New Delhi: The Law Commission of India has recommended the legalisation of regulated sports betting and gambling activities, stating that a complete ban has proved to be "counter-productive" and has only resulted in a hike of "black money generation and circulation”.

The commission's report, "Legal Framework: Gambling and Sports Betting including Cricket in India", recommends a number of changes in the law for regulating betting and generating tax revenues from it. It has been prepared by the panel under Chairman Justice BS Chauhan after the Supreme Court ordered it to study the possibility while hearing a case between the Board of Control for Cricket in India and Cricket Association of Bihar & Ors.

The commission had taken opinion from students, experts and public in general before coming to the "logical" conclusion that regulation was needed more than prohibition. It has also proposed that the income earned from these activities should be made taxable. If the proposal goes through, it could lead to a windfall for the government.

“In the light of the fact that the existing black-market operations relating to these activities are a major source of influx of black money in the economy, regulation rather than complete prohibition the logical step to be taken," reads the report.

While pondering over the question, the commission looked at examples from Mahabharata as well.

"The argument that had gambling been regulated in the Mahabharata period, Yudhishtir could not have put his brothers and wife as stakes, perhaps Mahabharata could not have been there, is full of substance," noted the commission.

At present, betting is legal only on horse racing, and it is taxed at 28 per cent under GST. The commission recommended that like the exemption for horse-racing as a game of skill, "other skill-centric games may also be exempted from the blanket prohibition on gambling".

The commission has also recommended amending the laws regulating forex and India's FDI policy to allow investments in the casino and online gaming industry.

It also proposed strong regulations and laid down several checks and balances to avoid misuse if betting is indeed legalised.

It has stated in its report that such activities should be offered only by operators from India possessing valid licences granted by a game licensing authority.

For those who would participate in gambling and betting, there should be a cap on the number of transactions that they can indulge in monthly/yearly etc.

It has also proposed that all betting and gambling activities should be linked to the operator’s and participant or player’s Aadhaar Card/PAN Card, to ensure "enhanced transparency and state supervision".

To top it all, transactions need to be cashless, "with penal provisions for cash transactions", it said.

Making betting and gambling legal has been debated for long. Estimates about the size of the gambling market in India vary, with a 2010 KPMG report suggesting that it could be $60 billion, but more recent studies peg the value to be much higher.

According to Doha-based International Centre for Sport Security, the illegal betting market in India is worth $150 billion, or roughly Rs 9.6 lakh crore. Most of it is via local bookmakers and unregulated offshore websites.

The government could earn tens of thousands of crores as tax revenue by legalising sports betting. Additionally, if online gambling and casinos are also permitted, the estimated tax revenue would be much higher.

In addition to revenue generation, a legal and regulated gambling sector will also help in creating large-scale employment opportunities.

While giving its green signal, the law commission noted that India as a nation thrives in its rural heartland, where betting and gambling pushes individuals at the mercy of money lenders, and its urban counterpart onto the mercy of "loan sharks".

"One of the major drawbacks of illegal gambling and betting activities is loan-sharking, i.e. taking loans at exorbitant rates for gambling. Aberrational behaviour sprouting out of compromised individual and social ethics is also a common side-effect of unchecked and unregulated ‘betting and gambling’, ultimately weakening the moral fibre of the nation," noted the 276th report.

The ones who have been excluded from participating in such betting and gambling are the ones who receive "subsidies or do not pay taxes."

Justice BS Chauhan stated that with time law changes and thus the need is for regulation rather than blanket prohibition. Quoting Justice DP Madon, the commission stated “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.”

The primary law on which states have framed their gambling legislation is an archaic, British-era law called the Public Gambling Act, 1867. Ironically, while India follows a British-era prohibitionist statute, the UK legalised and regulated various forms of gambling and betting many decades ago.