Since shutting down illegal gambling and enforcing a ban on betting in sports has proved difficult, the only viable option for the government is effective regulation of legal gambling through cashless transactions and mandatory use of PAN and Aadhaar cards to curb money laundering, the Law Commission of India has said.
In a report titled “Legal Framework: Gambling and Sports Betting, Including in Cricket, in India”, the law commission has said the inability to enforce a complete ban has resulted in a rampant increase in illegal gambling and a consequent boom in black money generation and circulation.
“Since it is not possible to prevent these activities completely, effectively regulating them remains the only viable option,” it noted.
Law panel suggests model law to regulate gambling
The law panel has somewhat controversially suggested two categories, “proper gambling” and “small gambling”, where “proper gambling” would be characterised by higher stakes. Accordingly, only individuals from high-income groups would be permitted to indulge in “proper gambling” while others would be restricted to the latter.
Citing examples of legal betting and gambling in countries such as China where sales of state lotteries touched $51 billion in 2013, the commission said additional revenue thus generated through imposition of income tax and GST may become a good source of revenue which, in turn, could be used for public welfare.
Despite its prevalence in other countries, legalised gambling is a contentious issue here as easier access to such options online can encourage a spendthrift habit and lead to addiction. Opinion is divided even in the case of casinos as its revenue benefits, when weighed against likely social ills and adverse impact on families, has led to an unfavourable view of gambling even in legalised form.
The panel has recommended that Parliament may enact a model law to regulate gambling that may be adopted by states or, in the alternative, Parliament may legislate in exercise of its powers under Articles 249 or 252 of the Constitution.
In case of legislation under Article 252, the states would be free to adopt the same. Being a state subject under List II of the Seventh Schedule of the Constitution, “it is needless to say that state legislature(s) is competent to enact the required law for the state(s) concerned, while duly taking note of the national policy on gambling, etc., and other legal considerations”, the panel observed.
It has recommended that gambling and betting be offered only by Indian operators possessing valid licences granted by a game licensing authority. It has also said that for participants there must be a cap on the number of transactions in a specific period, such as monthly, half-yearly or yearly.
“The nature of stakes should be restricted to money with a linkage to PAN and Aadhaar cards, and the betting amount should be prescribed by law, having an upper limit on the amount one can legally stake in a gamble, which may be on the basis of the deposit, winnings or losses,” it said.
Individuals from lower income groups will have to confine themselves to “small gambling” as they will not be permitted to stake high amounts which would fall within the bracket of “proper gambling”.
This newspaper has consistently maintained that betting should be legalised. Banning it only pushes it underground, making it lucrative for criminal elements. That creates a dangerous situation in which money can flow between gambling, drugs and even terror, all of which the underworld dabbles in. Legalising gambling would not only create an additional source of tax revenues for governments, it would also minimise criminal involvement. The government could impose a sort of “sin tax”, like on cigarettes, to signal social disapproval of the activity and to make it more expensive for those who want to gamble. Legalising betting and ensuring that transactions can be traced would also allow it to be properly regulated and ensure that black money does not enter the business.