(if you can t stop it, legalize it?)

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1 IRACST International Journal of Commerce, Business and Management (IJCBM), ISSN: Sports Betting in India (if you can t stop it, legalize it?) Kanchan Sehrawat Jesus and Mary College University of Delhi Delhi, India Gaurav Talan (Co Author) University School of Management Studies GGSIPU Delhi, India WHAT IS GAMBLING? The New Encyclopedia Britannica defines gambling as the betting or staking of something of value with consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event the result of which may be determined by chance. The terms wager and bet essentially mean money or other consideration being risked on an uncertain event or a promise to pay money or other consideration on the occurrence of an uncertain event. The above definition associate gambling with betting on the outcome of a game in which a person may win by chance and not by using skills. Indian law also seems to follow this approach. WHAT IS THE DIFFERENCE BETWEEN BETTING AND GAMBLING Gambling is a generic word to describe the activity of placing wages on particular outcomes or events taking place while betting is the term used to refer to agreement between two parties where one party makes a prediction and loses or makes money if his prediction turns to be true. The other party forfeits the amount waged or has to return many times more as per the agreement1. INTRODUCTION Man has always been captivated by gambling. History books have shown that man has indulged in this and it has sometimes even led to his ruin. Indian history has lots of references of such incidents. One of the most revered epics, the Mahabharata, has highlighted the practice of gambling at that time and the evils associated with it (The famous episode where Yudhisthir loses his entire kingdom and his wife in a game of dice.) Betting and gambling give man a chance to earn disproportionate amounts of money in a short time without labor; this fuels the dream of avarice of men. It lures a man away from an honest day s work and has, therefore, been 1 betweenbetting and vs gambling/#ixzz32lhyv86f termed as an evil in the religious scriptures and is generally shunned upon by the society. Around the globe opponents of gambling refer to the wide range of social, economic, and psychological problems associated with pathological gambling. Advocates of legalized gambling emphasize that it is a leisure activity that should be legally offered. They also refer to the fact that the gambling instinct is born in all normal persons ( A special report on gambling, 2010) Under the Constitution of India, state governments are empowered to frame laws in respect of gaming and betting in their respective states. Currently, only horse racing, lotteries conducted by state governments and casinos in certain states are permissible. State governments have declared any activity which involves gambling or gaming illegal under the Public Gambling Act, More recently, however, more unconventional forms of gambling have appeared in two states: Goa and Sikkim. These states have been pioneers of the Indian gambling world and set up both online gambling as well as land-based operations. Goa, for example, has set up a number of casinos, both locally and offshore. The offshore casinos cater to higher stakes players and host large poker tournaments. Sikkim, meanwhile, has set up the only legal betting website in India through the Play-win lottery and regularly releases statements demonstrating the intention to set up more. These rare unconventional steps in the Indian legal system are deviating from the common order in a country where the overwhelming majority of gambling is illegal. Illegal gambling accounts for staggering amounts of money in India; A study by auditing firm KPMG revealed that betting to the tune of Rs. 300,000 crore takes place annually in India. And there are certainly enough willing people with the right amount of criminal enterprise to take advantage of the situation. It is difficult to pick up an Indian newspaper without reading about the cricket betting scandal or the latest betting house busted during any big cricket tournament. This is because a large proportion of Indian society continues to partake in sports book betting. Cricket, the nation's favourite sport, attracts vast 475

2 numbers of viewers, many of whom want to have a bet whilst watching the match. If betting in cricket is taken under review specifically, it is estimated that about Rs. 720 Crores ($150 million) is bet on an average One Day International anywhere in the world.2 As there are no legitimate means through which people can place these bets in India, it becomes inevitable that they will use informal methods. Since betting is illegal in India, those interested in having a flutter have had to place bets overseas. As per one of the articles in Economics Times (2010), In jurisdictions like UK, where gambling is legal, major bookmakers like William Hill and Paddy Powers, listed corporate entities, say they are accepting online bets from India. Rupert Adams, spokesperson for William Hill, which estimates it will make GBP 4 million on this IPL alone, also says "Yes, we do accept online bets from India, the only territory we do not accept bets from is the US. According to a survey conducted by FICCI 85% of surveyed agreed that betting on sports existed in India. It can be noted that if such vast majority of betting in India takes place illegally, its effects can be extremely damaging. Sophisticated criminal rackets have been running even with in the country to cater to the high betting demands. These networks have developed over the years and now incorporate cutting-edge technologies to run their betting systems. There is a constant battle between the police and the bookmakers, with most people generally agreeing that the bookmakers have the edge. The result of this is that a large amount of police time and money is spent tracking down criminals involved in betting and gambling. These racketeers do not provide any direct or imminent threat to the public and therefore many people believe that police resources could be better used elsewhere. The reason that the police do try to bust these betting rings is because the money made in these illegal gambling remains in criminal circles. Money made in illegal betting often ends up in the hands of more dangerous crooks that operate the drugs and terrorism industries in India. Illegal gambling is the hand that therefore feeds these gangsters and funds other forms of criminality which do pose a danger to society. If gambling were to be legalised that mountain of dirty money would stop going to criminals and could be collected as tax. The Indian government currently loses out on billions of rupees every year through money lost into the illegal gambling black-market. 2 Lord Condon, Bounce Corruption out of cricket leaflet (2002). Also see ICC Anti Corruption Unit. Interim Report April 2001 (The Condon Report) cricket.com. IRACST International Journal of Commerce, Business and Management (IJCBM), ISSN: Betting market in India Possible rate of tax Possible revenue to the Government Rs. 300,000 Crores 20% of the profits Rs. 12,000 Crores to 19,000 Crores Source: KPMG Report on Online Gaming: A Gamble or a Sure Bet Gambling in India has a very real association with criminality and this has created many scandals over the years. In particular, the cricket fixing allegations are especially harmful to the country's reputation. By legalising gambling it would become far easier to eliminate these types of scandals from the game of cricket and punish the culprits, which would in turn better the state of both the nation's pride and its economy. A. International Precedents: Dealing with Sports Betting/ Gambling Approach Rationale Countries Blanket Prohibitions Integrate Gambling within their own systems Morally Neutral Gambling is a vice or sin from which the public should be protected. Gambling is a means of generating employment, social improvement for populations and tax collection for their governments. People should be free to choose. They seek to regulate in a way which reduces the social costs to an acceptable level. There are series of new laws which allow on-line operators to be licensed and taxed in the jurisdiction. Saudi Arabia, Turkey, Malaysia and some other states. Curacao, Gibraltar, the Isle of Man, Alderney and states in the US like Nevada. Most jurisdictions in Europe-Denmark, Italy, France, Spain (including UK) and most states within America Source: A conference organized by FICCI on Regulating Sports Betting in India- A vice to be tamed? on 6 June,

3 B. International Precedents: Dealing with Sports Betting/ Gambling Despite several attempts to ban it, betting is continuing in an underground way and substantial resources have been invested into enforcing such a ban; Thus middle way out is it should be regulated in a way which reduces these social costs to an acceptable level. Hence, the Government should think of legalizing and regulating betting. Economic advantage: It s clear from the various betting scandals", as we call them in India, that despite ban on betting in India it is thriving in a big way and the Government is losing revenue in the form of taxes and the continuous investment in curbing it is not reaping the desired results. Ravi Sawani, chief of BCCI's Anti-Corruption and Security Unit, said in each IPL game, legal bets from one exchange in the UK are about Rs.440 crore whereas for the tournament, bets worth Rs. 66,000 crore approximately are placed which include illegal betting syndicates as well. IRACST International Journal of Commerce, Business and Management (IJCBM), ISSN: as possible, might prove dangerous to the governments all over the globe as it s a huge amount of money which can be used to fund terrorism and anti-social activities. The total value of the global sports betting market is difficult to estimate because of the lack of consistency in how it is regulated in some parts of the world. Some estimates put the value of the sports betting industry at between 700 billion U.S. dollars and 1,000 billion U.S. dollars. Illegal sports betting alone could be worth 500 billion U.S. dollars according to some estimates3 Old law: Betting is considered as a criminal offence under The Public Gambling Act of A lot has changed since This law has been used as per convenience. Betting on horses is legal, Sikkim and Goa houses casinos, lotteries are legal. The laws must be amended to keep up with the times. The outdated existing legislation, inevitably, leaves online gaming in a grey area. If a customer puts a bet on a cricket match via a website, and the server is in the UK rather than India, is that still legal? FICCI in one of its reports estimated the size of the betting market at Rs 3 trillion in India. In a note submitted to the government, it said the government was losing out on tax revenues of Rs 12,000 crore to Rs 20,000 crore a year by not taxing betting. Also More tourists and money from countries where gambling is banned would come to India If betting is regulated, this huge amount of money can be used for economic growth of the country. Source of Employment: It s an untapped source of employment as it s an industry currently thriving only in the underground. If legalized, betting can create a large number of legal jobs. India already has examples of its state Goa that use gambling as a means of generating employment; more than 8000 people are employed in casinos in Goa. Ficci estimates the online gaming industry will be worth Rs 46 billion by 2015, as internet penetration rises, so this loophole is slowly widening. Blow against organized crime like match fixing which threaten to damage public trust both in sport and in the legitimate betting industry. i. Betting in sports in India especially cricket- is done through illegal channels, often by people with criminal backgrounds. When a match is fixed, some bookmakers (someone who facilitates gambling, commonly on sporting events, by setting odds, accepting and placing bets and paying out winnings on behalf of other people. Bookie is a slang term for bookmaker 4) know the outcome in advance and use the information to cheat bettors. Misuse of money: The revenue generated by the betting industry, if not regulated by law as soon

4 ii. iii. Legalizing and regulating sports betting might not completely solve the problem of fixing, it will however make it easier to track, investigate and catch anomalies as betting patterns can be monitored. At the same time it will also limits the amount of money and opportunities available with the fixers to tilt the odds in their favour thus make fixing less lucrative. The focus of the police or the regulatory authority will also shift from a preventive action to regulatory action. It will be more of monitoring a business transaction like that of SEBI monitoring the share market. Under regulated betting, bookmakers will be required to keep proper records of the transactions that they are involved with and know the identity of those with whom they are betting which is the key to ensure that sports fraud is detected and dealt with. Tracking cash exchanges among betting agents will be easier and when there s a greater fear of getting caught which generally translates into lesser illegal activities such as fixing. In fact license holders will themselves ensure and create systems where sports fraud would be very difficult as their licenses can be revoked, or good will is affected if they are found flouting the rules. That process is possible only after legalizing and regulating betting. As Mr. Rajpal Singh, Director, Federation of Indian Chambers of Commerce and Industry (FICCI) says; Once the market is open, people will prefer to bet through fair channels, online or offline. Which will suck out the liquidity from the unregulated market and chances of fixing will reduce drastically Fairer and more trusted betting experience for consumers with entertainment in a controlled and responsible way which they can trust. Also legalized betting will help protect young and vulnerable against the dangers of unwise betting behavior. Example of other countries: United Kingdom serves the best example as how betting is beneficial if regulated. UK legalized betting in 2005, there are some 10,000 authorized betting shops. Bookies must register with the gambling commission, a body that sets the rules for betting. They are required to report unusual bet settlements to the commission, which can fine IRACST International Journal of Commerce, Business and Management (IJCBM), ISSN: and revoke licenses and prosecute illegal gamblers. The betting industry is reported to contribute 6 billion pounds as of January 2010, 0.5% of GDP. Furthermore it employs over 100,000 people and generates 700 Million in taxes. As the Ficci report says: In countries like UK the funds from sports betting is used for funding of elite sports, training and exposure of athletes. Besides, funds from lottery have played important role in funding sports development in China, UK, and South Africa etc. Now the question is whether sports betting can also be regulated in India and funds from sports betting and lottery could also support development and funding of sports like many other countries. POINTS AGAINST: Opponents around the globe point out various problems associated with legalising betting. Some of them are highlighted below. "Right now, only a limited number of people are placing bets, because not everyone has access to bookmakers. Legalising betting will make the sports gambling more accessible to people who cannot afford to bet," says cricket commentator Charu Sharma Menace for the Society: Betting and gambling give man a chance to earn disproportionate amounts of money in a short time without labor; this fuels the dream of avarice of men. It lures a man away from an honest day s work. If the already not so rich Indian in dream of earning quick income starts losing all his life long saving on betting, we might altogether give rise to new situation where suicides and disappearing acts maybe on the rise Exposure to Children: Betting in India is largely prevalent in Cricket; which is a religion in India. People of all ages worship cricket in India. If it s made legal, owing to the inefficiency of the law enforcement agencies, even children who are attached to this game might start betting. Lack of Self-discipline: Not everyone can keep a control over their urges for betting and it can easily become an addiction. No government can 478

5 IRACST International Journal of Commerce, Business and Management (IJCBM), ISSN: control addictions as it s a disease and not just a We can see that gambling will continue to be prevalent in India regardless of whether gambling is legalised or not. Legal forms social stigma. We already have tobacco, alcohol, of gambling have beneficial effects on both local and national drugs addictions to deal with it will only add to economies. They are popular with the majority of the this list. population and can be properly regulated. Meanwhile, illegal forms of gambling help fund more sinister forms of criminality and do damage to both the national economy and the reputation Can t Eliminate Match Fixing: Match Fixings of the country as a whole. are due to human greed. Laws cannot govern that. 'Choose the lesser of the two evils' is usually sane advice. Given the choice between legalizing gambling, with the Corruption and Bad Governance: Indian possibility that people, men in particular, might gamble away Regulations have not been very efficient. their money leaving their families destitute, and continuing with an ineffective ban that brings in its wake organized crime Corruption makes it impossible to enforce a law on a much larger scale, the former seems to be the lesser evil. If strictly. All the benefits that can be achieved by the experience with prohibition is anything to go by, banning is legalizing betting will be very difficult to achieve a sub-optimal answer. in the law and enforcement scenario we have in India. Wider legalization of sport betting could add another layer of challenges to the many that professional sports have already encountered, like performance enhancing drugs in baseball and concussions in the N.F.L. Add gambling's threat to the integrity of the games could add disastrous complications. The Road Ahead Despite on-going attempts to enforce prohibitions against sports betting and a number of arrests of those concerned, there is still a great amount of money being bet on sports in India. Some estimates put the total turnover of the betting market at Rs. 300,000 Crores ($60bn). Due to the perceived illegality of sports betting, a large sum of money flows untaxed to unlicensed offshore Internet sites or to illegal bookmakers, many of whom are allied with organized crime. This presents a strong case to regulate it as sport betting in the eyes of a large number of people is an inevitable activity and is a mere form of entertainment. The greatest advantage of regulating sports betting is going to be the accountability for the large amounts of money transferred through illegal channels and reduction in cases of match fixing, money laundering and crimes, creating knowledge and education about ill effects in a focussed manner are inbuilt conditions to save vulnerable groups. Besides, it could potentially fund sports development, education, social protection or welfare schemes and infrastructure development plan besides employment generation. A number of countries have legalised gambling in a productive and safe way and there are a number of legal models - such as Britain s - the Indian government could successfully adopt. Carl Rohsler, partner at Squire Sanders Hammonds, a UKbased law firm that serves global organisations involved in gambling also suggests that "India should legalise sports betting," and that "Betting is a vice that cannot be eliminated. Instead of turning its back on the problem, the government should find solutions." What are the features of most regulatory systems for gambling that can be followed? Most countries that have permitted gambling/ Betting have statutory regulatory bodies/ gambling commissions created by the state which is responsible for distributing licenses to betting operators. The regulatory body will have an important role in examining license applications from third parties. The national regulatory body (a body at the central level) could regulate disputes, where violation/breach involves more than one state s jurisdiction. These could be power to void a particular bet, power to prosecute or seek cooperation between states as well formulating guidelines and dispensing information to the public about betting including listing events on which bets can be placed. National regulator may have state level chapters. The regulator will have powers of entry and inspection into operator s premises and online networks and to have cooperation from operators. Where problems are detected, the regulator will have powers to impose conditions on operators, together with a range of regulatory remedies from warnings to financial penalties removal or suspension of a license and even criminal prosecution. 479

6 IRACST International Journal of Commerce, Business and Management (IJCBM), ISSN: Conclusion Many people have strong feelings about gambling these views originate from religious or moral views relating to human relationships and attitudes to money and so on. However, we believe that it is perfectly legitimate for members of the public to have different moral views or personal preferences either in favour or against sport betting, it should probably be treated as morally neutral; something which lies between an entertainment and a financial service. Public should be given the respect and should have freedom of choice as to whether to bet or not, and government should ensure that there exists a framework designed to protect the young and vulnerable and to ensure good law and order. REFERENCES I. Why Legal Gambling in India Will Help Prevent Spot Fixing by George Oborne16 May :56http:// - india/508518/why-legal-gambling-in-india-will-help-preventspot-fixing II. Strong betting lineup abroad for today's IPL finals by Sudeshna Sen, ET BureauApr 25, 2010, 12.40am IST Legally illegal, but you can bet online in IndiaSomshuvraLaha, Hindustan Times Kolkata, May 20, 2012 III. IV. Conference proceedings of FICCI on Regulating Sports Betting in India- A vice to be tamed? held on 6 June,