The Lotteries Regulation Act, 1998

The lotteries Regulation Act was enacted on 7th July 1998 and enforced on 2nd October 1998. After its enforcement the Lotteries (Regulation) Ordinance, 1998 was repealed. The act is applicable throughout India. The act was drafted in order to regulate lottery selling and bringing the business of selling lotteries in control of State. After the enforcement of the act the business of lotteries shall be run and controlled by State. After the enforcement of the Act there is a complete ban on running lottery business of any manner whatsoever, as also stated under section 3 of the Act which prohibits the states to ‘organize’, ‘conduct’ or ‘promote’ lottery.  However, in case a state wants to run this business there are certain essentials which need to be complied under section 4 of the Act. The conditions are more or less regulators, inorder to regulate the lottery business and keep a check on the States running this business. Section 4 clearly states that the lottery business shall be run only by states and distributors representing states and not through private individuals, the sale proceeds shall go into the state treasury, the lottery tickets shall have a logo or a mark, the prizes shall not be pre announced and in a calendar year there shall not be more than six lotteries.

The lotteries act also takes into consideration that if a state is not inclined to run business of lottery, the state can impose restriction of lottery tickets of another state within its territory one such example is State of Himachal Pradesh wherein there is a complete ban on lottery business. Incase the Central government deems it necessary it can make rules for prohibition and control of lottery business. The act also imposes liability incase the provisions of the act are contravened by departments, head of departments, company and their heads or private individuals. The penalty includes imprisonment, fine or both. In order to have a deterrent effect the act makes the offences committed cognizable and non bailable. The rules made under the act shall only be enforced once approved by both house of parliament. The Central Government shall make such rules under section 11 of the Act. The State government too can make rules time to time.

Supreme Court, in  State of Bombay vs R. M. D. Chamarbaugwala, 1957 AIR 699, 1957 SCR 874, in this case the Bombay Legislature passed the Bombay Lotteries and Prize Competitions  Control and  Tax (Amendment) Act of 1952, and widened the  scope  of the definition of ‘prize competition ‘ contained in S.              2(1) the respondents moved the High Court of Bombay under Art. 226 of the Constitution and contended that the amended Act and rules framed under it applicable to prize competitions were ultra vires. The State legislature had transgressed upon their fundamental rights thereby violating their rights under Art.19(1) (g) and freedom of inter-State trade under Art. 301 of the Constitution. Supreme Court held, that the law makers never intended to include “gambling” activities under article 19 (1)(g) of the constitution since such activities in their very nature are harmful and undesirable. The petitioners, therefore, had no fundamental right under Article 19(1) (g) or freedom under Art. 301 of the Constitution in respect of their prize-competitions and an Act in violation of such gambling activities need not be tested by Articles 19 (6) and 304 of the Constitution.”

The scope and ambit of The Lotteries Act is further widened by The Lotteries (Regulation) Rules, 2010 wherein with the changing needs certain additions have been made to the parent act. The new rules now gives definitions of terms like ‘central computer server’, ‘online lottery’  ‘prize’, ‘security deposits’ etc. Section 3 of the parent act has been rephrased completely. Certain new guide lines have been laid inorder to keep a check on the sale of lottery tickets. Inorder to keep a check everything concerning lotteries shall be notified in the official gazette. There are also guidelines made for appointment of distributors. Whenever the lottery is not being carried as prescribed the new ordinance also lays rules for the same.

Thus we can say that the Act was required to keep into check the business of lottery. Since lottery’s have a large societal impact the act completely bans lottery and incase a state runs this business the same shall only be done in accordance with provisions of the Act. The Amendment rules of 2010 further strengthen The Lotteries Regulation Act of 1998.

by Vibhuti Nakta.