TIOL - COB( WEB) - 346
MAY 30, 2013

By Shailendra Kumar, Editor

THE curtain over the IPL tournament has come down but there seems to be no blanket to douse the fire ignited by the spot and match fixing scandals. The scandalous 'inferno' has been so 'sporting' that it has dragged under its arms not only the bookies, the bettors, the underworld shadowy kingpins, the umpires, the sports managers and the cricket players but also charming CEOs / owners, known for their suaveness-tinged mannerism. Even as the pressure mounts over the BCCI Chief to step down on the charge of alleged involvement of his son-in-law, most of us have forgotten that the morality is a case of lost 'baggage' for the 'travellers' living off the public life in today's modern India! Going by the recent episodes of scandals, one may say that the sports lovers across the country are in a state of shock but the ground reality has always been more shocking - most keen watchers of sports say that the corruption in our sports has always been reflective of the cancer eating away the vitals of our political system. With more and more politicians and corporate profiteers taking over the sports bodies, the problem simply got aggravated in recent years.

In response to the match-fixing scandals, the Union Government has lost no time in rushing to the law-drafting table to come out with an independent legislation. As reported, the AG opined that the solution does not lie in amending the IPC, and a separate law may be more desirable. Such an opinion further spurred the Ministry of Law to wrap up the First Draft of the new legislation prescribing three-year punishment for spot and match-fixing. More details of this Draft will be known in the coming days but such a response appears to be geared more towards treating the symptoms rather than the disease itself.

So, what is the disease? The moorings of this disease are rooted in the history of preventive legislation. Since the Britishers had no allegiance towards the mythical tale of Yudhisthira losing his kingdom and his wife on a few rolls of dice, their major concern was certainly not the loss of a source of entertainment through betting and gambling in public houses but the law and order. Thus was enacted the Public Gambling Act, 1867 - barely seven years after the IPC was codified in 1860, and the Indian High Court Act was enacted in 1861. The British satraps were more worried about a robust law and order and a prosperous regime for themselves. The wheels of history continued to roll even after the Independence but no whisper of legalising betting and gambling was heard notwithstanding the palpable changes taking place in the socio-economic conditions in the country. Many Governments occupied the seat of power at Raisina Hills and also the capitals of States but none ever thought of legalising betting and gambling. Although officially, their major concern was that such acts are addictive and may destroy many families but the reality seems to be that they had no study to indicate how much of ill-gotten money was involved in this trade, and how much of sin tax they might have been able to collect. Had addiction been one of the key planks of their concern, no State Government should have licensed sale of liquor through government outlets. Since liquor is a necessary evil, which co-exists in a civilised society, it was permitted to be vended through private and government shops. But, when it came to legalising betting and gambling, it was construed as sacrilegious. Thus continued to grow in volume and extra-territorial influence the illegal trade in betting, spot and match fixing by the shadowy underworld operating with remote control through a large network of agents and bookies. So, what is the solution?

To find the solution, there cannot be two opinions about legalising betting, to begin with. A simple glance at some of the rudimentary studies done by various private bodies indicate a robust economics to collect the sin tax if betting is truly seen as a sin! Given the fact that betting and gambling is a subject of State List as per the Doctrine of Separation of Power enunciated by our Constitution, some of the States have legislated to regulate betting in a limited domain of horse-racing. For instance, only two days back, the Punjab Government Cabinet approved the Draft Bill for betting activity in horse racing. It also gave its nod for online lottery system. Such legalised trade is believed to be worth Rs 100,000 Crore in the country. If the betting in sports like cricket is legalised, the size of this market is projected to be in the range of Rs 3.5 lakh crore. If that is so, even if one-third of the total transactions is taken as profit, the Central Government alone would be garnering income tax of about 25000 Cr to 30000 Cr. Besides, the State Governments would be collecting the sin tax, depending on the tax rate. For instance, the States of Goa and Sikkim - the only two States to officially allow betting and gambling activities - levy 30% tax rate.

But legalising betting is certainly not as simple as State Governments coming out with their own legislations. The invasion of internet technology has changed the rule of the game. The turf has extended itself beyond the physical boundaries of Republic of India. Internet has been a boon particularly for gaming and betting activities, which ride the twin horses of information and money (laundering) to grow and spread its tentacles. This is what apparently attracted many underworld kingpins to bet their fortunes on the e-commerce of betting. Through remote control (communication), they have been able to entice Indian citizens to bet online notwithstanding certain restrictive provisions in the Information Technology Act as inserted in 2011. Internet poses serious challenge to any regulatory mechanism. Many developed economies have surrendered part of their sovereignty by succumbing to the power of internet. And online betting and gaming has become so competitive with many smaller nations like Malta, Gibraltar and Isle of Man treating gambling as an 'export of services' to earn revenue. Such cut-throat competition fuelled by smaller nations have forced large countries like the UK, France and Australia to reduce their sin tax rates to as low as 5% - a profit-based tax system so that 'trade operators' do not migrate to island nations.

In this background, rather than hurrying up a simple legislation to fix the criminal activity of match-fixing in sports, the Union Government and all the States are required to think of a futuristic and comprehensive legislative solution to regulate this rapidly growing trade. So, the first and most cumbersome problem, which may come to the surface, is the Constitutional Limitation. Betting and gambling is a part of Entry 34 of the State List. Does it mean that the Centre cannot do much in this case? Some legal experts have suggested that the Union Government can legislate on betting in sports vide Entry 42 of the Union List i.e. inter-state trade and commerce. Though such an idea may work to an extent but it would soon prove to be a legislative patchwork rather than a long-term solution. Since the betting and gambling is no longer confined to inter-state trade in today's broadcasting and satellite-dominated business space, any constitutional patchwork would not bear the desired fruits.

I would like to recommend that the Centre and the federating States should first go for a Constitutional Amendment Bill to shift betting and gambling from the State List to the List III (Concurrent List) like the proposed GST. After the Constitution is amended, the States should agree with the Centre for setting up a Betting & Gambling Regulator, which should be vested with the powers to licence operators by collecting hefty fees like the Spectrum Auction; and also the authority to levy profit-based ad valorem sin tax. The Regulator should licence certain number of gambling houses in each State, depending on various parameters, and should have its own personnel to conduct audit, assessment, and collection of tax. Such collection should fund its regulatory activities and the revenue collected should go to a common pool from where the same can be distributed among the States like the CST. The Regulator should also notify in advance the sporting events, which would be open for betting like Olympics. Some of the obnoxious newsy events like hanging of a terrorist (Afzal Guru episode) should be banned by the Regulator. Similarly, the result of general elections is another mega event, which attract bettors in hordes. Since the polls are the foundation stone of our democratic system, it cannot be allowed to be treated at par with any sporting event for betting. However, some of the traditional or geographically local events like cockfights, which also involve betting in crores, can be notified as organised events and tax can be collected.

There are indeed several benefits of legalising betting in sports and also gaming online and offline both. But the biggest beneficiary would be India's National Security Paradigm. Given the fact that too many shady and shadowy operators are involved in this trade today, they are also suspected to be funding various terror outfits in many Republics. So, legalising it would be the first blow to such agents of terror. Secondly, their staple diet, the money laundered through this trade, can be effectively curbed with the help of technology and expertise acquired by the agencies like FIU. Thirdly, white-clothed corporate and other operators who have been making mountains of unaccounted money by fixing matches, can be brought under the regime of laws. Fourthly, such a Regulator can prescribe guidelines for sanitising sports players weeks before a tournament and for the entire period of tournament unlike today's late night champagne-induced interactive sessions with Bollywood and Kollywood damsels-in-distress where they often compromise their integrity and agree to trade off for match-fixing. Huge revenue collection will be a bonus for the revenue-starved Government, and cleansing of sports would be an additional bout of bonus. Let's hope the Union Government sets up a Committee of jurists to provide a comprehensive solution to this issue before betting is legalised along with restricted gaming.