Recent Kerala HC decision on lotteries

The Kerala High Court recently announced its verdict on lotteries from outside the state (notably Sikkim and Bhutan lotteries). A litigant secured an order from the Kerala High Court to restrict the number of draws to once a week.  However, a recent division bench order of the Kerala High Court has now vacated the earlier order.  It said that the government could have draws under different schemes. The Court also directed the Kerala government to collect advance tax from Megha distributors, promoters of Bhutan lotteries in Kerala. The issue of Sikkim and Bhutan lotteries being drawn is a matter of continuous controversy not just in Kerala but across India. Lotteries sponsored by the government of Sikkim, the Playwin lotteries (a company owned by the Essel Group) are the largest selling lotteries in India. The annual turnover of Playwin is over US $ 150 million (approximately Rs. 6,750 crores). We shall now look into the various legal, social, political and economic issues involved.

Legal issues: Respective State governments have the power to prohibit lotteries conducted, authorised or promoted by any other State under Section 5 of The Lotteries (Regulation) Act, 1998. There are various conditions which the State governments have to comply under the Central government enacted Lotteries (Regulation) Act. Some of these conditions are: the state government must print the tickets, the proceeds of the ticket sale must be credited into the public account of the state, the state government shall conduct the draw of all lotteries and no lottery shall have more than one draw per week.

The two most contentious in this legislation are: restricting the draws to one per week and prohibiting lotteries from other states. The Kerala High Court while passing the order said that the state government can have more than one draw per week under different schemes.

However, while there have been vociferous demands in Kerala to ban the ‘outside’ lotteries both the State and the Central Government are reluctant to ban these profitable lotteries promoted by powerful individuals. While it is the State Government’s prerogative to prohibit lotteries authorised by other states, the state government has conveniently passed on the blame to the Central government which has the power to prohibit organisation of lotteries, only if the said lotteries are in breach of the above-mentioned conditions.

Political issues: Kerala accounts for just 4 per cent of the lottery ticket sales in the State while Sikkim and Bhutan lotteries account for most of the remaining 96 per cent sales. Most of these Sikkim and Bhutan lotteries are run by promoters like Coimbatore based Santiago Martin, a man with friends in all political parties and the treasurer of the All India Federation of Lottery Trade and Allied Industries (AIFLTAI).   Law enforcement agencies suspect Martin of being the king pin of an illegal lottery racket worth thousands of crores. Martin has many cases of illegal lotteries and irregularities in his legitimate lottery business against him in Tamil Nadu.  However, with Abhishek Manu Singhvi- Congress spokesperson appearing on behalf of Martin owned Megha distributors and Tamil Nadu Advocate General stepping in to defend Martin, it seems that Martin’s remarkable clout will ensure that his lottery-business is never affected.

Economic and Social Issues: Lotteries are almost a part of Kerala’s landscape. Keralites spend more than Rs. 15,000 crore on lotteries every year. Though Indian Courts have on numerous occasions held that the business of conducting/promoting lotteries is not included under freedom of trade and profession; more than 400,000 people in Kerala alone depend on lottery-ticket selling for their livelihood.   Any measure to ban lotteries would thus be seen as an attempt to deprive the poor of their livelihoods.

List of news articles used: Bummer Ticket, p. 12 Outlook dated 13th September, 2010

http://ibnlive.in.com/generalnewsfeed/news/ker-cm-writes-to-karuna-on-tn-ags-appearance-in-lottery-case/393677.html

http://www.livemint.com/2010/10/15001902/Kerala-HC-vacates-order-on-wee.html