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.

Legal & Regulatory

US Second Circuit Court overrules lower court decision, holds poker to be gambling under New York law

In a new twist to the landmark 2012 United States of America v. Lawrence Dicristina decision delivered by the New York federal court, the United States Second Circuit Court gave a separate interpretation to the federal Illegal Gambling Business Act (IGBA) to reverse the acquittal of Lawrence Dicristina and others. The Court while interpreting the IGBA relied on New York state law definition of the term “gambling” which includes mixed games of chance and skill under its ambit to convict Dicristina. Dicristina had not contested the precedent that poker falls within the definition of gambling under New York law but merely contended that poker does not fall within the ambit of “illegal gambling business” as defined by the federal IGBA.

The Court while rejecting Dicristina’s argument held that since IGBA did not directly define “gambling” (IGBA only defines illegal gambling business and gives an illustrative list of activities such as  pool-selling, bookmaking, slot machines, roulette wheels, dice tables, lotteries etc. that could be covered under the definition of gambling) reference has to be made to state statutes on gambling. The Court cited precedents and legislative history to conclude that poker is covered within the ambit of IGBA (at least when read with New York state penal laws).

While this decision is certainly a minor setback for the gaming industry in the United States, contrary to popular perception, this decision will not have any significant impact on any gaming law jurisprudence in India or elsewhere; as the Court had simply not gone into the merits of whether poker can to be construed as a game of skill. The Court merely reiterated New York state’s position of holding poker to be gambling under its state law (which includes mixed game of skill and chance within the ambit of gambling). This verdict will only have a significant impact on the interpretation of IGBA in USA.

Thee only option available with Dicristina is to prefer an appeal directly to the United States Supreme Court against this decision, though it could not be ascertained whether he would indeed prefer such an appeal.

Note: A copy of the Second Circuit Court decision can be accessed here.

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.

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.

Legal & Regulatory

Feature: Jason Chess, Partner at British Media Law firm Wiggin LLP speaks on gambling regulation, cheating in sport and road ahead for the Indian gaming industry

In this exclusive interview, we present the Gambling and Betting Law Head of top British Media Law firm Wiggin LLP; Mr. Jason Chess. Mr. Chess is an expert on electronic betting and gaming and has advised several top International companies in their gaming projects. In this interview, he discusses the gambling law regulations in  UK, India’s potential in the gaming industry, match-fixing and cheating in sport and much more.

Q. Mr. Chess, 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 did you chose this practice area?

Jason Chess (JC): Jay, back in 2004 the big UK football pools company Littlewoods asked me to advise them on a tie-up between some of their businesses and ITV, the UK’s main commercial broadcaster. We worked on putting electronic betting products into the satellite ‘set-top-box’ receivers of the UK’s direct-to-home satellite audience and the viewers were able to access and play the products by clicking onto the ‘red button’ interactive icon on the ITV channels. From that time onwards I developed expertise in electronic betting and gaming and have been practising in that area ever since.

 Q. India has largely followed the British model of prohibiting gambling based on the (except betting on horse-racing) Victorian notion of morality and the archaic British-era Public Gambling Act, 1867 has been adopted by most states or legislation has been drawn on similar lines. However, UK itself has seen changes in its gaming laws in the past few decades and comprehensive changes after the passage of the Gambling Act of 2005 liberalising the sector. Can you take us through the progress of the gambling industry in UK in the twentieth century and the current legal and regulatory environment?

JC: Jay that is an interesting question with wide social and moral dimensions. The historic gambling legislation in both countries has been until recently reflective of a far deeper issue – that of the fundamental morality of gambling. Historic legislation was always restraining and controlling, taking the view that gambling was a moral evil and that it should be suppressed as far as possible, and to the extent that it could not be suppressed and people were going to do it anyway, it would be controlled and confined to very strictly-regulated premises where the authorities could exert what control they felt appropriate, for example racecourses and casinos.

In more recent times, attitudes have become more liberal. The British 1968 Gaming Act provided that persons could apply for casino licences based on them demonstrating that there was a public demand and the current 2005 Gambling Act goes a step further and offers gambling licences to any person who wishes to run a gambling business regardless of demand. Official British Government policy behind the 2005 Act was that gambling was from henceforth to be treated as a leisure pastime like any other, with no adverse moral connotation, albeit subject to much heavier regulation than other sports or pastimes. Other European jurisdictions have similarly ‘liberalised’ with a variety of more or less permissive licensing regimes allowing gambling businesses to obtain particularly electronic/remote gambling licences, pay duty, report to the regulators and operate in a well-regulated and transparent manner.

Q. What are your thoughts on the Indian gaming industry and its potential?

JC: India is a huge and fascinating market and like the USA will surely be one of the dominant global markets. There is enormous potential for sports bets operators particularly and for remote gambling generally as the takeup of smartphones and connectivity increases. The Indian sports fan will enjoy a bet on his favourite cricketers just as much as his English and Australian cousin.

British Gambling Law expert Jason Chess

Q. In Indian except two Indian tourist states of Sikkim and Goa, gambling is mostly prohibited. Though there is ambiguity on online gambling and initiatives involving online gambling may be illegal and it is assumed to be prohibited by the federal Information Technology Act, 2000 and allied rules. What do you think of the regulatory framework on gambling in India? Do you see opportunities in the Indian gaming industry? What would be your suggestions and comments on the model for regulating gambling in India?

JC: It isn’t for me to develop a local framework for the Indian market because of course this needs to be worked out by Indian politicians and lawyers bearing in mind Indian needs and the traditional expectations and morality of Indian society. Here in the UK however the three ‘principles’ or ‘objectives’ of the current gambling legislation are to protect the young and the vulnerable (i.e. problem or addict gamblers) from harm, to ensure that gambling is fair and open, and to prevent any association of gambling with crime.

As someone close to the gambling industry if you asked me what I would like to see in India I would of course like to see a country-wide amalgamated market with federal enabling legislation offering responsible, certified and approved and socially-aware businesses the chance to obtain gambling licences, pay duty, and make a contribution to the prevention and treatment of problem gambling.

An India-wide electronic gambling market, with high-quality, fair and verified products, paying duty to the state and ensuring that problem gamblers are identified and excluded, would be the same sort of system that places like the US and Germany seem to be struggling towards and which jurisdictions like Italy, Denmark, Spain, Great Britain, France and the Netherlands already have in place. The emergence of the internet, smartphones and international connectivity vastly increases the difficulties for a Government that wishes to prevent gambling and a lot of Governments have taken the view that you can’t beat the internet and so why not regulate and tax these businesses instead? All gambling businesses – or at least the reputable ones – are keen to operate legitimately, obtain the correct licences and pay the correct duty because of course that gives them business certainty, the certainty they need to invest in good systems and platforms and digital marketing and promotion.

Q. Do you think tribal gaming in India can be developed as a concept similar to native American gaming in USA? Tribal areas in India also enjoy constitutional protection; so do you think opening casinos will enable the development of these areas?

JC: I am not an expert on this and my only comment would be that these markets may lack the volume and liquidity to be attractive. The population in India may be greater than that of individual native US tribes and such segmented Indian markets may be capable of development for that reason in a way that the US markets are not, but all gambling companies like to see the market as large as possible and, for example in relation to poker, they like to be able to ‘pool’ players from different countries/jurisdictions and have them all playing together for the maximum prizes and so on.

One only has to look at Germany for an example of a country where, in the absence of overarching federal gambling laws, individual states have sought to licence or prohibit gaming and the situation is something of a disaster. The US is looking like a similar case. Everyone is very excited at the moment about the ‘opening’ of the US market but all we have so far is a small number of states opening up to electronic poker, primarily, and the integration of these jurisdictions may take some time, including native jurisdictions. A Nevada licence is in reality useless because of course Nevada is mostly desert and there are very few people there – it’s all based on future hopes of what might happen. I wouldn’t think that that would be the best model even for a large and varied country like India. So the ‘working up from local units’ model of regulation isn’t perfect and I suppose the lesson with gambling legislation is to try to do it on as universal a scale as possible, not on a micro-level.

Q. The recent allegations of spot-fixing in the Indian Premier League (IPL) and other International cricket matches as well as the larger issue of cheating in sport has tarred the integrity of many sports and jolted fans. However, the UK Gambling Act has brought transparency in betting and many say curbed the chances of cheating in sport. Do you agree that regulated and transparent betting and an independent regulatory body will curb instances of fixing and ensure swift punishment for the guilty? What would be your advice on the approach by Indian lawmakers as India is considered to be the hub of fixing and illegal betting?

JC: I am a cricket fanatic and I have no greater pleasure than watching the incredible cricketing talent that comes out of India, along with millions of others, but there does seem to be an issue with betting and sport in some areas and this is a hot topic throughout the world and not just in India at the moment.

Cheating in any shape or form should of course be a serious offence because it is a slap in the face for the overwhelming majority of honest fans who may enjoy a bet as part of their enjoyment of their sport. Sportsbook operators should be under strict regulatory obligations to identify and report immediately suspicious betting patterns and there should be software and system in place to do this. Any co-operation or collusion from a bookmaker with irregular betting patterns should result in that person losing their licence and facing prosecution.

Q. Bringing a legislation liberalising gambling requires political will and such a move is difficult in the near future considering the fragmented political situation and protests from religious groups. Has UK ever faced political and religious opposition to casinos or betting in the past few years?

JC: Yes. Even in the current secular and liberal UK society there are some groups who maintain the historical mistrust of gambling on moral grounds, particularly groups influenced by the old Evangelical Protestant traditions like the Salvation Army and the Methodist Church. Some sections of press also take a negative view and report in detail on the issues faced by the very small minority of people who suffer addiction problems.

However in the main, British society is fairly liberal and tolerant of people’s choice of pastimes and gambling is not a particularly prominent matter of concern in the national life. Of more concern are economic matters, welfare dependence, the neglect of the elderly and Britain’s place in the world. We have plenty to worry about before getting to gambling!

Legal & Regulatory

Feature: Top Sikkim Lottery Department officials clarify ambiguities in lottery, online gaming & casino regulations

Exclusive In a visit to the Lotteries Department, Ministry of Finance and Revenue in Gangtok, I met Lotteries Director KP Sharma (a bureaucrat of the rank of Secretary to the Government of Sikkim), Suman Gautam, Law Officer of the Lotteries Department and other officials. The officials patiently clarified the stand of the Lottery Department and Sikkim government on paper and online lotteries, online gambling, casinos and future plans in a first of its kind interaction. Here is their response to the various initiatives of the Sikkim government, the state with the most liberal gaming and lottery laws in India:

On Online Gaming licenses and failure of the companies to start operations despite issuing provisional license

Gautam and other officials admitted that the companies who had been allotted online gaming licenses were not able to start operations  as per schedule despite the provisional license being issued a couple of years back which clearly stated that operations were to start within 120 days. This was due to the reason that necessary infrastructure could not be immediately set up by the companies, potential criminal and civil liability for operators under the Information Technology Act and state gaming laws and refusal by the Reserve Bank of India (RBI) to allow payment gateways to gambling websites.

However the officials admitted that there would be negotiations to clear any ambiguity and potential liability and the government would take an appropriate decision on granting ‘Go-live’ licenses at an appropriate stage after consultations with stakeholders (despite the maximum time gap of 120-days between the provisional and go-live licenses already been elapsed, the Lottery Department officials indicated that the delay in granting the full license would be condoned and operations could be started depending on favourable regulatory and commercial environment, though it was very well possible that the online gaming websites may not start operations at all).

On casinos in Sikkim

Two casino licenses have been issued by the Sikkim government to Hotel Mayfair and Royal Plaza in Gangtok and casinos are currently running in these two places. The Sikkim government started the process of regulating Electronic Games in 2002 by introducing the Sikkim Electronic Entertainment Games (Control and Tax) Act, 2002 but renamed the legislation as the Sikkim Casinos (Control and Tax) Act in 2005. Through the Rules framed in 2007, various conditions and fees are imposed on casinos and licenses are only granted to casinos in five star hotels.

Further, the officials clarified that only two licenses are issued as of now and there is no immediate proposal to grant any further licenses in the short term. Casinos were only licensed for attracting rich tourists and there was no attempt to encourage gambling in the state and the revenue generated through casinos was insignificant compared to lotteries.

Office of the Directorate of Sikkim Lotteries in Gangtok

On online and paper lotteries

Gautam and other officials were of the opinion that both paper and online lotteries have brought in significant revenues to the Sikkim government which otherwise does not have many sources of income and was essential to implement various government schemes. (Currently the Sikkim government has issued paper lottery license to Pan India which conducts the famous Playwin lottery and online lottery licenses to Future Gaming Solutions India Pvt. Ltd. and Samit Online. Gautam estimated the total annual revenue to the Sikkim government from all lottery licenses to be around Rs. 50 crores and from casinos to be around Rs. 10 crores ).

On the issue of transparency in draw of lotteries and  lottery feud with Kerala

Lottery department officials were critical of the banning of Sikkim lotteries by the Kerala government in 2011 on flimsy grounds and slammed the Kerala government for their doublespeak on the issue of lotteries. They noted that Kerala was until recently promoting its own state lottery and its recent moves were aimed to tarnish the reputation of Sikkim lotteries.

The officials however stressed to point out that the draw of lots in Sikkim was completely fair and transparent. Various regulations were in place and two judges and one supervisor were present in the lottery office during draw of lots (both online and paper lotteries).

They added that there would be progress in the Indian gaming industry and the Sikkim government had already taken various initiatives which should be followed by other states depending on their needs and sensitivities.

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.

Gaming Legal & Regulatory

Exclusive: Government fails to notify landmark Maharashtra Casino Act even 37 years after passage, as clamour for regulated gaming grows; court can compel govt to enforce the Act

Exclusive After I had written an exclusive story on how the Maharashtra legislative assembly passed the historic Maharashtra Casino (Control & Tax) Act, 1976 but failed to enforce and notify application of the Act till date, the clamour for regulated gambling has increased over the past few days with almost all media sources, experts, government officials etc. approving the consistent stand taken by this website in the last couple of years.

However, the question is why has no organisation, individual or the press taken up the issue and urged the government to forthwith notify this Act and frame Rules therein to give effect to the will of the legislature? Clearly organisations and experts who have been lobbying to get legislation passed have failed in their efforts to convince the government. However the inaction of the Maharashtra government has been exposed by the inordinate and unreasonable delay in taking any decision on the Act and judicial recourse may be available to compel the government to take a stand on the issue and pass the appropriate notifications.

A writ of mandamus can be filed in the Bombay High Court seeking directions to the state government to forthwith notify the Act or explain its appropriate stand on not notifying the Act. The Supreme Court and Delhi High Court have set an important precedent and allowed judicial action in cases of inordinate and unreasonable delay on part of the executive in issuing notifications. While in AK Roy v. Union of India AIR 1982 SC 710; a five-judge bench of the Supreme Court refused to allow a writ 0f mandamus to compel the Central government to notify provisions of the 44th Constitutional amendment Act and held that th power of issuing such notifications is the prerogative of the executive government.

However, a subsequent division-judge bench decision of the Supreme Court in Aeltemesh Rein v. Union of India AIR 1988 SC 1768 held in the context of pending notification under Section 30 of the Advocates Act, 1961 that there cannot be a blanket ban on issuing directions to the government to issue notifications when a statute has already been passed. Accordingly the judges ordered the government to consider whether the time is appropriate to issue a notification under the Act and asked the government to take a stand. The government however failed to notify Section 30 despite strictures in the decision and various recommendations of experts; only issuing the notification in 2011.

However, both these decisions have been differently interpreted by the Delhi High Court in Common Cause v. Union of India (Delhi Rent Control case 1999) where the court directed the central government to issue notification under the Delhi Rent Control Act within six weeks of the order. The court in the decision reasoned that both the AK Roy and Aeltemesh Rein cases did not put a blanket ban on such directions to issue notifications when there is unreasonable delay in taking such a decision.

Thus, the Maharashtra government will have to answer a lot of questions and take a stand on the Casino Act very soon- either before the courts of law or before the media. One only hopes that effect is given to the 37-year old Act to enforce the legislative will and constant recommendations of experts and jurists.

Legal & Regulatory

Feature: Sports lawyer Vidushpat Singhania discusses the recent spot-fixing controversy, sports betting laws and upcoming FICCI conference on sports betting

In this exclusive interview, Sports Lawyer and Principal Associate of Indian law firm Lakshmi Kumaran & Sridharan (Delhi office) Vidushpat Singhania discusses sports and gaming law practice in India, regulating spot-fixing and cheating in sport, liberalising laws on sports-betting , the upcoming FICCI conference on regulation of sports-betting and other important issues concerning the gaming industry.

Q. Could you tell us more about your practice on Sports & Gaming Laws?

Vidushpat Singhania (VS): Sports and gaming laws are emerging fields of law in India and involve exciting assignments. With respect to gaming laws work mainly pertains to advising companies on whether a game would be classified as a game of skill or a game of chance, whether it can be offered in India or in a particular territory, other related laws ancillary to the provision of betting and gambling services in India, structuring of the transactions and payment systems that can be used.

Whereas, work in the area of sports law pertains to assisting the government in its policies, representing federations and athletes before anti-doping panels, representations before courts, advising on compliance with rules and regulations of international and national federation, drafting, negotiating and advising on commercial contracts such as sponsorship, merchandising, franchising, player representation, employment, TV rights, broadcasting, venue hire, concession, marketing and other related services. The field is very vast and contrary to general perception specialized knowledge of the field helps in minimising risk to the clients.

Q. There have been constant allegations of fixing in cricket starting from the Azharuddin controversy in 2000 to the recent allegations of fixing in IPL tarring the reputation and integrity of the sport. What are your views and suggestions of curbing the malaise of corruption in sport and restoring the confidence of cricket-fans?

VS: The problem related to match fixing and its impact on the integrity of the sport is and was well known to the ICC and the BCCI. It is precisely for this reason that the Anti Corruption Sports Unit and the Anti Corruption Code for Participants had been formulated. However the implementation of the code and proactive investigation has been the problem. The first step that needs to be taken is a thorough investigation of all those who are likely to be involved with match/spot fixing. It is only when the investigation is completed and a comprehensive report is formulated that strict action is taken against the players, officials and other concerned. This would to some extent help in restoring the confidence of the jolted cricket fans.

The other steps that should follow are formulation of an international legal instrument against manipulation of sports results, setting up a betting monitoring system, securing judicial cooperation for expediting prosecution and imposing uniform sanctions. Maybe it’s time that a World Anti-Corruption body is set up, similar to the way WADA (World Anti Doping Agency) has been set up, with the cooperation of the International Sport Federations and the Governments.

Q. In the recent spot-fixing controversy, three cricketers have been booked for cheating and conspiracy under IPC. However many widely believe that the charges of cheating are not tenable and will not be able to sustain conviction. In fact there is a feeling that there is no specific law to deal with cheating in sport. Even the preliminary report of CBI in 2000 suggested that no offence is made out for allegations of match-fixing. Do you think a criminal offence could be made out for fixing in current laws or do you suggest introducing amendments to deal with this problem strictly?

VS: News reports have indicated that the Hon’ble Minister Kapil Sibal is planning to bring forth an amendment to the Indian Penal Code to incorporate a specific offence for wrongly influencing the outcome of a sporting event. If this happens the courts would have an effective tool for punishing people engaged in these activities. The provisions of IPC though not squarely dealing with the problem can always be interpreted by the courts broadly for public good and a precedence could be set which would be used in all future cases to punish such offences. Machinery for investigation is in place and what is needed is cooperation amongst the stakeholders and proactive investigation. Creation of a special unit in the police for protecting the integrity of sport is also an option, which could be set up on similar lines to the one that has been set up by Interpol.

An option is also available to the sport federations to prosecute the accused in front of the Court of Arbitration for Sports, this would bring about a penalty award which would be appealable only to the Swiss Courts.

Q. You have played a very active role in preparing the FICCI report on legalising sports betting in India and also in organising the conference. Can you share some details about last years’ conference and the upcoming conference this year?

VS: The FICCI conference on ‘Regulation of sports betting in India’ took place in June last year. It was a first of its kind and brought together stakeholders concerned with betting in sports. The conference’s aim was to spur discussions on regulation of sports betting. The conference, to some extent, dispelled the belief of the public, that betting in sports is a vice which must be curtailed completely. It brought forth the view that betting in sports and subsequent taxation of such winnings has huge revenue potential and the evils associated with it like gambling addiction, involvement of criminals and match fixing are the reasons why this activity needs to be regulated rather than banned or denied existence. The recent scandal of match fixing in the Indian Premier League has merely reiterated this fact that sports betting and match fixing exist in humongous proportions and that sports federations and the government cannot tackle this problem without proper tools. What the government needs is an essential and effective tool to monitor betting patterns which is key to wielding out corruption associated with match/spot fixing. Such tool can only become effective when sports betting will be regulated in the country.

This year too, FICCI seeks to hold the conference in September-October and endeavours to have representations from wider genre of stakeholders, particularly considering that the government, for the first time, has become amenable to the discussion on regulation of sports betting. I believe that this open attitude of the government to some extent can be attributed to the FICCI conference.

Vidushpat Singhania
Sports lawyer Vidushpat Singhania

Q. In the book on Law and Sports in India- Developments, Issues & Challenges, by Justice Mukul Mudgal, and co-authored by you, a very controversial position regarding sports betting has been taken where you stated that sports betting could be considered a game of skill as per the current laws and hence there would be no criminal liability on betting in sports. However, the fact that associating sports betting with gambling has global precedence and courts in India since the earliest times have indicated books of accounts and other betting documents to be instruments of gaming under the Public Gambling Act, 1867 indicate the inclination to hold betting as a criminal offence. In such a situation, do you think stretching the ratio of KR Lakshmanan decision (holding betting on horse racing to be a game of skill when played in licensed race courses under specific conditions) to include all sports betting would be tenable in courts of law? What would be the response of courts to this proposition?

VS: It cannot be assumed that sports betting and gambling are one and the same thing. Sports betting has been differentiated from gambling worldwide and the parameters for obtaining a licence to take bets are more relaxed than say that for a casino. The difference mainly lies on the aspect of predominance of skill in sports betting and predominance of chance in gambling. I think that it is only fair that when betting on the skill of an animal and a human being is treated as a game of skill, there is absolutely no reason why an event involving betting solely on the skill of a human being should not be treated as a game of skill. Games of skill have been expressly excluded from the ambit of Public Gambling Act and there exist, contrary decisions of the Madras High Court and the Andhra Pradesh High Court on the aspect of whether betting on game of skill should be treated as an activity within the Gambling Acts or not. The global precedence too clearly makes a distinction between sports betting and gambling but have conflicting views on whether betting on sports is a game of skill or a game of chance.

Q.Your views on the ongoing Supreme Court matter on whether rummy can be played for stakes and Delhi High Court matter on whether poker is a game of skill.

VS: As this matter is sub-judice it may not be appropriate to comment on this. However considering the ratio of the Satyanarayan Case, the issue before the Supreme Court is not whether rummy can be played for stakes, but whether rummy can be played for substantial stakes. Even the issue of poker being a game of skill or not would have to be decided by the Supreme Court as divergent views exist amongst legislatures of states and various High Courts. Personally I feel that poker is a game of skill and the in some countries for example Russia it has been classified as a sport.

Q.Punjab and Maharashtra are considering proposals to allow casinos. Reports suggest that some other states have also considered this suggestion and not ruled out casinos for the purpose of promoting tourism. Do you think we would see some state legalising casinos or gambling in the near future?

VS: I believe that the perception in India seems to be shifting from considering casinos as some would say ‘Sin City’ to places of harmless entertainment. The state governments are realizing the tremendous revenue and tourism potential of casinos and the direct and indirect employment that these casinos generate. There are already discussions taking place in Punjab on legalising casinos and it is likely that on seeing the success of the operations in these states, other states will follow suit.

Q.Many top foreign gaming companies have tried to pressurise the government to consider opening the gaming sector but the efforts have not really succeeded. Do you think the state governments or central government would consider allowing online gambling or sports betting in the near future and if so what would the model of regulation?

VS: The revenue potential of these activities is hard to ignore therefore the state and central governments should and would definitely consider allowing online sports betting if not online gambling in India. A possible model that could be looked into is a central body drafting the policies and rules, deciding disputes and investigation whereas the state bodies would be in charge of issuing licences, monitoring compliances and assisting in local investigation. The revenue sharing ratio would depend upon the number of states willing to legalize sports betting and the cost involved in its monitoring.

Q. Finally, your thoughts on the future direction of government policy on gambling and the future of the gaming industry in India.

VS: Even if the government decides to regulate gambling it will have to amend a number of other related legislations and regulations in order to make the industry commercially viable. For example, if a high licence fee is fixed on the operators offering bets may not be commercially viable for them. If winning from bets is sought to be taxed, there may be a need to amend the provisions of Income Tax Act dealing with a 30% tax liability on winnings from game shows and horse races amongst other activities. The FDI policy would also need amendment in order to allow import of foreign technology, licensing or franchising for this industry, and a new law punishing cheating in sports by influencing the result of a sporting event, whether for gain or not and joint investigation understanding between sport federations and investigating authorities would also have to be deliberated, amongst many other impediments.

Legal & Regulatory

Govt planning to introduce match-fixing, betting Bills; PIL filed against fixing in IPL

In rapid developments over the past couple of days, media reports have indicated that the Sports Ministry is considering introducing a Bill to legalise sports-betting in India. It is believed that the FICCI conference conducted last year urging the government to legalise and regulate sports-betting and calls by various sports administrators, independent analysts and policy-experts along with the recent spot-fixing and betting scandal have finally prompted the government to consider legalising betting.

Further, in a connected development current Union Law Minister Kapil Sibal is also liaising with the Union Sports Minister Jitendra Singh to draft a Bill  imposing criminal liability on match-fixing and cheating in sports. The Bill could be introduced as early as the Monsoon session of the Parliament. I had already written that the current laws are insufficient to deal with fixing in sport and the charge of cheating would not be able to sustain a conviction of the three accused cricketers and that there is a need to introduce a comprehensive legislation to regulate betting and deal with fixing in sport. Law Minister Sibal was also uncertain whether current laws would be enough to sustain conviction as he remarked:  “I don’t think the offence of cheating is something that adequately deals with the issue of spot-fixing and match-fixing” as per a India Today report.

Sibal also indicated that he in favour of banning betting and wagering activities and imposing further criminal sanctions on betting though it is not clear whether the proposal would be included in the match-fixing legislation or a separate Bill. However sources familiar with the development have indicated that a decision on whether to legalise or prohibit sports betting has not been taken and consultations on all aspects of the controversy and proposed legislations are on with stakeholders in various Ministries and the ruling Congress party.

Kapil Sibal
Will the new Law Minister finally bring legislations on sports-betting and match-fixing?

In another surprising development a Lucknow-based activist, Sudarsha Avasthi filed a Public Interest Litigation (PIL) (WP 318 of 2013) demanding a ban on the controversy ridden Indian Premier League as it had become synonymous with cheating, betting and black money and a SIT-probe into allegations of spot-fixing. While the Supreme Court refused to entertain the plea of banning IPL; it expressed concerns over growing allegations of fixing and passed scathing observations against the BCCI while directing it to submit a probe-report into allegations against the cricketers.

Update: The PIL filed in the Supreme Court seeking a ban on IPL and SIT-probe has been dismissed but the Court has directed the BCCI appointed committee to file the probe-report into allegations  within 14 days and asked the BCCI to take appropriate action based on the report.

Meanwhile two separate PILs have been filed by individuals- one in the Madurai bench of the Madras High Court seeking nationalisation of BCCI- as it is allegedly running a registered society for earning profit and the second one in the Delhi High Court seeking a ban on IPL for its role in funneling black money and promoting criminal activities such as money-laundering and betting.