Staff Reporter

Petitions by Meghalaya and Sikkim governments allowed Karnataka cannot be declared a lottery-free zone as the State runs lotteries: Bench

BANGALORE: In a setback to the Karnataka Government, the High Court on Friday set aside a notification banning online lotteries, and allowed petitions by the Meghalaya and Sikkim governments challenging the ban.

A Special Division Bench, comprising Justice R. Gururajan and Justice C.R. Kumaraswamy, said only a State government which banned all lotteries could ban online lotteries. The Karnataka Government had banned online lotteries and permitted its own lotteries.

The court refused to accept the State's definition of lottery.

Citing a Supreme Court order (B.R. Enterprises and the State of Uttar Pradesh, where it had gone into the ban on lotteries), the Bench said the law was well settled in this regard, and the apex court decision was binding on all States.

The Meghalaya and Sikkim governments, Tashi Delek Gaming Solutions and Pan India Network Infrastructure had challenged the July 24, 2004 notification banning online lotteries. They said they had invested money in infrastructure and entered into an agreement with the Government. They approached a single judge, who said that it was an inter-State dispute and the High Court had no jurisdiction to hear such matters.

A Division Bench endorsed the single-judge order and the petitioners appealed to the Supreme Court, which accepted the appeals, set aside the High Court order and asked the High Court to decide. The Government told the court that lottery was a form of gambling, and Karnataka had been declared as lottery-free zone. The Bench said the Karnataka Government could not prohibit lotteries of other States. It said as long as the State ran lotteries, Karnataka could not be declared a lottery-free zone.

It said if the State wanted to ban online lotteries and curb gambling, it could have taken steps to make Karnataka a free lottery zone as enunciated in the B.R. Enterprises case.

Revenue loss was inevitable when policy decisions were taken keeping the interest of the people in mind, the Bench said.