Legalising gambling good bet?

No one expected India to lose in the finals of the ICC Champions Trophy. At least not against arch-rivals Pakistan. India had an enviable 13-2 record against Pakistan in ICC matches (out of 15 ICC matches ever played between these teams, India won 13 and lost only two). The Indian team’s defeat is just one side of the story. Another darker side of this story concerns the betting industry. The defeat in the final also led to huge betting losses. Unverified media reports suggest that about Rs 2,000-2,500 crore were riding on this match with around 80-90 per cent bets placed in favour of India. Such huge sums of money are quite commonly bet in big-ticket ICC matches, IPL, etc. As such, things have gone on unabated despite the fact that betting in cricket is still not legal in the country. So, it is natural to question why should betting continue to be prohibited? Why not open it up and make it legal?

It is first pertinent to look at the existing legal framework on this subject. The term ‘betting’ is mostly used within the larger context of ‘gambling’. Gambling is defined as an act of wagering or betting for money on a future outcome. Gambling has been put as a State subject under the Constitution and hence most states have legislations on this. In general, other than some exceptions, gambling is largely prohibited in the country. By its very nature, an element of chance is inherent in gambling. The government does not want the lay man to take unknown risks with his/her hard-earned money. It fears that if gambling is allowed, large sections of the society, particularly the poor, may get exposed to the perils of taking chances with their money. Hence, the ban is said to exist for the larger good of society.

Nevertheless, as mentioned earlier, there is no blanket prohibition on gambling. Some exceptions do exist. Gambling is largely permitted on events where success depends on a substantial degree of skill and not chance. Moreover, a few states also permit casinos and online gambling. Many allow lotteries as well. This piecemeal approach has created a lot of avoidable regulatory confusion. Take for instance interpretation of events where success depends on skills. In a case in 1996, the apex court held that betting on horse racing was a game of skill since factors like fitness and skill of the horse and jockey could be objectively assessed by a person placing a bet.

This interpretation is quite interesting as one may theoretically argue on similar lines for betting in other sports like cricket. Factors such as skills of teams, forms of players, etc, may be used to predict possible outcomes in cricket as well. But still, while debating betting in cricket, authorities would presumably like to take a more cautious stance. The reason is obvious. Cricket has a much broader appeal cutting across sections of the society. Horse racing, on the other hand, is followed by a limited elite and possibly a richer section of society. Another important repercussion of the above confusion is that the gambling market in the country has been segmented artificially. Gambling in casinos is permitted to a limited extent in Goa, Daman and Diu, and Sikkim. Not in other states. Sikkim permits online gambling, which is not the case for others. Many states allow lotteries while states such as MP do not.

However, prohibition on gambling has not led to the elimination of the practice itself. People often come up with ingenious ways in finding a way around the ban. As per reports, the overall betting market in India is worth around Rs 3 lakh crore. Betting in cricket accounts for almost 80 per cent of this. Taking a note of this, the Justice RM Lodha Committee on BCCI reforms recently recommended making betting on cricket legal. The Supreme Court took a much broader view on this. It mandated the Law Commission to study the possibility of legalising the overall betting and gambling scenario in the country.

This is a prudent move as it’s high time we acknowledge the ground reality that gambling and betting would exist irrespective of a ban. Therefore, it’s worth working towards evolving sound regulations along with appropriate safeguards given the Indian context. This may also have positive economic advantages in the form of increased taxes, jobs and boost to the travel and hospitality sectors.  The Law Commission is likely to examine all these aspects and submit its final view to the government. Whatsoever happens eventually, this is going to be an interesting space to watch and that is something all of us can ‘bet’ on.

The authors are economists with NITI Aayog. Views expressed are personal.