Law Commission of India Urges Government to Legalize Betting & Gambling

Acknowledging the undeniable presence of betting in India, the Law Commission of India (LCI) has recommended legalization of betting and gambling while seeking stringent control and creation of a detailed framework to facilitate cashless transaction with checks to curb money laundering.

In its report titled ‘Legal Framework: Gambling and Sports Betting Including Cricket in India’, LCI has recommended this to the Union government and stated that the incapability to enforce a complete ban on sports betting and gambling has resulted in a rampant rise in illegal gambling and this has resulted in a boom in black money generation and circulation.

“Since it is not possible to prevent these activities completely, effectively regulating them remains the only viable option,”the panel noted.

The recommendations come in the light of a number of incidents of betting on sports including cricket and reports of match fixing and cheating. In 2016, LCI was tasked to examine the best way to deal with the country’s rampant gambling activity, nearly all of which remains untaxed and underground.

The Commission has recommended that only ‘Indian licensed operators from India’ possessing valid licenses granted by the game licensing authority should be allowed to offer betting and gambling and that Indian-licensed online gambling websites would be required to prominently display responsible gambling information and to ensure that no ‘objectionable or pornographic content’ is displayed on their portals.

Gambling should, LCI stated, be categorized into two groups- ‘Proper Gambling’ – with high stakes and ‘Small Gambling’.

Only the individuals belonging to high income groups should be allowed to indulge in the first type, and individuals belonging to lower income groups will have to confine themselves to the second type, and not be permitted to stake high amounts (falling within the bracket of ‘proper gambling’), the Commission suggested.

It also recommended that for participants, there must be a cap on the number of transactions in a specific period, which could be monthly, half-yearly or yearly, PAN and Aadhaar Cards should be mandatorily used and all transactions must be cashless.

Citing examples of legal betting and gambling in other countries such as China, the LCI has strongly recommended that betting and gambling should be made taxable under the direct and indirect tax regimes and observed that the revenue generated from imposing the Income Tax and GST on gambling will boost revenue, which can be in turn used for public welfare.

The LCI has urged the Indian Parliament to enact a model law for regulating gambling that may be adopted by the states. Alternately, it suggested, the Parliament may legislate in exercise of its powers under Articles 249 or 252 of the Indian constitution. The current gambling laws in India already permit exceptions for ‘skill-centric’ gambling, i.e. horseracing. Taking note of this, the LCI has recommended that “other skill-centric games” should be granted similar exceptions and observed that Information Technology laws may need to be amended to ensure that technical intermediaries are not prosecuted for transmitting or hosting content related to legal gambling.

While the ball is in the court of the Indian legislators, if implemented, the recommendations could set in motion a sequence of events that could benefit the Indian gaming industry in the long run.

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