The Sikkim legislative assembly on July 30 paved the way for India's first legal betting shops to be opened in the state. But scope of the Himalayan state's ambitions have been curtailed. Sikkim had originally hoped to allow people across India the change to gamble using websites located in the state.  However, the Home Ministry ordered it to restrict its online gambling activities to the confines of the state.

Nonetheless, the passage of the Sikkim Online Gaming (Regulation) Amendment Bill, 2015, has generated considerable optimism.  Manoj Sethi, Director of Golden Gaming International has already put up hoardings at prominent locations in Gangtok advertising his products. “We hope to start operations by September, once the amended Bill is signed by the governor and notified by the relevant department," he said. "We already have the technical and physical infrastructure in place and are only waiting for a go-ahead from the Directorate of State Lotteries."

Sikkim has the most liberal gaming laws in the country. The state government allows casinos in five-star hotels (two are operational), online and paper lotteries and now even online gaming and betting. In 2001, the state government started India's first online lottery, under the popular Playwin brand name.

Going online

In 2008, the state passed the Sikkim Online Gaming (Regulation) Act with a view to serving as the base for websites that could be used by people all through India. By 2009, the state government came out with rules that allowed license holders to offer, among others, sports betting, roulette, black jack, poker and baccarat to all citizens subject to payment of a 10% "online gaming levy".

Provisional licenses were issued to several parties, including three of India’s biggest lottery groups: Essel Group headed by media mogul Subhash Chandra, Future Gaming Group headed by lottery king Santiago Martin of Coimbatore, and Sugal & Damani Group, which is run by a group of Gujarati and Marwari businessmen.

Even global gaming giants such as William Hill, Ladbrokes and Pokerstars expressed in interest in using Sikkim licenses to enter the vast, untapped Indian market.

However, even though gambling and betting is a state subject, serious doubts were raised about the legality of these proposals.  There was a distinct possibility of other states interpreting their gaming statutes not just to request the government to have these gambling websites blocked, but also to impose criminal liability on the operators. The Reserve Bank of India had also indicated that it would not allow payment gateways to accept deposits on such gambling websites.

In April 2014, the Union Home Ministry finally clarified since gambling and betting was a state subject,  the Sikkim government was competent to regulate online gaming – as long as the activities did not traverse into other states or union territories in the country.

Market shrinks

The clarification by the Home Ministry sent the Sikkim government and provisional licence holders in a tizzy.  Instead of the earlier potential market of 1.2 billion-plus citizens of India, the pool was suddenly restricted to the 6.19 lakh residents of Sikkim and the few lakh tourists who visit the state every year . According to state officials, the new amendments reflect the condition that licensed gaming can be offered only through "intranet gaming terminals" across the state.

Not everyone in Sikkim is happy with the latest turn of events . Said Navraj Gurung, General Secretary of Sikkim Krantikari Morcha, the principal opposition party in the state, “The Bill has the potential to affect locals with the ills of gambling.”

However, despite the six-year delay and territorial restriction, some of the license holders hope that the steps taken by the Sikkim government will prompt other state governments to legalise online gambling. If the Sikkim government’s experiment becomes a successful revenue churner, there's no reason why some other states could soon follow suit.

Jay Sayta runs glaws.inIndia’s only website monitoring developments relating to gambling, betting and lottery laws.