Lottery law reforms stalled, influenced by Future Gaming and other market players

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It has come to light that the Union Home Ministry’s efforts to amend the Lotteries Regulation Act, 1998, and revise the Lotteries Regulation Rules, 2010, were halted seven years ago due to several petitions from prominent market players, including Santiago Martin’s Future Gaming and Hotel Services. Future Gaming and Hotel Services is a significant buyer of electoral bonds worth Rs.1,368 crore.

This revelation comes amidst reports of irregularities flagged by the Comptroller and Auditor General (CAG) and subsequent investigations into lottery-related malpractices.

The CAG’s audits in Sikkim, Mizoram, and Nagaland disclosed violations which favoured marketing agents like Future Gaming, prompting the Ministry to rethink tighter regulations. However, these proposals were put on hold due to legal challenges from major players in the industry, as per reports in the Economic Times. However, the spokesperson at the home ministry did not comment on the matter when contacted.

Under the existing regulations, the Lotteries (Regulation) Act, of 1998, mandates that proceeds from lottery ticket sales be credited to the public account of the respective state. Similarly, the Lotteries (Regulation) Rules, 2010, require states to ensure that proceeds from ticket sales are deposited into designated accounts and that income tax on prizes is deducted at source.

The Business Standard reported that in September 2023, the Ministry of Home Affairs notified the lottery-running states about the alleged “irregularities” linked to Future Gaming. The Enforcement Directorate started a case of money laundering against Future Gaming in early 2019. On April 2, 2022, the ED attached movable assets worth Rs.409.92 crore in the case, and on April 7, Future Gaming bought Rs.100 crore in electoral bonds.

The history involving Future Gaming and its alleged involvement in lottery scams across multiple states has attracted attention. Despite legal actions and regulatory warnings, Future Gaming continued its functioning, raising concerns about the efficiency of existing regulations and enforcement mechanisms.

In a parallel development, the recent revelation by the Election Commission of India (ECI) regarding electoral bonds further underscores the company’s significant financial influence. Future Gaming emerged as one of the largest purchasers of electoral bonds, with a significant contribution of Rs.1,368 crore. A substantial portion of these funds, amounting to Rs.509 crore, was reportedly donated to the Dravida Munnetra Kazhagam (DMK).