Legalising gambling, a huge bet for Sikkim

19 Jannuary 2016

From The Economic Times

Shortly after Sikkim legalised gambling last July, tour operators in Delhi and Mumbai began hard-selling the state as the 'Las Vegas of India'. Off-season five-night packages cost Rs 25,000 to Rs 60,000 in any of the three Casino hotels in capital Gangtok.

The move is likely to boost tourism in the scenic north east state but the government faced many obstacles before passing the 'Online Gaming Regulation Amendment Bill'. "It was after a long-winding legislative process Sikkim managed to get its laws in place," says Jay Sayta, a researcher in gambling laws and founder of GLaws.in, a gaming laws web portal.

Initially, Sikkim planned to roll out 'gaming services' across India using the internet. But this was not allowed as it breached 'duty of internet service providers (ISP) rules' under the IT Act of 2000 which bars ISPs from hosting gambling-related content. The central government later clarified that Sikkim could only offer gambling/gaming opportunities inside its territorial boundaries.

"With geo-blocking of internet sites difficult and not foolproof, gaming companies and betting shops have started offering their services through intranet," says Sayta.

Gaming and lottery operators are sanguine about their prospects in Sikkim. The state government has permitted four main gaming and lottery companies — Sugal & Damani Group, Golden Gaming International, Future Gaming Group and Essel Group's Playwin — to operate in the state.

Two of them have already opened shops in Gangtok. Golden Gaming is giving finishing touches to its 6,000 sq ft "gaming zone" in Gangtok. "We're offering Keno and virtual horse racing to our clients," says Manoj Sethi, director of Golden Gaming International, adding that betting in popular sports like cricket, soccer and tennis will be ready by the end of February.

Operators with strong lottery franchisee network are considering a 'gaming shop' model adjunct to their existing lottery stores across Sikkim. By doing so, they may not incur much infrastructure cost. "It may take some time before all licence-holders start their operations in full swing. We're looking at options to roll out the business in a cost-effective manner," says Kamlesh Vijay, CEO of Sugal & Damani, one of India's largest lottery and gaming operators.

Licence holders concede that they would have invested more had they been allowed a "nation-wide online rollout" (as envisaged by the state government earlier), with operational bases in Sikkim. Dependency on private networks and intranet drive up operational costs of licence-holders two-three times, without actually getting the desired reach, according to experts.

"It's an expensive proposition, but we expect tourists from other states to bail us out," says Sethi.

The Sikkim government has pieced together its Sikkim gaming laws from other gaming and betting-friendly countries. It has also framed laws to prevent money-laundering activities, imposed KYC norms for high-value bets, set up communication and datasharing channels with Financial Intelligence Unit (under the Finance Ministry), banned minors from playing high stakes and limited betting amounts (and also the use of cash). But there is one major deficit. "Sikkim gaming laws have not focused much on responsible gaming", says Sayta ..

The government has signed a profit-sharing agreement, under which licence-holders would pay 10% of their profits, or Rs 5 crore (to the government), whichever is higher. Winnings would be taxed at 30% as they come under the Income Tax ambit. There is already an uptick in the number of visitors to the state, according to gambling operators who are optimistic that other states will legalise gambling by looking at the Sikkim experience.

"If other states open their doors to gaming businesses — or if gaming or sports betting is legalised across the country — we'll be the first ones to grab that opportunity," Kamlesh Vijay adds. But all bets are off on that happening anytime soon. So for now, Sikkim is indeed feeling lucky.

 

 
 


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