Establishing the optimum sports betting regulatory system to protect the integrity of Indian sports

Published 21 November 2018 | Authored by: Kevin Carpenter

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 IPL1 (leading to the high profile ‘Lodha Committee report2) and Indian football3.

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 America4), 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), France and Australia.

This article will set the background by taking a look at the history of sports betting in India, and where we are today, before briefly set out the approaches taken in Great Britain, France and Australia, the recent Law Commission of India report, and ending by setting out what the author believes to be the key integrity elements for a successful regulated Indian sports betting market. Specifically, it looks at:

  • History of sports betting in India and shortcomings of the current system of prohibition

    • Overview of the current law

    • IPL Probe Committee Report

    • Supreme Court Committee on Reforms in Cricket

  • Systems of sports betting regulation around the world

    • Great Britain

    • France

    • Australia

  • Law Commission of India report

  • Key elements to a regulated Indian sports betting market

    • National and state betting regulators

    • Open licensing system

    • Licensing condition to report suspicious activity

    • Establish a specialist sports betting integrity unit

    • Robust money laundering regulations

    • The blocking of unlicensed operators

    • Specific legislation to support the new regulatory system

  • Final remarks

History of sports betting in India and shortcomings of the current system of prohibition

Overview of the current law

The federal 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.5 This distinction has been tested in the Indian courts, particularly in two Supreme Court of India judgments: State of Bombay v. RMD Chamarbaugwala [A.I.R., 1957 S.C. 699] and Dr. K.R. Lakshmanan vs State Of Tamil Nadu & Anr [1996 AIR 1153]. 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.6

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

  • Superior knowledge;

  • Training;

  • Attention;

  • Experience;

  • Adroitness 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”.

Despite the federal 1867 Act still being constitutionally valid, since gaining independence in August 1947 (just after the Second World War), individual states in India have the power to legislate on betting and gambling. However, the regulation of any kind of sports betting has only happened in one state (Sikkim), and so it is still treated as being illegal throughout the rest of the country.7

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.

IPL Probe Committee Report

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.8

A three-member Committee were entrusted with examining the allegations. As part of the Committee’s Recommendations9 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.

Supreme Court Committee on Reforms in Cricket

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.10

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).11 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 sports12, including Conditions as to accepting "Payments" and "Anti-money laundering". However, the key Condition in this regard is 15.1 on "Reporting suspicion of offences etc.", in particular:

Systems of sports betting regulation around the world

When such information is reported by a licensed sports betting operator, it will be fed to the GC’s Sports Betting Intelligence Unit (SBIU), who collect information and develop intelligence about potentially corrupt betting activity involving sport.13 14

France

Gambling has long been totally prohibited in France, but over the years, several exemptions have been granted, gradually authorising certain gambling activities. These must be either offered in specific venues or provided by authorised operators.15 The online gambling authority, the Autorité de Régulation des Jeux en Ligne (ARJEL) can license operators authorising the offer of sports betting. ARJEL has full competence to issue licences, enforce online gambling regulations and fight against illegal gambling websites.

Bets can only be made on certain sports, competitions and types of results, determined by ARJEL following consultation with the sport federations. The official list is available on ARJEL's website and ARJEL can decide from time to time to add new competitions or new types of results. Under French law, organisers of sports competitions have rights over the competitions they organise. Consequently, sports betting operators can only offer bets on the competitions for which they have entered into an agreement with the organiser of each competition. Any licensed operator requesting one must be offered the possibility to sign a contract if the operator meets the general conditions set by the organiser. These contracts are reviewed by ARJEL and the French Competition Authority (Autorité de la concurrence) and must offer similar terms to all operators.

One of ARJEL’s missions is to ensure the integrity of online sports betting operations which can be altered by manipulations of sports competitions. ARJEL works closely with the French Ministry for sports and the French sports movement (federations, competitions organizers). Specifically, regarding the prevention, detection and sanctioning manipulations of sports competitions:

  • ARJEL implements prevention measures relating to prevention of conflicts of interest, risk

  • analysis and the betting right;

  • ARJEL ensures the detection of online betting related manipulation of sports competitions online; and

  • ARJEL supports the disciplinary actions of sports.16

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.17 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.18

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.19

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. For example, they must report suspicious transactions to the relevant sports governing body and provide that body with information relating to customers and transactions upon request.20

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" in July of this year21, 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 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.

The final part of the LCI’s report are their recommendations. In the context of this article, it is worth quoting paragraphs 9.7 and 9.8 of the LCI’s report in their entirety:

9.7 The existing policy of the Government (National Sports Development Code of India, 2011, etc.), the current socio-economic atmosphere in the country and the prevalent social and moral values do not encourage betting and gambling. Accordingly, the Commission reaches the inescapable conclusion that legalising betting and gambling is not desirable in India in the present scenario. Therefore, the State authorities must ensure enforcement of a complete ban on unlawful betting and gambling.

9.8 An incapability to enforce a complete ban has resulted in rampant increase in illegal gambling, resulting in a boom in black-money generation and circulation. Since it is not possible to prevent these activities completely, effectively regulating them remains the only viable option. Thus, if Parliament or the State Legislatures wish to proceed in this direction, the Commission feels that regulated gambling would ensure detection of fraud and money laundering, etc. Such regulation of gambling would require a three-pronged strategy, reforming the existing gambling (lottery, horse racing) market, regulating illegal gambling and introducing stringent and overarching regulations.

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.22

The other recommendation from the LCI which is key to the future protection of the integrity of Indian sports was that match-fixing and sports fraud should be specifically made criminal offences, with severe punishments.

Key elements to a regulated Indian sports betting market

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.23

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.

Licensing condition to report suspicious activity

The effective, efficient and yet secure exchange of information is paramount to ensure the integrity of any regulated sports betting market. Therefore, it must be a condition of having and maintain a license that all operators promptly inform the national regulator when they become aware of any suspicious activity in the betting markets. Equally, licensed operators must be compelled to operate with the regulator when they request information as part of an investigation.

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-fixing24 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.25 However, by widening it’s remit and capabilities in line with the requirements above, the SIU could become India’s “national platform”.

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.

The blocking of unlicensed operators

A key factor in ensuring regulation is successful is that the licensed market is protected by preventing unlicensed operators from gaining access. This will require a variety of tactics to be used (e.g. IP blocking), most of which will be driven by technology.

Specific legislation to support the new regulatory system

All of the preceding building blocks will require new legislation to be passed. However, with protecting the integrity of Indian sport being paramount to any future regulatory approach to sports betting in the jurisdiction, other specific provisions must be included / laws must be passed to create the most robust and comprehensive legislative framework possible.

Even before the LCI’s specific recommendation, India has initiated the adoption of specific provisions related to match-fixing26 27, with best practice being for such law(s) to include:

  • both the active and passive manipulation of a sport event as the objective elements;

  • the concept of any undue advantage resulting from the match-fixing offence, be it material (“gift”, “present”, “consideration”, “allotment”, “material/pecuniary/financial advantage”) or non-material;

  • the criminalization of both the manipulation of an entire match/event (i.e. match-fixing) and the manipulation of the course of a match/event (i.e. spot-fixing);

  • the introduction of civil asset recovery, whereby even if a criminal conviction fails, the proceeds of the corrupt activity can still be recovered on a the balance of probabilities;

  • the protection of witnesses and of reporting persons (in accordance with the legal principles of the jurisdiction).

Final remarks

The LCI concluded their recent report by quoting Justice D.P. Madon that “as the society changes, the law cannot remain immutable” and that “the law exists to serve the needs of the society which is governed by it.” In the author’s opinion, of all the needs of society, keeping it corruption free is of paramount importance, and therefore the Indian government must change the law to adopt the measures set out in this article at the earliest opportunity to protect the integrity of Indian sports to the fullest extent.

About the Author

Kevin Carpenter

Kevin Carpenter

Kevin is a advisor and member of the editorial board for LawInSport, having previously acted as editor. In his day-to-day work he has two roles: as the Principal for his own consultancy business Captivate Legal & Sports Solutions, and Special Counsel for Sports Integrity at leading global sports technology and data company Genius Sports.

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