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Gaming Legal & Regulatory

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 18th 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
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.

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Gaming Legal & Regulatory

Feature: Canadian Gaming Lawyer Stuart Hoegner speaks on gambling laws in Canada and India's archaic gaming regulations

In this exclusive interview we present Mr. Stuart Hoegner, a gaming attorney from Canada. Mr. Hoegner graduated from the Faculty of Law at the University of Toronto in 1996 and is called to the bar in Ontario and Nevada. His clientele includes Internet gaming operators, sports books, land-based casinos, software developers, marketing and advertising companies, poker pros, and social media entrepreneurs. Mr. Hoegner represents a large number of innovative gaming and other businesses in the Bitcoin space and is a regular writer and speaker at various conferences.

In this feature, he gives an overview of gambling regulations in USA and Canada; the changing global gaming environment and future of the Indian gaming industry.

Q. Mr. Hoegner, it is a pleasure to present your interview to our readers.  Could you briefly tell us what got you interested in gaming law and why you chose this area of practice?

Stuart Hoegner (Stu): I was a tax lawyer working in mergers & acquisitions for my first 7 years of practice. I never dreamed of a career in gaming law; being a gaming attorney never occurred to me. I had an interest in poker and in casino games, so when a chance came along for me to join a gaming company in 2006 as in-house counsel—they needed an in-house tax lawyer—I took the opportunity. I have one of the best jobs in the world. The gaming industry (and especially Internet gaming) is filled with interesting personalities and fascinating and emerging legal issues.

Q. India and Canada share the common law heritage. Could you give a brief overview of the Canadian gaming laws and the type of gaming allowed by Canada including state level and federal laws?

Stu: Gaming and betting law in Canada is an area of shared responsibility between the federal and provincial governments. (Like India, Canada is a federation.) The federal government exercises jurisdiction through the Criminal Code and the Competition Act. Generally, conducting a gaming or betting business in Canada is illegal unless it’s conducted and managed or licensed by a provincial authority or, possibly, it’s regulated by a First Nation.

All of the provinces have provincial lottery corporations that operate or regulate gaming within their borders. In Canada, you’ll find everything from entertaining lottery tickets and games to bingo halls, charitable gaming centres, and casino resorts run by major global operators in partnership with the provincial governments.

Federal law in Canada sets out that Internet gaming is to be exclusively conducted and managed by the provincial governments. A number of provincial lottery corporations have already moved into this space, including Quebec and British Columbia. Ontario says it will open the doors on www.playolg.ca soon. The Code does not provide for First Nations in Canada to conduct and manage their own online gaming, but at least one aboriginal community in Canada disagrees with that: the Mohawks of Kahnawake, in Quebec. They regulate Internet gaming and betting from their territory and, to date, several land-based card rooms in their community.

Canadian Gaming Lawyer Stuart Hoegner

Q. Coming to United States which has seen quite a few regulatory changes in recent times, could you briefly tell us the current legal position as to which states allow brick and mortar casinos and which states allow online gaming? Also do you think a pan-America regulation on online gaming is likely anytime soon?

Stu: Many of the states in the US have a state lottery; only a handful (including Nevada) do not. Most states also have land-based casinos in some form. These range from full commercial casino offerings like in Nevada, New Jersey, and Mississippi to First Nations gaming offerings in Florida, California, and Connecticut. Only two states currently have Internet gaming offered pursuant to state law: Nevada and New Jersey. Nevada has live offerings but New Jersey has none yet. Delaware is in the process of rolling out its own online gaming offerings. Other states are looking at Internet gaming, however.

Q. Indian gaming laws are archaic and urgently require reforms. There have been various debates on legalising betting and other forms of gaming. Your thoughts on the regulatory model that India should follow and any lessons that India can take from the Canadian model of regulating gaming?

Stu: India will have to make its own way on the Internet gaming file, and international comparisons can be difficult. Regulating online gaming and betting will also have to compete with policy-makers’ attention with other projects that are urgently needed in India. However, given the size of the Indian betting market and the amount of that market that is underground, I would think that there is an incentive to try to deal with the issue and to regulate and tax the activity.

Q. Tribal areas in India enjoy constitutional protection just as they do in United States. Do you think developing casinos in tribal areas is a feasible option and based on experiences in USA, do you think such an experiment would contribute to economic progress of backward regions?

Stu: Economic development is just one goal in regulating land-based and online gaming. Other objectives (reducing grey market activity and collateral harms, generating tax revenues) should also be considered. I get skeptical when casinos are seen as a panacea for economic regeneration or development goals. That said, a properly conceived and regulated casino offering could generate economic development; there are some good examples of that happening internationally. Some areas in India (Goa and Sikkim) have, I understand, tried introducing gaming with some success. So I suspect that the issue should at least be considered and studied.

Q. Finally, your thoughts on the potential of the Indian gaming industry? Do you think India can emerge as a leading destination for gaming in the near future?

Stu: That would be interesting. It certainly has a population with a passion for betting. The latest estimates I’m aware of peg the Indian gaming and betting market as worth more than $60 Billion. That’s an immense market and a huge population, and it would seem there’s room for regulated sports betting and casino games across different channels. As someone on the outside but who has worked on gaming projects in India, I think there’s huge potential, but the question is whether Indians and their policy-makers want to find out if and how they can regulate that market and cause it to flourish.

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Business Gaming

As new Delta Corp Casino starts operations and Opposition alleges 'casino scam'; Goa Deputy CM defends government stand on casinos [Exclusive]

Exclusive As Delta Corp started casino operations on its new vessel MV Horseshoe after securing all necessary compliances for transfer of its existing offshore casino license to a larger vessel,  opposition Congress government alleged a Rs. 431 crore casino scam in allowing transfer of offshore casino license to Delta Corp. Congress politicians alleged that Goa BJP leaders had got kickbacks through insider trading on the stock market to the tune of Rs. 431 crores  in the run-up to the announcement of license transfer.

However, in an exclusive conversation, Francis D’Souza, Deputy Chief Minister of Goa and Senior Bharatiya Janata Party (BJP) leader rubbished all allegations of the Congress party and said, “Congress Party is an expert on scams and they are deep rooted in all kinds of scams. These allegations of manipulation of stock market by Goa government officials are frivolous and baseless. Since Congress is in opposition it is making loud noises and trying to stop all forms of revenues for the state government. They earlier tried to stop entry tax and mining in the state and now they want to stop revenue from casinos by banning them altogether. It seems that Congress wants to put the state government in a financial crunch and does not want financial stability for the exchequer.”

On being asked to clarify BJP and Goa government’s stand on the issue of offshore casinos in the state, D’Souza said, “It is not possible to change decisions made by previous governments (on allowing offshore casinos) overnight. Lot of investment has been made in the casino industry which is benefiting Goan tourism and economy and generating employment. Due process of law has to be followed in changing conditions and we are sticking to the stand that offshore casinos will not remain in River Mandovi after two years. We are trying to phase out offshore casinos.”

Goa Deputy Chief Minister Francis D’Souza

D’Souza added that gambling was an inevitable vice in all societies since ancient times and it was not possible to ban casinos altogether.  “Although I have never gambled in my life, I think banning casinos is not a solution. Gambling has existed since beginning of mankind and cannot be wished away though some organisations want it.”

On the issue of an independent Gaming Commission which was to be established as per the Goa Gambling (Amendment) Act, 2012, D’Souza responded by saying that an independent gaming commission was required to monitor activities of the casinos and the Chief Minister was working towards its establishment. He added that the commission may be put in place before the October assembly session.I have always asked that machines and equipment in casinos should be calibrated; should be fair and transparent. It may be the case that casino owners are taking away all the money and gamblers are being cheated. I had raised the issue of as Member of Committee on Delegated Legislation (in the Goa assembly) and asked for framing of rules and standards (by the Gaming Commission or Government). I ask the casino owners to come forward and prove that all machines are fair and calibrated”, he claimed.

On being asked about Aam Aurat Aadmi Against Gambling (AAAAG) and other NGO’s opposition to all casinos in Goa, D’Souza replied, “They (AAAAG) have their own point of view which I accept. But certain things cannot be changed overnight and gambling cannot be wished away from society altogether. Hence we also have to consider revenue, employment and tourism aspects before reaching any decision. I would also like to say that some NGO’s are falling prey to tactics of the Congress party which is now opposing casinos only for their convenience. Congress has no right to oppose casinos now as they allowed them in the first place.”

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Gaming Legal & Regulatory

Goa government issues final casino policy after months of uncertainity: No new offshore casinos, old ones to be shifted to Arabian sea

After months of confusion and contradictory statements issued by Goa Chief Minister Manohar Parrikar, the Goa Cabinet approved a new Casino Policy as per PTI reports.

The following would be steps taken by the Goan government to regulate casinos in the state as per statements issued by the Chief Minister:

  • No change in existing regulations for onshore casinos (in five star hotels). Onshore casinos to remain in the state; no further restrictions on license conditions and no bar on issuing new licenses to onshore casinos.
  • Licenses of offshore casinos expiring after 31st March 2014 will not be renewed.
  • Licenses of offshore casinos expiring before 31st March 2014 may be renewed subject to the condition that they shall move out of River Mandovi (into the Arabian sea) within the next two years.
  • No new licenses will be issued to any offshore casino.
  • Goan Gaming Commission, an independent regulatory body will monitor all activities of onshore and offshore casinos to ensure that they act in accordance with the Goa, Daman and Diu Public Gambling Act, 1976 and license conditions. The legislative assembly has approved the idea of a Gaming Commission through the passage of  the Goa Gambling Amendment Act 2012.  The government has announced that it will notify the formation of the Commission within the next couple of months.

These announcements will stop any new offshore casinos and the shift outside River Mandovi will certainly make the offshore casino industry economically unfeasible. Along with stricter regulations by the Gaming Commission, these measures taken by the Goa government come as a major blow to the casino industry.

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Gaming Legal & Regulatory

Government relaxes FDI norms for retail, defence, telecom, insurance but maintains status quo on gambling, betting FDI ban

In a bid to revamp India’s investor-friendly image, the Union Cabinet eased existing Foreign Direct Investment (FDI) norms in key sectors such as multi-brand retail, insurance, defence, tea plantation, telecom, courier services etc.  These reforms were taken in a bid to revitalise the economy and save the sliding rupee from further depreciation.

However, gambling, lotteries and betting is a key sector where there was no discussion for change in the existing blanket restriction on any FDI. The current FDI policy as clarified by a 2012 government Press Note easing FDI norms for the retail sector, states that no FDI of any nature is permitted for private or government lotteries or gambling/betting sector. The note further clarifies that foreign technology collaboration in any form is also strictly prohibited. The bar on any kind of foreign investment exists since 2002 (presumably to stall the then Chautala-led Haryana government’s plan to introduce casinos with the help of foreign investors) and there has been no proposal to ease these norms in the past decade.

However, two years ago India’s largest gaming company, Delta Corp tried seeking foreign investors for its gaming and hospitality operations but failed to get the deal cleared, presumably due to regulatory hurdles. Similarly, Sheldon Adelson, one of America’s richest men and promoter of Las Vegas Sand Corp intends to invest in the Indian casino industry but has been denied clearances by the government authorities.

It thus seems that the government’s decision to impose a blanket restriction on any foreign investment in the gambling, lottery betting or casino sector including in government licensed casinos or lotteries is flawed and without any basis. When all other sectors of the economy are being opened up for foreign investors, barring legitimate investment in the gaming industry and classifying gambling in the ‘totally prohibited’ seems counter-productive to the earnest intentions of attracting maximum foreign investments and creating an investor-friendly image. There is neither any threat to national security nor any reason to believe that domestic businesses will suffer (domestic gaming companies would in fact welcome any proposal to allow FDI in the gaming sector with open arms).

Therefore, the government should either immediately consider allowing FDI in the gaming sector along with critical reforms in the other sectors (at least partially in the first instance) or initiate and invite discussion on this subject to arrive at an informed decision on this important issue.

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Gaming

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.

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Gaming Legal & Regulatory

Goa CM softens stance on casinos, says casinos to remain in state due to windfall revenues

Goa Chief Minister Manohar Parrikar again changed his stance on the casino industry in the state and said he has no option but to allow gambling in the state due to the windfall revenues generated by the casino industry.

In an interaction with the Goa Small Industries Association, Parrikar said, “I get Rs 150 crore worth of revenue from casinos. Although I am personally against them, how will I be compensated if I close them…”

Parrikar’s latest comment may be a pragmatic compromise on his ethics and values in favour of fiscal prudence and economic health of the state. Parrikar and the ruling Bharatiya Janata Party (BJP) in Goa have been aggressively against casinos and had campaigned against casinos since the 2012-assembly elections.  Parrikar’s last anti-casino statement was in June 2013 when he rejected permission to Delta Corp for a new offshore casino and made a public statement promising to phase out offshore casinos by not renewing their licenses.

While Goan columnists, opposition leaders and the social organisation Aam Aurat Aadmi Against Gambling (AAAAG) were quick to criticise Parrikar’s softened casino stance, industry experts believe that casinos have greatly benefited the fiscal health of the state and have promoted tourism besides conferring many indirect benefits such as employment opportunities and view this as a reprieve for the Indian gaming industry.

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Gaming

Punjab Dy CM cancels grand casino plan, decides to build race course, resort on proposed casino land

Just months after reports that Punjab top leader and Deputy Chief Minister Sukhbir Singh Badal is seriously considering a proposal to legalise casinos in the state and permit a first of its kind casino resort in Mattewara near Ludhiana, the Deputy CM seems to have changed his mind and will now allow a race course in the same location since there was religious and political opposition to the casino project.

According to  media reports The Punjab Horse Race (Regulation and Management) Act, 2013 is set to be promulgated either as an ordinance or through a full-fledged Bill in the legislative assembly very soon. Given the comfortable position in the legislative assembly of the ruling Shiromani Akali Dal (SAD)-Bharatiya Janata Party (BJP) coalition in the legislative assembly and support from the top leadership, it is unlikely that there will be any problem in getting the statute passed and kick-starting the proposal.

The draft Act also provides for on-course and off-course betting on horse races conducted in the licensed race course. Permissions and license for the race course can be provided to both private parties or government agencies, with the first race course in the state proposed in the Ludhiana region. Penalty is prescribed for illegal betting on horse-races except through licensed bookmakers.  However, experience indicates that it might take some time to get the Act passed and frame the appropriate Rules and Notifications before allowing the project. It might thus take a few years to actually start the race course and betting, though the process has already begun and there is unlikely to be any obstruction.

Next grand race course in Ludhiana?

If everything goes according to plans, Punjab would be the ninth state to allow race courses and betting thereof and probably the first state to allow the innovative off-course betting (remote betting). One would have to wait and watch as the nitty-gritty details of this  innovative betting system emerges, but needless to say this proposal is a positive step for the gaming industry in India. Currently, states like Andhra Pradesh, Assam, Delhi, Karnataka, Meghalaya, Tamil Nadu, Maharashtra and West Bengal have created specific exceptions in their statues allowing horse races and betting thereof.

In another related development, the Punjab government is set to allow online lotteries through a licensing system in the state. The government is set to amend the Punjab State Lottery Rules of 1998 and permit and license online lotteries in the state. State governments are free to conduct paper and online lotteries in accordance with the Central Lotteires (Regulation) Act of 1998. According to the 2010 Central Lottery (Regulation) Rules, stringent conditions are imposed on state governments who wish to allow paper and online lotteries.

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Gaming

Goa government rejects permission to Delta's grand casino,decides to phase out all offshore casinos

Goa Chief Minister has rejected permission to operate Casino Horseshoe in the River Mandovi in a jolt to the Indian casino industry. While rejecting the permission Chief Minister Manohar Parrikar issued the following statement on his official Facebook page:

“A vicious campaign is currently being run about supposed change in stance by my Government on the issue of casino. I would like to put it on record that my stand on casinos has not changed. To put the things in perspective, let me point out the below facts/comments:
– 6 licenses were issued during Congress regime without following any procedure. I am firm in my stand that no new licenses will be issued by my Government. The actual number of operating offshore casinos has come down to 3.

– Due action has been taken on casinos not adhering to the rules and regulations One license has been cancelled and the ship is under process for confiscation by Tourism Department since it poses threat to the tourism in the state. The same will be towed away and auctioned as soon as final order is issued by the statutory authority concerned.

– About the highly debated and publicized Horseshoe casino, please note that it is only a vessel. Permission for starting of casino has been rejected.

What is surprising is that despite of clarification, which is already in public domain through media, some publicity seekers with vested interests have chosen to spread blatant lies with regards to the Government’s stand on the issue. I am sure this clarification will set record straight.”

Anti-casino Goa CM Manohar Parrikar

The number of operational offshore casinos in Goa is now  three with the cancellation of license operated by estranged Haryana Minister Gopal Kanda and rejection of permission to Delta Corp’s MV Horseshoe. Chief Minister Parrikar also made public his decision not to renew licenses of existing casinos and eventually phase out all casinos from Goa.

Though these decisions come as a major jolt to Delta Corp and the gaming industry, the stand of the BJP-led Goa government is consistent with its electoral promises made in 2012. We had also correctly predicted tough measures against the casino industry when the new government took charge in 2012.

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Gaming Legal & Regulatory

Nationwide debate on legalising sports betting in India as US Congress mulls legislation to license online gaming, important lessons for Indian policy makers

The past few days have been exciting for all observers of the gaming industry in India. After the recent spot-fixing and betting scam, there have been various calls to bring in a strong law to penalise cheating in sport and also change the archaic gambling/betting laws. Debates in television studios, media (including Times of India which cited this website on a betting laws cover story) and even through policy papers such as publications by the Hindu group  and PRS Legislative research indicate that archaic gaming laws should be liberalised on a priority basis.

However, Union Law Minister Kapil Sibal indicated today that while the draft of the Bill criminalising cheating in sports has been submitted to the Union Sports Ministry, which may introduce a Bill in Parliament on the subject soon; he clearly rejected the idea of introducing a Bill to regulate sports-betting citing the Attorney General’s (AG’s) opinion stating that since betting and gambling is a state subject, the Union government will not intervene and it is upto the individual state governments to either regulate or prohibit gambling and betting.

Kapil Sibal
Law Min misinterpreting the law?

However, developments in the past couple of years indicate that it is impossible for state governments to regulate new and complex forms of online and telephonic wagering which have inter-state and International dimensions. The opinion of the learned AG and Law Minister is also wrong on the following counts:

First, as noted in a recent Indian Express column, the Maharashtra Home Department and even the Bombay High Court in response to a Public Interest Litigation (PIL) ordered the blocking of online betting website Betfair as it was used for illegal gaming and hawala transactions. However the Computer Emergency Response Team (CERT) could not take any action and block the website as there was no explicit provision in the Information Technology (IT) Act authorising blocking of gambling websites, despite a Central government order on the subject.

Secondly, as noted by us earlier, the Sikkim government’s bid to legalise, license and regulate online gaming has failed despite issuing Letters of Intents (LOIs) since there is opposition from other state governments and lack of clarity on applicable Central legislations.  Thus, it is ridiculous to assume that state governments can regulate all forms of gambling including online and telephonic wagers. As far as legislative powers of the Parliament is concerned, the Parliament has all powers to regulate the internet, telecommunications, International and inter-state commerce as per List I of the Seventh Schedule of the Constitution. Thus, attempts to portray helplessness are incorrect, false and indicative of the Central government’s lethargy. Again regulation of online gambling requires several changes in FDI and FEMA policies, Information Technology Act, Income Tax Act, RBI policies etc. which can only be done at a Central level.

Thirdly, no one is asking the Central government to meddle with the state governments traditional powers to regulate and tax brick-and-mortar casinos. The option to regulate land-based and inter-state gaming is obviously best left to the respective state governments. As far as taxes on online gambling is concerned, there can be a revenue sharing model with states as the case is with a number of other subjects and thus this cannot be a stumbling block for a Central online gambling regulation.

Fourthly, federal regulation of online gaming and betting have a global precedence. USA having a similar federal structure has a federal Unlawful Internet Gambling Enforcement Act 2006 (UIGEA) which prohibits financial institutions to allow payments for online gambling which has been passed under Article 1, Section 8 of the US Constitution (inter-state trade and commerce) despite the fact that land-based casinos fall squarely within the domain of state governments or native American tribes as the case may be.

Interestingly, USA is also planning to move away from unenforceable prohibition to regulation as the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2013 has been introduced in the US Congress to repeal the UIGEA and introduce a licensing system to regulate online gaming and betting under the Federal Department of Treasury. The Bill when passed will allow a comprehensive system to regulate all forms of online gaming, taxation, Centre-State relations and also add an element of flexibility to allow states/tribes to either participate in the internet gaming licensing system or prohibit the activity in their state. (A copy of the Bill can be accessed here).

Australia is another jurisdiction where gambling/casinos traditionally fall within the domain of state governments, but there is a comprehensive federal Interactive Gaming Act of 2001 to deal with online gaming.

In conclusion, Sibal’s assertion that gambling/betting squarely falls in domain of state governments is devoid of any merit. Lessons should be learnt from other jurisdictions such as USA and Sikkim’s failed online gaming experiment to immediately regulate and license online gaming at a federal level.