Explained – Boon at places, bust elsewhere: State of the lottery in India

What is the legal status of traditional and online lotteries in India?

It’s a mixed bag. 12 states — West Bengal, Maharashtra, Kerala, Punjab, Madhya Pradesh, Sikkim, Goa, Assam, Arunachal Pradesh, Meghalaya, Manipur and Nagaland — allow lotteries. Some states like Kerala permit only their own state lotteries. Tamil Nadu and Karnataka, that were formerly key centres for the lottery business, have banned lotteries. Before states began banning them at the turn of the century, the annual nationwide turnover of the lottery business was estimated to be Rs 50,000 crore.

Why have some states banned lotteries?

The primary reason has been the social cost they are seen to extract, with earning members of families getting addicted to gambling. While many smaller states cite lotteries as a major source of revenue, the states that have banned them argue that the social costs are higher.

How have the courts viewed lotteries?

As per item 40 on List I (Union List) and items 34 and 62 on List II (State List) in the Seventh Schedule of the Constitution, the union government is empowered to frame laws to regulate the conduct of lotteries, while state governments have the responsibility of authorising/conducting lotteries. The Supreme Court has permitted states to ban lotteries, pointing out that the right to sell lottery tickets is not a fundamental right. The court has also ruled that lottery is not a free ‘trade’ like other “trades’, even when authorised by law.

In the states that have banned lotteries, how effective has the clampdown been?

Underground lotteries thrive in Tamil Nadu and Karnataka. Lotteries from states where they are not banned tend to flow into states where they are, especially to border regions. Lottery operators have introduced the so-called ‘single-digit’ lotteries — declared illegal in all states — where draws are held daily for single-digit matches fetching small prizes, besides big weekly bumper prizes. Anonymous illegal lotteries not affiliated to any state or private parties run in states where they have been banned, possibly by using the lottery infrastructure that existed before the bans came into effect.

What is the latest illegal lottery case in Karnataka about?

Karnataka banned lotteries in 2007, and a Lottery Enforcement Wing was created in the state police, headed by an Inspector-General with over 1,000 policemen in the unit.

In March this year, a local television channel carried out a sting that purported to show an alleged illegal lottery operator, Pari Rajan, boasting of links to senior officers in the Lottery Wing and those in charge of regions where he ran his business. The government ordered a probe by the state CID, which found that two senior officers, including an IGP-rank IPS officer, had been in frequent touch with Rajan. The IPS officer was also accused of attempting to thwart the arrest of Rajan. The two officers were suspended. Rajan has claimed to be associated with as many as 23 police officers of the rank of Inspector and higher, and to be working for the notorious lottery kingpin Santiago Martin, who faces dozens of cases in southern states. JD(S) leader H D Kumaraswamy has alleged that two IPS officers who earlier headed the Lottery Wing had collected bribes to the tune of Rs 1 crore from Martin to facilitate the illegal lottery business. Continous speculation on the involvement of policemen and politicians in the alleged racket has resulted in the government deciding to hand over the investigation of the case against Pari Rajan to CBI.