Sports betting, gambling might turn into a regulated, taxed activity in India

• A legal panel recommended that Indian government make sports betting, gambling a legal practice.
  
• However, the panel also laid down a number of regulations that the government should put in place for the activity.
  
• Gambling and betting are currently allowed with restrictions only in the states of Goa, Daman and Sikkim.

The Law Commission of India, this Thursday, recommended that the government allow gambling and sports betting as a regulated activity under the direct and indirect tax regimes.

The report, ‘Legal Framework: Gambling and Sports Betting, including Cricket in India’, was submitted to the Law Minister, Ravi Shankar Prasad. The legal body was asked by the Supreme Court to frame a law in 2016 for legalising betting in cricket.

However, the panel decided that since betting and gambling are intertwined, the law could be extended to both. It also said that various “skill-centric” games must be exempted from the current gambling law, just like horse-racing is. However, the panel refused to list any of the games.

It said that since it was not possible to completely prevent these activities, a law for “effective regulation” is the only workable option.

In a 2013 report, the FICCI estimated that the underground betting market in India is huge pegging it at ₹3,000 billion. Regulating these activities would strike straight at black money circulation and the underworld’s control over the illegal and unregulated gambling industry.

The body says that the activity must be taxed with excise like, Income Tax and the Goods and Services Tax as it would help generate revenue for the government, which could further be used for the “welfare of the people”. Though the idea sounds bizarre, it has been done in other countries. To back up their argument, they cited examples of legal betting and gambling in China where the state lotteries sales recorded a high of $51 billion in 2013.

Another recommendation was for the government to allow Foreign Direct Investment in Indian casinos and online gaming industry. The report also favours a regulated licensing regime for which only Indian nationals should be eligible for. “Gambling and betting, if any, should be offered only by Indian licensed operators from India possessing valid licences granted by the game licensing authority,” states the report.

The bigger picture, however, is that tourism and the hospitality industry is expected to grow, if betting, gambling is regulated and this would further increase job opportunities and increase the revenue in the country.

The panel also plans of linking PAN or Aadhar with these activities. It will make transactions mandatorily cashless and will also keep a check on illegal activities like money laundering. The linking will also help the government regulate laws about how much a person is allowed to stake depending on their income, losses or wins and keep a cap on the number of transactions done over a period - monthly, mid-yearly or yearly.

The panel has divided gambling into two types - ‘small gambling’ with lower takes for lower income groups and ‘proper gambling’ for higher stakes and high income groups.

However, one of the members, Professor S Sivakumar filed a separate note to the government strongly disagreeing with the panel. He said that these recommendations were only for vested purposes and would lead to “unhealthy discussions”.

Gambling and betting are currently allowed with restrictions only in the states of Goa, Daman and Sikkim.