New Bhutanese government to resume lottery business, raise issue of resumption of lotteries with Indian government

Bhutan witnessed a surprise political change this month with the opposition People’s Democratic Party (PDP) defeating Druk Phuensum Tshogpa (DPT) in the general elections held last month.

One of the prominent election issues taken up by PDP leaders was the resumption of the state-run lottery business.  Bhutan ran a a state-run lottery since 1987 which was a huge source of income for the small Himalayan state. According to estimates, around Rs. 950 crores of annual revenue can be generated by sale of Bhutanese lotteries across India. However in 2011, the Bhutan state lottery was shut down after allegations of irregularities and appeals by the Kerala government to the Indian Central government to ban Bhutanese lotteries.

Commenting on a question regarding resumption of lotteries in an exclusive interview to Hindustan Times, leader of PDP and Bhutan’s future Prime Minister Tshering Tobgay said: “Our party pledged to revive the lottery business which was a substantial source of revenue for the Royal Government of Bhutan. At the same time, we will ensure that the lottery business is conducted in a lawful manner and all proceeds go to our education and health sectors.”

New Bhutan govt to resume lottery service in India?

It may be remembered that Bhutan enjoys a peculiar trade-arrangement with India and is the only foreign country which is entitled  to sell lotteries in India by virtue of the Agreement on Trade, Commerce and Transit between the two nations. Under Article 1 of the Agreement, there is to be free trade and commerce between India and Bhutan.  With reference to this Article, the Protocol to the Agreement states: “For the purpose of this Agreement, the term ‘free trade and commerce’ in Article I shall be understood to include within its scope sale of Bhutan lottery tickets in India and the sale of Indian Government or State lottery tickets in Bhutan, subject to the relevant laws which may be in force in the territories of the Kingdom of Bhutan and India, as the case may be.”

Thus, Bhutan is entitled to sell lotteries in India in any state if that state government allows sale of lotteries from other states. Under the Central Lotteries (Regulation) Act, 1998 the state government can either allow lotteries from other states or ban them. Thus, Bhutan is virtually considered to be an Indian state for the purposes of lottery business due to the aforementioned agreement and state governments which allow lottery business in general, would also have to allow Bhutanese lotteries as well.