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ESTABLISHING THE OPTIMUM SPORTS BETTING REGULATORY SYSTEM TO PROTECT THE

INTEGRITY OF INDIAN SPORTS


(Project towards fulfillment of assessment in the subject of Sports Law)

Submitted by: Submitted to:

Shubh Dixit Rashmi Patowary

B.A. LL.B. (Hons.) Faculty of Law

1245

NATIONAL LAW UNIVERSITY, JODHPUR

SUMMER SESSION

(JANUARY-MAY, 2019)
Contents
INTRODUCTION ........................................................................................................................... 3
HISTORY OF SPORTS BETTING IN INDIA AND SHORTCOMINGS OF THE CURRENT SYSTEM OF
PROHIBITION ............................................................................................................................... 3
SYSTEMS OF SPORTS BETTING REGULATION AROUND THE WORLD .......................................... 5
Great Britain........................................................................................................................... 5
Australia ................................................................................................................................. 6
LAW COMMISSION OF INDIA REPORT ......................................................................................... 6
CONCLUSION AND RECOMMENDATIONS ..................................................................................... 7
National and state betting regulators...................................................................................... 7
Open licensing system ........................................................................................................... 8
Establish a specialist sports betting integrity unit .................................................................. 8
Robust money laundering regulations ................................................................................... 9
INTRODUCTION
Sports betting is a global phenomenon. Thanks to advances in mobile technology, principally
mobile phones, and the pervasiveness of the internet, online sports betting is one of the
world’s fastest growing and most dynamic industries. This brings with it incredible
opportunities economically including vast employment and income to the state from taxation.
However, at the heart of any regulatory system that is adopted has to be the protection of the
integrity of sport. Only then will betting operators, sports and other stakeholders, have faith
in a crime-free system which benefits all stakeholders.

India remains one of the largest unregulated sports betting markets. This lack of transparency
has partially contributed to a number of match-fixing and betting integrity issues arising in
Indian sport, ranging from cricket and the IPL (leading to the high profile ‘Lodha Committee
report’) and Indian football.

However, globally there is a movement by large currently unregulated markets to embrace


the inevitable creep of sports betting, meaning the appropriate regulatory approach (e.g. the
United States of America), and integrity frameworks, are now at the top of both the political
and sporting agendas. These progressive jurisdictions are in the fortunate position of being
able to learn from other countries around the world who have already put in place effective
regulatory and integrity frameworks. Leading countries are objectively viewed to be Great
Britain (England, Scotland and Wales) and Australia.

HISTORY OF SPORTS BETTING IN INDIA AND SHORTCOMINGS OF THE CURRENT SYSTEM


OF PROHIBITION

The law in India regarding sports betting is the 150-year old Public Gambling Act 1867,
which prohibits public gambling. Section 12 of this Act provides that the prohibition only
applies to a “game of chance” rather than a “game of skill.” This distinction has been tested in
the Indian courts, particularly in two Supreme Court of India judgments: State of Bombay v.
RMD Chamarbaugwala1 and Dr. K.R. Lakshmanan vs State Of Tamil Nadu & Anr2. In in
interpreting the 1867 Act, the Court has decided that games with the following elements are
not “gambling”:

 where success depends on substantial degree of skill; and


 despite there being an element of chance, there is requirement of application of skill.

The elements which may mean there is sufficient “skill” involved in a particular game
include:

 Superior knowledge;
 Training;

1
State of Bombay v. RMD Chamarbaugwala A.I.R. 1957 S.C. 699
2
Dr. K.R. Lakshmanan vs State Of Tamil Nadu & Anr 1996 AIR 1153
 Attention;
 Experience;
 Skill of the Player

Overall, the element of skill must predominate over the element of chance. As a consequence,
the test in this regard is called the “predominance test” or “dominant factor test”.

The only exception to the current country-wide prohibition is horse racing, betting on which
was made permissible following the ruling of the Indian Supreme Court in 1996 in the
aforementioned Lakshmanan case, where it was said that betting on a horse race entails
evaluating and balancing a number of factors such as the speed of the horse, past
performances of the jockey, etc.

During the sixth edition of the IPL in 2013 ("IPL 6"), Delhi Police arrested three players from
the Rajasthan Royals franchise soon after their match in Mumbai for spot-fixing. Eleven
bookmakers were also arrested at that time, including one who was a former Royals player.
The arrests kicked off a nationwide search and arrest of bookmakers. One of those picked up
in Mumbai was a small-time actor, Virender "Vindoo" Dara Singh, arrested on charges of
links with bookmakers. However, his testimony led the police to arrest, Mr. Gurunath
Meiyappan, a top official of Chennai Super Kings and son-in-law of then BCCI president Mr.
N. Srinivasan.

A three-member Committee were entrusted with examining the allegations. As part of the
Committee’s Recommendations3 they said the following, “It is most imperative to enact a
substantive law making all forms of manipulation of sports, corruption and malpractices a
criminal offence. The law so enacted must be applicable uniformly in the country and should
stipulate the creation of an independent investigating agency, a dedicated prosecuting
directorate and a separate judicial forum for expeditious trials.”

Following on from the IPL 6 scandal, various governance scandals arose surrounding the
Board of Cricket Control for India ("BCCI"). This led to another Committee being
established by the Supreme Court to, “recommend those changes in the Rules and
Regulations of BCCI that will further the interest of the public at large in the sport of cricket,
improve the ethical standards and discipline in the game, streamline and create efficiency in
the management of the BCCI, provide accessibility and transparency, prevent conflicts of
interest situations and eradicate political and commercial interference and abuse and create
mechanisms for resolution of disputes and grievances.”4

3
Justice Mudgal IPL Probe Committee report available at
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwi274SZ1JfgAhXST3
0KHQb8BWsQFjAAegQIAhAC&url=https%3A%2F%2Fwww.thehindu.com%2Fmigration_catalog%2Farticle
11476956.ece%2FBINARY%2FJUSTICE%2520MUDGAL%2520IPL%2520PROBE%2520%2520COMMITT
EE%2520REPORT&usg=AOvVaw3ZK3h1Ogv40SK01tswtIjg
4
Lodha Committee’s Report
Chapter 9 of the Lodha Committee’s Report focussed on "Match-Fixing and Betting". The
Committee stated that the Indian legislature ought to legalize betting on cricket, whilst at the
same time putting these safeguards in place:

 Regulatory watchdogs would be necessary to ensure that the betting houses as well as
those transacting there are strictly monitored, failing which their registrations would
be susceptible to cancellation.
 The Players, Administrators and others closely associated with the sport would be
required to furnish the details of their incomes and assets for the sake of transparency.
 Licenses would have to be issued to those placing the bets as well, with age and
identification details recorded.
 Strict penal sanctions would have to be imposed on those transgressing the license
and other requirements.

In the final proposals of the Lodha Committee Report, Recommendation 14 addressed sports
betting in India and stated, “A recommendation is made to legalize betting (with strong
safeguards)…also a recommendation for match/spot-fixing to be made a criminal offence.”

SYSTEMS OF SPORTS BETTING REGULATION AROUND THE WORLD

Great Britain

Great Britain is one of the most liberal, and yet highly regulated, gambling markets in the
world. Anyone who wishes to offer consumers in Great Britain the opportunity to bet on
sports, regardless of where they are based (i.e. even outside of the UK), must apply for a
licence to do so from the regulator, the Gambling Commission (GC). The areas covered by
the licence application process, in a pure regulatory sense, include:

 Having written policies and procedures that explain how the business will meet the
following licensing objectives: (i) keeping crime and disorder out of gambling (e.g.
money laundering, match-fixing); (ii) ensuring that gambling is fair and open; (iii)
ensuring that children and vulnerable people are protected from being harmed by
gambling; (iv) promoting social responsibility in gambling.

 Demonstrating with the relevant gambling and software technical standards.

An application fee is payable when submitting your application, then subsequent annual fees
are due to the GC every year.

All gambling businesses which are successful in applying for a licence from the GC, then
have a continuing obligation to comply with the Gambling Act 2005 and the GC’s Licence
Conditions and Codes of Practice (LCCP).5 There are various parts of the LCCP’s that can
be seen to apply squarely to combating illegal gambling activities and betting-related
corruption in sports6, including Conditions as to accepting "Payments" and "Anti-money
laundering".

Australia
Australia has not embraced online sports betting to same extent as the other two counties
already mentioned. The main form of legislation that covers online gambling in Australia is
the Interactive Gambling Act 2001. Sports betting is one form of online gambling that is legal
under the Act. Recent amendments to the Act now prohibit an organisation providing
regulated online sports betting services to Australian consumers unless the person holds a
licence under the law of an Australian state or territory.7

One important caveat that only services that are licensed by an Australian state or territory
are allowed to provide such online wagering services to Australian customers, is that the
provision of online "in-play" betting on sporting events to Australian customers is prohibited
under the 2001 Act. The Australian Minister for Communications has clarified the
application of the "in-play" betting rules to cricket matches, golf tournaments and cycling
events that take place over multiple days. The effect of this determination is that online
betting on these events is permitted from the end of play or racing on one day to the start of
play or racing the next day.8 Regardless of the state in which an online sports betting operator
is regulated, they will be required to comply with numerous obligations relating to integrity.

LAW COMMISSION OF INDIA REPORT

In July 2016, the Supreme Court asked the Law Commission of India (LCI) to examine
whether betting on cricket should be legalised, and, if so, to frame a law be framed to enable
it. The LCI published its report "Legal Framework: Gambling and Sports Betting including in
Cricket in India"9, and addressed topics ranging from the history of betting and gambling in
India and the constitution of India and betting, through to the need for regulation.

The starting point for the LCI is to consider the reasons why sports betting is currently
prohibited in the country, and balance this against the arguments in favour of legalising sports

5
Licence conditions and codes of practice (LCCP)’, Great Britain Gambling Commission,
https://www.gamblingcommission.gov.uk/for-gambling-businesses/Compliance/LCCP/Licence-conditions-and-
codes-of-practice.aspx
6
How we regulate the gambling industry’, Great Britain Gambling Commission
https://www.gamblingcommission.gov.uk/about/who-we-are-and-what-we-do/how-we-regulate-the-gambling-
industry.aspx
7
Protecting Australians from illegal online gambling services’, Australian Government: Department of
Communications and the Arts, August 2017
https://www.communications.gov.au/file/25201/download?token=HfZSMwrL
8
‘In-play betting’, Australian Communications and Media Authority, 18 December 2017
https://www.acma.gov.au/Industry/Internet/Internet-content/Interactive-gambling/in-play-betting
9
‘Legal Framework: Gambling and Sports Betting Including Cricket in India’ (Report No. 276), Law
Commission of India, July 2018 https://lawcommissionofindia.nic.in/reports/Report276.pdf
betting. Like most democratic governments around the world, the Indian Government
principally prohibits activities such as betting to prevent societal harm (e.g. problem
gambling). However, governmental policy may in the present day not be in tune with existing
social values, despite morality and religion having a significant influence over gambling
policy historically.

The LCI recognised the illegal and unregulated betting industry in India, which is extremely
difficult to curb/control, is “rampant”. The consequences that ensue as a result include:
match-fixing, “black-money” generation and circulation, and associated crimes, and overall
the reduction of national revenue/funds which the LCI say could be used for public welfare.

Legalisation and regulation would importantly create transparency and ensure the detection
of fraud and money laundering. Opining further on spot-fixing and match-fixing, particularly
in India’s most popular sport cricket, the LCI believe that if sports betting is left unregulated,
this corruption in sport could further manifest and grow uncontrollably.

Upon publication, the media focussed on paragraph 9.8, rather than reporting it in the context
of 9.7, and the LCI felt it necessary to publish a clarifying Press Note that stated in clear
terms the LCI consider, first that legalising betting and gambling in India is currently not
desirable and a complete ban must be maintained, only then, if that is not found to be
possible, should effective regulation be introduced.10

CONCLUSION AND RECOMMENDATIONS

By learning from the chequered history of betting and Indian sport, and the well-functioning
sports betting regulatory systems in other countries (as were also considered by the LCI in
their report), these are the elements the author believes India should adopt to maintain the
integrity of sports betting, whilst secondary but at the same time, reaping its benefits.

National and state betting regulators


Preferably, subject to the constitutional legislative competence as between the Indian federal
government and the states, there should be an overarching national (federal) sports betting
regulator whose duties must include:

 Licensing operators and key personnel;


 Setting appropriate licence conditions and codes of practice;
 Carrying out compliance activities;
 Enforcement and prosecution work; and
 Providing advice.11

10
‘Press Note – Clarification’, Government of India, Ministry of Law & Justice, Department of Legal Affairs,
Law Commission of India, 06 July 2018 https://lawcommissionofindia.nic.in/reports/press-note-6.7.18.pdf
11
Licensing, compliance and enforcement under the Gambling Act 2005: policy statement’, Great Britain
Gambling Commission, June 2017 https://www.gamblingcommission.gov.uk/pdf/licensing-compliance-and-
enforcement-policy-statement.pdf
Due to the size of the country, and nature of how it is run and gambling regulation is
currently devolved, it may be preferable to delegate some of these functions to newly
established state regulators.

Open licensing system


Although there should be stringent licence conditions, both upon application and ongoing,
there should no restrictions on the number of sports betting operators that are able to obtain a
licence to offer regulated sports betting to Indian consumers.

Equally, there should be no restrictions on the betting types which such licensed operators are
allowed to offer. This is because India is part of what is now a global online sports betting
market. Therefore, if India were to adopt the same approach as Australia (i.e. prohibiting in-
play betting), this would simply mean Indian consumers would look to offshore unlicensed
bookmakers and the same spot-fixing risks would remain as have arisen previously.

Establish a specialist sports betting integrity unit


Following on from the obligation to report suspicious information, and the need to exchange
information, the national regulator should play a central role in establishing a national sports
betting integrity unit. As a minimum, this should be staffed with experts from sport, betting
and law enforcement.

This would echo closely what the only international convention on match-fixing12 envisages
as “national platforms”. The National Platform should (in accordance with Indian law):

 serve as an information hub, collecting and disseminating information that is relevant


to the fight against match-fixing to the relevant organisations and authorities;
 co-ordinate the fight against match-fixing;
 receive, centralise and analyse information on irregular and suspicious bets placed on
sports competitions taking place in India, and, where appropriate, issue alerts;
 transmit information on possible infringements of laws or sports regulations to public
authorities or to sports organisations and/or sports betting operators; and
 co-operate with all organisations and relevant authorities at national and international
levels, including national platforms of other countries.

Currently in India, there is a Sports Integrity Unit (SIU), that was set-up in April 2014 under
the Special Crime Branch in India, but its powers are currently limited to conducting
investigations and then providing a recommendation to the relevant state.13 However, by
widening it’s remit and capabilities in line with the requirements above, the SIU could
become India’s “national platform”.

12
Council of Europe Convention on the Manipulation of Sports Competitions, 18 September 2014
https://rm.coe.int/16801cdd7e
13
Kulkarni, M. ‘How effective is India’s new Sports Integrity Unit in tackling corruption?’, 04 April 2016
https://www.lawinsport.com/blog/indian-sports-law/item/how-effectively-is-india-s-new-sports-integrity-unit-
helping-to-tackle-corruption
Robust money laundering regulations
Both the IPL Probe Committee Report and the Lodha Committee Report state that money
laundering has been an inevitable outcome of illegal sports betting in India. In fact, the IPL
Probe Committee Report put it strongly as this, “The law must provide for stringent deterrent
punishments, similar provisions as in Section 18 of the MCOCA (Maharashtra Control of
Organised Crime Act 1999) and restrictive bail provisions as in [the] NDPS (Narcotic Drugs
and Psychotropic Substances Act 1985) and other similar enactments. This is necessary
because influx of hawala money and involvement of terrorist elements in matter of betting
and fixing of sports is causing serious threat to national security.”

Money is the oxygen of match-fixing, and so regulations must be in place to track the money
flows from corrupt betting and ultimately recover the criminal assets, to ensure the long-term
integrity India sports and the sports betting market.