Sports Gambling: A Case for Legalisation in India

Anand Swaroop Das & Poonam Motwani1.

“There is a practice around today that causes a lot of problems, damages families, people lose their jobs, they get in debt. They do it in excess. It is called drinking. . . . Prohibition didn’t work for alcohol; it doesn’t work for gambling2.”

Gambling is an activity which traces back to the beginning of every human civilization, religion and culture. Sports, is also one such activity. However, the mixture of both in the recent times has not bided well for the integrity of sports. And it gets even dirtier when the players of the particular game are themselves involved in gambling. The ubiquitous industry of sports gambling in the contemporary era is forever expanding even during lean economic periods. Black’s Law Dictionary defines gambling as “the act of risking something of value for a chance to win a prize3.” Sports’ gambling presents additional concerns which are beyond the normal gambling-related issues as they jeopardize the integrity of the sporting events and also promulgate addictive behaviours among young individuals. Gambling on sports outcomes, though has remained an age-old practice in many societies, its development has engulfed that of organized professional sports. The twentieth century witnessed the rapid growth of a plethora of professional and non-professional sporting events; coupled with that of wide coverage through newspapers and television. These conditions factored in enabling the people to place bets on many sporting outcomes all over the world. Some countries introducedlegislation aimed to regulate a growing industry, while some other countriescompletely outlawed sports gambling4. This industry thrives because it does not depend on the market situation but on the government decisions taken by a particular country.

Lately, another aspect of sports gambling came to the forefront of the contemporary sports betting industry in the form of online gambling. The phenomenal increase in sports broadcasting has led to online sports gambling and wagering. Online gambling catered to a larger global audience and started offering bets on many events. The enhancement of flow of sports programming on a number of network cable channels, sports channels, TV sources etc have further escalated the practice of online gambling. A fierce competition between online betting sites is increasing and making sports more vulnerable to corruption. It has become increasingly easy to place bets any time of the day on any type of competition or discipline, from any part of the world. Online gambling has blossomed into a three billion dollar annual business. In fact some of the leading high technology companies – including Dell, Yahoo, Intel and Microsoft – show profits that have less to do with their businesses than with stock market speculation and interest from hefty bank accounts5. In the recent times, a contentious debate is raging on the whole gamut of sports gambling and its proposed legislation in India. However, the question remains as to whether sports gambling will be legalized, regulated or completely outlawed?

Sports Gambling and the Present Framework in India: An Overview

The various sports governing models in India are Ministry of Youth Affairs and Sports, National Sports Federation, Indian Olympic Association, State Olympic Association, Sports Authority of India, Board of Control for Cricket in India (regulates gambling in cricket) etc. Indian Olympic Association acts as an umbrella body under which the government bodies, sporting events etc take place. Sports bodies in India are by nature autonomous. The sport’s governing bodies of India are registered under the Societies Registration Act XXI of 1860. These bodies receive government aids in various forms like direct financial assistance (in case of NSFs) and indirect subsidies like tax benefits (in case of BCCI). In cricket, betting practices are included in the Anti-Corruption Code and banned bythe ICC rules for players and player support personnel6. Betting practices like spot-fixing and match-fixing are included in the Anti-Corruption Code.

Indians love to gamble. Indian gambling market stands to gain a whopping $60 billion annually of which about 50% is illegally bet7. The worth of the industry is more than 2% of our current GDP. There is a good percent of people wagering on horse-racing and lottery but the primary revenue is generated by betting on the outcome of cricket matches, a sport which is considered a religion in India. The Federation of Indian Chambers of Commerce and Industry (FICCI) has been actively urging the Central government to legalise sports betting and estimates a mind boggling Rs. 12,000- 19,000 crores of revenue to the government through the Rs. 3,00,000 crores illegal sports betting market alone8. The economic crisis of the country can be effectively met with such a chunk of money. In one of its surveys, FICCI concluded that 74 per cent people believed that legalizing sports betting will help curb match fixing and 83 per cent of respondents said that regulating sports betting with proper laws is better than banning it9.Chris Fismer, a South African gaming industry analyst, wrote on the legalization of betting wherein he stated that criminalizing the behaviour does not keep people from gambling on sports10. Gambling enjoys a legal position only in horse-racing, lottery and rummy.

The Socio-Economic Repercussions of Gambling on Society: An Analysis of the Pros and Cons

One moral opposition to gambling is the question of legitimacy when it comes to the form of entertainment. Unregulated gambling also increases family distress and rate of crimes. The social repercussions include negative impact on the family of the gambler i.e. spending less time with children and family, no work, personal bankruptcy etc. The eventual results of such activities are domestic violence, substance abuse, divorce, morbidity, premature mortality, suicide etc. Usually premature mortality results from substance abuse which is a direct consequence of gambling.  Neglecting children also leads to behavioral problems with them and also problems at school. Studies have found that problem gamblers face higher incidences of job loss, and lost productivity through non-attendance and lateness. People indulging in gambling also face numerous financial difficulties. The National Opinion Research Centre at the University of Chicago had conducted a survey which found that 20% of the pathological gamblers had filed for bankruptcy, compared with rates of 5.5% for low risk gamblers and 4.2% for non-gamblers.

Drug addiction, smoking, heavy drinking etc are also induced by gambling. An article by David P. Phillips published in the journal Suicide and Life Threatening Behavior claimed that gambling may be accompanied by an increase in suicides. In general, attempted suicides range between 17% and 24% of pathological gamblers11. Pathological gamblers resort to thievery, embezzlement, misappropriation, bad behavior, corruption and crimes to finance their playing. Asaccess to funds becomes limited, many resort to illegal activities to pay debts,appease bookmakers, maintain appearances, and of course, provide more money to gamble with12. A study of offenders on probation found that 4.5% were classed as problem gamblers13. The impact of gambling can include depression, stress-related illness, chronic or severe headaches, anxiety, moodiness, irritability, intestinal disorders, asthma, cognitive distortion, and cardiovascular disorders14. Physical health conditions which are caused by gambling are high blood pressure, ulcers, migraine headaches, intestinal problems, serious heart problems resulting from chronic stress15. Problem gamblers also experience higher risks of alcohol, drug and tobacco abuse16, as well as increased risk of mental health problems such as dysthymia, major depression, anti-social personality disorder, phobias, or anxiety17. Adolescents, whose parents are gamblers, have a greater probability of being anxious, having mood swings, insecurity etc.

Despite the counter-productive effects of gambling on the society, there are certain benefits associated with the same. In terms of entertainment pleasure, gambling helps people enjoy the time they spend in gambling. The revenue of gaming industries like hotels, restaurants, betting-houses etc increases and so does their net growth. Values of private and commercial property increases as gambling venues develop with time. The gaming industry allows for direct as well as indirect employment. There is an influx of people into this industry as wages are paid on hourly and annual basis. Gambling serves as a major tourism industry in some regions, pumping quite a huge chunk of money into the economy of the particular country. There is also a marked decrease in crime, policing and judiciary cost. Studies have proven that gamblers feel an increased sense of personal safety as a result of gaming venues. Public sectors, non-profit sectors and other charitable institutions benefit from gambling activities.

Sports Gambling in India: The Legal Aspect

The aspect of law is consistently connected and ubiquitously affects the conduct of the society. However, it is also relevant in ignoring certain relevant social facts and human tendencies in the wake of achieving an idealistic order governed by pure morality and not rationality.  In this wake, it becomes an indispensible requisite to examine the law relating to gambling in India so that a comprehensive view of both what the reality is and what measures are to be taken to add the essence of practicality to the system of governance can be measured. To borrow from the wordings of the 2nd US President John Adams, “we live in a world governed by laws not men. Those laws shape our lives, guide our conduct and define our relationship with the state. In the common law world, the evolution of law through precedent can change lives in profound ways. On a more prosaic, but more immediate, private law level, case laws shape everyone’s day-to-day lives and give pertinent insights into the law.”

The Public Gambling Act of 1867 is the primary legislation of the country. Under this old law, operating, assisting in operation, visiting a gambling house and being in possession of gambling devices is a crime. Even though the punishment prescribed under this Act is meager but still no betting person in India has ever been charged under this Act. The Constitution of India in the Seventh Schedule under the State List has made it clear that states have the right to make policies and legislate on ‘gambling and betting18.’ To date most states have only made laws against gambling, while 13 states have legalized lottery, and 2 states (Goa and Sikkim) have legalized many other forms of gambling19. A very pertinent example of internet gambling in India is the heavy Indian customer base of the UK based gambling company www.bet365.com.

One of the legal facets that have to be looked into is the prohibition limiting itself only to games of chance, i.e, the test being the determination of whether the dominant element is chance or skill20. Thus, in the wake of undefined terminology “skill” by Indian legislation, the hope of interpreting the aforementioned lies in decisions of courts. It has been held by the Supreme Court of sIndia; in Dr. KR Lakshmanan v. State of Tamil Nadu21that gaming is an act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. Furthermore, in the case of M.J. Sivani and Others v. State of Karnataka and Others22, the Supreme Court held that when in a game the element of chance strongly preponderate, it cannot be the game of mere skill. However, it has been emphatically opined by Justice Mudgal23that these regulations are indeed “paradoxical”, whereby it is legal to bet on the sill of horses and jockeys, but at the same time betting on the skill of seasoned sportsmen is proscribed24.

Moreover, the spheres of Information technology Act, 2000 and Information Technology Act, 2011, prohibiting online gambling are imposed by the Union, conferring duty on the service providers to block internet gambling sites25and also providing for a very high liability for violation26. The Act also has extra territorial jurisdiction with regard to computer related offence committed in India27. Thus, in the U.S. cases of Missouri ex rel. Nixon v Interactive Gaming  & Communications Corp and  Minnestona v Granite Gate Resorts Inc, the court asserted jurisdiction based on the nature the nature of the ‘gambling operations’ web sited coupled with the intent to solicit business with residents of the other states.

Arguments Favouring the Legalization of Gambling in Indian Context

With the wheel of time, we have seen the changes generated in the organic body of law, as it seeks to adapt itself to the norms of the ever-moving society in which it functions. This however, isn’t without taking into account the plausible explanations of such adaptations. Thus, some of the reasons favouring the legalisation of sports gambling In India are as elucidated below:

  • The changed social perception of gambling – The subcontinent of India had recognized the leisure-providing aspects of gambling in the era of Vedic-Ages classifying it as one of the “Vyasana”28and also saw the attestation of an immoral connotation to the same in the epic Mahabharata29, whereby the depiction of Dharamraj Yudhishthira betting all his possessions including his wife due to the high generated by this activity30. This common folklore serving a deterrent against excess leisure also cemented an emphatic fear and loathsomeness in the minds of people categorising it as a vice and the Styx31boundering ruin32. However, the perception of depicting it as a vice has undergone transformation with its being accepted as a socially acceptable form of leisure activity. It is to be understood that most people do not see betting as quite distinguished from using it for other leisure activities that require the shedding of money such as playing console games or renting a movie33. This trend has also crept into the psychological patterns of the masses with this idea being positively received by the citizens34, especially since the 2010 – match fixing scandal35. Among the prevalent instances of inferring a widespread support and acceptance for the same lie in the writing of articles encouraging legalising sports gambling36, interviews generating much desired support in the favour of transparency37through the tool of regulation and favourable results to the tune of 73% in polls conducted38. Also, , the endorsement from the Government of India through State run Lotteries39brings forth the Government’s acquiescence to the fact that regulated gambling is not wrong. Hence, what is required at this juncture is to look for ways to work around whatever remains of the stigmatisation of sports gambling40.
  • Sports’ gambling is legally impractical to eliminate – Over the heralds of law being the ultimate coercive and regulatory instrument41, one often forgets the fact that law cannot seek to do the impossible. Thus, the equation to ensemble the best results are to work on given facts. Here, the prevalence of sports gambling being an established fact, it can be stated that the adopted tool of outright banning has only encouraged illegal and unscrupulous activities42.  This, coupled with the inadequacy of punishments to deter people from this illegality43, manifests itself as a failed system to contain the emerging arena of betting on sports.
  • It is to be understood that the application of an enforced mechanism in an environment where prohibition will not work is a futile exercise. The tool of prohibition has just driven the activities underground and has displayed no efficiency in either combating them or reducing the instances significantly.  Thus, the answer to this situation can be located in the quote: “Prohibition promotes unlawful activity, regulation removes it44.”
  • Thus, regulation of sports gambling would not only bring this Rs, 300,000 crore industry under the wing of the government rather than that of the underworld lords45, but will also ensure the checking of laundering of money for other hazardous activities such as terrorism and drug marketing.  It is to be understood that prohibition couldn’t stop the masses from drinking, resultantly only making the alcohol unsafe due to lack of regulation. Thus, it makes sense to legalize gambling and regulate it.
  • Justification from a social perspective– Gambling can be considered a harmless form of entertainment which acts as a recreational outlet for people. Gambling can be socially engaging and exciting, suggests Australia’s Mental Health Foundation (1998). Within this charged environment, individuals become part of a world away from the burden and drudgery of their daily routine46. For others, gambling is stimulating due to the challenge of estimating potential wins and losses, especially with sports betting and horse racing47, hence boosting self-esteem.
  • Potential taxable resource benefits– The revenues generated by the gambling sector have always been in massive magnitudes, with the revenues amounting to 1% of G.D.P in US, UK and European Commission. Assuming the application of a proportionate rate to India, the revenues generated would be to the tune of Rs. 62,000 crores and hence, generating a tax of Rs. 7,594 crore under the Amnesty Voluntary Disclosure of Income Scheme in 1997-98, even after discounting of Inflation. Thus, when the decade has seen the economy of India slipping away into demise with the debt trap mounting48and the Indian currency losing its hold49.  That along with the limited resources and escalating needs for spending demands the harbouring of an additional source of revenue. The inflated frenzy with regards to sports in India (especially Cricket) contributes to the prosperous industry of gambling in sports. This, if taxed, could bring about the much needed financial resources, and the needed multiplier benefits50.
  • Curtailing relocation of gambling businesses to foreign countries– The modern method of online gambling provides a path for the citizens choosing to bet over the outcomes of sports events to gamble the money via countries that proved havens for gambling proprietors51. This leads to a drain of wealth and eliminated source of revenue that would otherwise tremendously benefit the Indian economy.
  • Employment Opportunities– The tremendous industry of sports gambling once legalized will put forth a multitude of job opportunities to the qualified unemployed youth of the country and will contribute positively to the demographic dividend.
  • Tourism and FDI – The frosting of popular sports in India (especially cricket) has the potential to attract both tourists and patrons from outside the country.  The injection of new wealth into the system will provide a net benefit to the economy52.
  • Integrity of Sports not harmed – One of the popular notions that are forwarded as arguments against the legalisation of betting is the possible damage that may be caused to the integrity and the popularity of sports. However, this remains unproved by the factual circumstances following the various scams seen in the sports53, which could not bring about demise in the popularity of the sport. These aberrations on the part of players have neither escalated the corruption of the sport nor destroyed its integrity54.

Recommendations: The Way Ahead

Within the political boundaries of India, gambling can be construed as the “Payment of a price for a chance to win a prize55.”  The same has been legally prohibited in India, socially stigmatised and blended with negative connotations. However, this concoction hasn’t helped to control this event56and there have been generation of a counter-intuitive approach to bring it within the purview of law for better regulation57. Thus the issue of creating a regulatory frame-work has to be approached with an open-mind and the subtext that it will effectively help to keep a better record and impose sanctions against people involved58. Thus, circumscribed within this chapter lies the model of regulation based on the legislations enacted by U.K.59and South Africa60as they have emerged in a better position61and have brought about more effective mechanisms post their legalising sports gambling62.

Thus, the requirement of the hour is to either amend and overhaul the Public Gambling Act or to enact a new legislation replacing it, in order to bring about modernisation in the current structure and to consolidate the law relating to sports betting into a more comprehensive, effective and flexible national scheme63. This enactment can also mobilise the existing structures of national and international sports regulatory authorities for the effectuation its objectives, to prevent, deter and sanction corrupt betting practices64and to ensure that gambling is conducted in a fair and open way65. The first pertinent step of the same being the establishment of legal definitions of legal and illegal gambling66to achieve the dual purpose of differentiation which will form the foundation and pulling out those arenas of betting that occur regardless of criminalisation from the slot67. Furthermore, the illegal practices should be classified under a separate head including but not limited to any attempt to interfere with the events to which the betting practices relate such as spot-fixing and match-fixing68. The second step would be developing an executive structure to concretely manifest the act. The potential suggestions include the setting up of Gambling Commissions at both the centre and State levels, consisting of members of the relevant Ministry personnel and experts69for collecting information, monitoring and regulating betting. Furthermore, a Council should be established for assisting in policy formulation and a body for targeting and eliminating corruption.  Once these bodies are established, a system of licensing has to be brought in vogue70, allowing both individuals and syndicates71to present their information and legally venture the arena of sports betting. This will serve the dual purpose of pre-assessing risk72and also tracking them down in the possibility of commission of a crime. Additionally, in the spirit of Federalism and also in the apparent necessity of it, the power to issue and revoke licenses should be conferred on the respective States and Union Territories73.

Cascading to the part about penalisation, it is imperative that the punishments be updated to manifest a deterrent effect as the punishments in the present governing act can be clearly connoted as inadequate. To incentivise legal operation in this field the fines can be up to the amount earned from illicit betting74and may also include hefty fines and a term in prison75. Moreover, an atmosphere promoting the employment of prudence and responsibility in gambling via awareness campaigns would be beneficial in bringing home the point that sports betting is a mere game.

In the view of the successful regulatory models established by United Kingdom and South Africa that have triumphantly seen the decrease in cons of sports gambling and the responsible involvement of citizens in this activity76, the following suggestive pointers are to be considered :-

1)    The setting up of a two-tier regulatory model with the Government Legislations and the National Sports Regulatory Bodies operating in tandem to regulate the sports gambling industry.

2)    The vetting of financial records and setting entry-check gates similar to the sports of derby allows combating the social evil of bankruptcy.  Additionally, the setting up of sophisticated economic barriers like the need of credit cards along with a particular bank balance will cater to checking youngsters from mindlessly jumping in this field77).

3)    The following standards set up by international bodies such as ICC78, along with stringent penalties for  individual sport related gambling offences79, are enough to effectively deter this industry from corrupting the integrity of sports.

4)    In accordance with the axioms of decentralisation, the states should be allowed to decide on the question of legalising sports gambling with regards to their specific demographic, financial and developmental situation. This right also has been specifically conferred to the states by the Constitution by providing Entry 34(Betting and Gambling) in the state List80.

Conclusion

The prospect of gambling in the modern parlance follows the growing trend of marketing consumer utilities delivering activates that combine the trinity of risk, excitement and chance.  In such a situation the hype from betting on the already popular sports events has emerged as a recreational outlet similar to leisure products and services, providing the adrenaline rush for escaping the mundane life81.  In the subcontinent of India, however, archaic notions about the immorality of such a sport still govern the legal setting of the land (even when the Mahabharata does not prohibit such and act). The connotation of this is similar to the prohibition on liquor in the state of Gujarat due to the preaching of Mahatma Gandhi. Thus, it can be said that the government instead of reaping revenue benefits from this activity is instead being fraught with the combating of this industry, the cons of which have over the years been easily nullified or can be nullified through regulation.

The aforementioned regulations should be implemented with immediate effect to protect not only the integrity of sports but also its spirit in general. The nature of gambling has been secretive and it has been observed that the business has flourished when it was completely banned. The legitimacy of sports will be upheld if such regulations are enforced. Hence, it is very apparent that though the country seems to cater to the needs of certain forms of gambling include the activities akin to gambling like share speculation and foreign currency speculation through the means of regulation,  it seems to adopt a double standard for sports gambling. However, it must be seen that the solution here demands that such betting be regulated for the betterment of the State and the Society, as we can never bet on the future of sports gambling in India, or can we?

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  51. Supra note 11 []
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  60. South Africa’s National Gambling  Act of 2004 (South Africa). []
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  63. Supra note 37, at 391. []
  64. Id. []
  65. Gambling Act of 2005, § 191(b) (U.K.). []
  66. Legal betting practices refer to betting and gambling on the likelihood of the occurrence of certain events in a game or sport or the placing of a wager. see Gambling Act of 2005, §§ 9(1)(b)-(c)(U.K.) ; National Gambling Act 7 of 2004 §§ 3 (South Africa). []
  67. Bbc News, Illegal Cricket Betting Makes Millions For Indian Gangs, (Sept. 6, 2010), available at http:/www.bbc.co.uk/news/world-south-asia-I 1200235; Tom Wright, India Profits from Pakistan Cricket Scam, (Aug. 30, 2010), available at  http://blogs.wsj.com/indiarealtime/2010/08/30/india-profits-from-pakistan-cricket-scam (last visited Jan. 29, 2014). []
  68. Gambling Act of 2005, c. 19, §42 (U.K.). []
  69. Dep’t Sports, About Department, available at http://yas.nic.in/indexI.asp’langid=1&linkid=10 (last visited Mar. 19, 2012). []
  70. National Gambling Act 7 of 2004 § 37 (South Africa) Gambling Act, of 2005, c. 19, § 65 (U.K.). []
  71. Gambling Act of 2005, c. 19, § 127, § 65(2), § 93 (U.K.). []
  72. Gambling Act of 2005, c. 19, § 69 (U.K.). []
  73. National Gambling Act 7 of 2004 § 30 (South Africa). []
  74. ICC ANTI-CORRUPTION CODE, supra note 39, § 6.2. []
  75. National Gambling Act 7 of 2004 § 83 (South Africa). []
  76. Smith G.J., Pools, parlays, and point spreads: A sociological consideration of the legalization of sports gambling, 7(3) Socio. of Sport Journ., 271-286(1990). []
  77. National Opinion Research Centre (NORC), Gambling impact and behavior study: Report to the National Gambling Impact Study Commission. National Opinion Research Center at the University of Chicago(1999), available at http://www.norc.uchicago.edu/new/gamble.html (last visited Jan. 20, 2014 []
  78. Supra note 13, at 395 []
  79. National Gambling Impact Study Commission (NGISC) (1999). Final Report. Washington D.C.: NGISC., available at http://www.ngisc.gov/reports/finrpt.html (last visited July 16, 2001). []
  80. List II, Schedule XI, The Constitution of India. []
  81. Koerner, B.I, Extreeeme. U.S. News & World Report,122(25), 50-60 []

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