It was a hectic Day 1 of the IPL auction 2022 in Bengaluru on Saturday. Teams splurged on their favourite cricketers as young men like Ishan Kishan, Shreyas Iyer and Shardul Thakur laughed all the way to their banks after bagging lucrative contracts amounting to several crores.
Sunday will see another day of the IPL mega auction and more players will get richer. But on Monday, all eyes will be on the Karnataka High Court. A decision will be made on Karnataka’s ban on online gaming. The Karnataka Police (Amendment) Act, 2021, notified on October 5 last year, had made all forms of gaming for stakes, including online, a cognisable and non-bailable offence.
Monday’s decision will have a significant impact on stakeholders, who are involved with cricket in India, specifically the platforms that run fantasy sports. A decision in favour of online gaming (read: real money gaming), will be a massive boost to those making money from cricket.
The legalities involved with money and sport is at an interesting juncture. The recent judgment of the Karnataka High Court that quashed criminal cases against cricketers and bookmakers responsible for fixing Karnataka Premier League (KPL) matches also made interesting observations that could pave the way for legal sports betting in the country.
Justice Sreenivas Harish Kumar in his judgment quashing criminal charges against some bookmakers charged with spot-fixing noted that since ‘cricket is a sport and therefore even if betting takes place, it cannot be brought within the ambit of ‘gaming’ found in Karnataka Police Act.’
Skill Vs Chance: Blurred Distinction
The view that betting on cricket and other sports does not amount to gambling under state legislations dealing with gaming and betting stems from the age-old distinction of ‘games of mere skill’ being exempted from the ambit of gambling or betting under most state laws (gambling and betting are a state subject but there is no clarity on whether online games of skill fall under the domain of state governments or the Centre).
The Supreme Court in 1967 observed that the card game of rummy is not a game of mere chance and involves various skills such as creating sequences and memorizing the fall and drop of cards. It thus ruled that rummy is a game of skill and does not fall within the ambit of gambling and betting.
In 1996, a three-judge bench of the Supreme Court held that horse-racing was a game involving a preponderant degree of skill and thus wagering or betting on it also involves skill and does not fall within the ambit of gaming or gambling.
It is citing this judgment of the Supreme Court on horse-racing that many jurists such as retired Chief Justice of Punjab and Haryana High Court and the chairperson of the committee to probe the IPL spot-fixing scam, Justice Mukul Mudgal have opined that cricket or other sports being games of skill, betting on the same would not be an offence under the state gaming laws.
The Karnataka High Court in its recent judgment seems to have affirmed and ratified this point of view. A similar ruling was also given by the Additional Sessions Judge of the Patiala House Court, New Delhi in 2015 while discharging former India cricket S. Sreesanth and 35 others of criminal charges
Additional Sessions Judge Neena Krishna Bansal, in her 2015 judgment, also similarly stated that various skills such as hand-eye coordination, stamina, strength and mental agility. Thus, it was ruled that since cricket is a game of skill, betting on the game would not amount to an offence.
It may however be noted that after chargesheets were filed by Karnataka Police against former Ranji Trophy cricketers CM Gautam and Abrar Qazi, the state government amended its gaming law, the Karnataka Police (Amendment) Act in 2021, to broaden the definition of gaming, to include risking of money on any unknown event, including games of skill as an offence. Further, playing online games, including skill-based games involving wagering or betting has also been made an offence.
Interestingly, petitions by several online gaming companies and industry bodies challenging the constitutional validity of these amendments, on the grounds that betting on games of skill as ruled by the Supreme Court falls within the right to the trade and commerce guaranteed by the constitution, and that a complete ban on such activities is arbitrary and unconstitutional have been filed before the Karnataka High Court. Thus, Monday’s hearing is perhaps more significant for the cricket ecosystem that has close links with online gaming and betting companies.
Notably, similar amendments to its Gaming Act passed by the Tamil Nadu government were struck down by the Madras High Court in August 2021 on the grounds that a complete and overarching ban on wagering or betting on games of skill is manifestly arbitrary, paternalistic, disproportionate and violation of the right to trade and commerce.
An appeal against this decision is currently pending in the Supreme Court, which ultimately will have to pass a conclusive ruling on the correct interpretation of its previous rulings on betting on horse-racing and rummy, the scope and meaning of games of skill and whether states can completely ban games of skills, if played for stakes or wager.
Time To Legalise Sports Betting?
In the absence of a conclusive verdict from the Supreme Court, some ambiguity prevails over whether cricket betting is banned under the current gaming laws of most states and whether state governments have the constitutional powers to curtail betting on games of skill.
However, many politicians, jurists, bureaucrats and sportspersons such as retired Chief Justice of India RM Lodha, former cricketer Rahul Dravid, former CBI Director Ranjit Sinha and parliamentarians Shashi Tharoor and KTS Tulsi as well the 276th Report of the Law Commission of India have suggested regulating sports betting under a licensing regime with a view to earn revenues for the exchequer, eliminate unscrupulous elements from the business, create jobs and ensure transparency in betting patterns thereby making investigation of instances of manipulation of matches easier.
As per experts, even by conservative estimates, licensing and regulating the activity under GST would fetch at least INR 20,000 crore revenues for the exchequer annually. It is high time that the central government examines the issue seriously and engages in dialogue with stakeholders on the desirability of regulating sports betting and come up with a considered stand. (Concluded)
(The writer is a technology and gaming lawyer. Views expressed are personal).