said the report.

Suhan Mukerjee, one of the panelists and a senior lawyer practicing in Delhi, counseled that the gaming industry would do well to not depend on exceptions like the Nagaland model. “Sustainable businesses cannot be built on exceptions,” he contended. He exhorted the industry to have continuous engagement with the relevant ministries and to come up with a blueprint for the way forward which could be used to facilitate the engagement with judiciary, law enforcement and political parties as well.

Adhikari also noted that under India’s existing gambling laws, the presence of a physical structure, defined as a Common Gaming House, where games of chance were being allowed to be conducted with a profitmotive in mind, was critical for initiating criminal proceedings.

The Common Gaming House is relevant as the law distinguishes between public gambling activities and private ones, with the latter not being punishable. Gambling privately on the Hindu festival of Diwali remains widely popular in India.

At present, foreign direct investment is banned in both the casino and the lottery sector, but has not stopped the online sector, especially rummy and fantasy sports websites from receiving funding from foreign partners. Some speakers pointed to how regulation can lead to improved standards, with companies taking it upon themselves to tighten operations.

Pranav Bagai, of the Poker Sports League, cited the example of the Direct Selling Companies in India, which, when put under the regulatory scanner, “asked hard questions of themselves, created manuals for law enforcement, and worked with lawmakers to remove grey areas.”

In the absence of legislation, other commentators urged the industry to regulate itself.

Nandan Kamath, a Bangalore based lawyer who deals in sports laws, said: “Change of this nature takes time. Regulate yourself before others do,” cautioned Kamath. He also advised the industry to “push for reforms” in the legal arena.

Post deliberations on legal issues, two panel discussions were held. The first, moderated by Albert Climent, of Bluesea Gaming, covered issues related to responsible gaming and ‘cyber security.’

The second panel was moderated by lawyer Vidushpat Singhania and covered the current scenario in the Indian gaming industry.