Time Ripe for Gambling Law reforms-is the government listening?

[An edited version of this article was first published in The Statesman on 12th September 2013.  A soft copy of the column can be accessed here.]

Gambling has enthralled human civilisations ever since the ancient times. Description of rampant gambling prevalent in society can be found in Mahabharata, Quran, Bible and other ancient religious texts. In fact sports and wagering are also inextricably linked. Cricket, India’s favourite sport became popular in 18^th century England because it gave the upper-class elites an opportunity to wager on their favourite teams.

Given the ubiquitous nature of gambling, it has always been difficult for governments to prohibit it. However, Indian laws on the subject remain archaic and ambiguous. Based on the Victorian notion of morality, gambling in a ‘common gaming house’ was prohibited by the Public Gambling Act of 1867. The law still remains in the statute book though state governments have enacted their own gaming Acts modelled on the Public Gambling Act.

There are multiple problems associated with the Public Gambling Act and other state gaming laws. First, none of the laws have kept pace with changing times and the statute does not contemplate for instance gambling through internet or mobile phones and fails to clearly penalise bookmakers or sports betting.

Secondly these laws are scarcely implemented resulting in a huge underground betting and gambling market controlled by mafia syndicates which are often used to fund terrorist networks and other criminal activities. Underworld don Dawood Ibrahim’s solid grip over the illegal gambling and betting market is all well known. In fact after the liberalisation of Indian economy put an end to the illegal smuggling market, bottlegging and bookmaking are said to be the only two major sources of revenue for the underworld. Recent estimates by KPMG suggests that the underground gambling market in India might be worth a staggering US $ 60 billion, which is more than 2% of India’s GDP.

Thirdly, legalising gambling with specific set of rules and a strong regulatory framework would prevent match-fixing and other cheating in gambling to a large extent (cheating in gambling could be detected through suspicious betting patterns and regular inspection of gaming premises as is done in European countries), giving citizens a transparent and free right to indulge in recreational gaming.

Given this background, the economic benefits of liberalising this sector seem obvious. It would defy logic to continue having grey areas in gambling laws to benefit mafia syndicates while the government is deprived of a fair share of revenue. The moral arguments of protecting citizens against the ills of gambling also do not seem to cut much ice since the benefits clearly outweigh the costs.

Surprisingly India still swears by the Victorian notion of frowning on gambling while United Kingdom (and most other common law countries) have comprehensively liberalised the sector allowing various forms of lotteries, casinos, sports betting and internet gambling. The British Gambling Act of 2005 has addressed the problems of gambling addiction and gambling by minors through creation of the Gambling Commission, an independent regulatory body to monitor the gaming industry.

It is thus logical that governments in India should start looking at liberalising this sector to earn income through taxation and curtail revenue for criminal syndicates, just as they were driven out of their lucrative smuggling business post-1991 reforms.

Time Ripe for Gambling Law reforms

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 crore illegal sports betting market alone. Such huge amounts of revenue can go a long way in reducing the fiscal deficit and economic crisis.

All of this will led to a natural question: why hasn’t the government tried to legalise gambling in a structured manner? The simple answer to this is political expediency.  The small states of Goa and Sikkim remain the only two territories in India where casinos have been permitted through statutes (although a rather ironic situation exists in many other states where government sponsored lotteries or betting on horse races is perfectly legal, but card games and other forms of wagers are prohibited by law).

Out of these two tourist states, Sikkim has authorised land-based casinos in five star hotels; but Sikkim having had one-party rule for the last decade or so has not faced any serious political opposition. However even in Goa there is significant blame game over ‘offshore casinos’ authorised in 1996 by an Act of the state legislature. The Congress and BJP have taken turns in ridiculing the state casino policy while in opposition; and the current Goa government has already imposed stringent regulations on the casino industry and promised to push offshore casinos, into the Arabian Sea vowing to keep Goans at bay from the sins of gambling.

Other state governments like Punjab, Odisha, Assam and Haryana have at various points of time contemplated legalising gambling but have dropped the idea due to political opposition and negative public perception. The legislative assembly of Maharashtra passed a comprehensive casino legislation in 1976 taxing and legalising various wagering activities. Though the government was contemplating allowing casinos at various points of time over the past three decades, the statute is in cold storage and has not yet been enforced.

Thus, it is high time now that governments should immediately look at a holistic legislation legalising gambling and curtailing cheating and addiction in these activities to allow citizens a right to freely choose their pastimes.