by VIVEK MUKHERJI
IN the shaded lanes, winding through the labyrinths of the Walled City in Old Delhi, the FIFA World Cup turned out to be a harbinger of achhe din for the shady kings, rooks, knights and pawns, who move the pieces on the chess board of the underground betting networks in India. The unpredictability of the 2018 World Cup in Russia, which saw many big teams heading for the exit door early in the tournament, turning the pre-match odds on its head, made these men dance merry high on lucre.
Riyaz (name changed), is just one of the hundreds foot soldiers in the vast underground betting network that stretches from Kashmir to Kanyakumari and Surat to Siliguri, which in turn is linked to syndicates in Dubai, Singapore and Kuala Lumpur.
Riyaz operates out of a hole in the wall in one of the narrow lanes in Old Delhi with a faded signboard that simply says “Money Changer”. At first glance there is nothing ubiquitous about him or his “office”, except for the four mobile phones on the badly-chipped sunmica counter top. The mobile phones, a pocket notebook and Rs. 10 ballpen are the most important tools of his trade.
When the odds for a particular match are opened, which are determined by the syndicate based in foreign countries, the phones start ringing as punters call in to place their bets. These bets are scribbled in the notebook in coded language. For Riyaz, the busiest phase every evening is when the games got underway. That’s when the dynamic odds start coming in for ‘in-play’ betting, which is more profitable for the bookies, as well as those who called the right outcome during a certain period of play, compared to the end of the game result for which the bets are accepted before the start of the match. If the match went into extra time or penalties, things reach a dizzying pitch, which for an untrained person is difficult to track.
Meanwhile, at regular intervals, Riyaz’s retinue of ragged runners deposit the slips of paper with the designated ‘bookkeeper’, Babu bhai, who works out of a tiny room in the cramped quarters behind Turkman Gate.
Here, Babu in his mid 50s with a fast-receding hairline, meticulously records the bets in an old-school munim’s (clerk) ledger, once again in codes. (Any request to take a picture of the page is met by a volley of abuse). The incoming slips are deposited in a metal cash box, where they remain till the weekly settlements are made. These settlements are always done in hard cash, delivered or collected, at the doorsteps of the betters by a team of trusted couriers engaged by the network. Once the settlement is done, the slips are burnt, leaving no trace of the elaborate betting process that takes place every day, except the munim’s ledger, which remains in the safe custody of the bookkeeper.
IN this age of computers, internet and smartphones, this low-tech, analogous world of the underground betting networks, which operates purely on trust, might appear to be an antithesis to the conventional way of transacting business where astronomical sums of money is involved, but that’s how this system works seamlessly below the radar of the law enforcement agencies.
According to Riyaz and Babu, till the end of the round of 16 on July 3, Delhi alone accounted for a turnover of approximately Rs. 6,700 crore in illegal betting.
By the end of the FIFA 2018 World Cup, the total turnover would be close to an eye-popping Rs. 25,000-30,000 crore. This is just from offline betting. If online betting data is taken into account, which is also illegal in most parts of India under the existing laws, this amount is likely to balloon even further.
Despite the seemingly vast sums of money that coursed through the capillaries of this underground network during the FIFA World Cup, a tournament in which India had no stake, it’s a mere drop in the country’s gigantic illegal betting market. According to a note prepared by the Federation of Indian Chambers of Commerce & Industry (FICCI) in 2012, called Regulating Sports Betting India: A Vice To Be Tamed, quoted a report prepared by the international consultancy firm, KPMG, which pegged the market at a mammoth Rs. 300,000 crore. By 2016, according to the Doha-based International Centre for Sports Security (ICSS), a sports security and integrity body that has worked closely with the Indian Super League, the size of the illegal Indian betting market swelled to Rs. 990,000 crore ($150 billion approx)—a growth of 230 percent in four years—primarily driven by cricket. This includes both offline and online betting.
Given the enormous sums of money that grease the wheels and cogs of the underground betting networks, controlled exclusively by the mafia and criminal syndicates, it comes as little surprise that the Law Commission report that was submitted to the Ministry of Law & Justice on July 5, makes a helpless pitch to legalise “gambling and sports betting including cricket.” The report also marks the culmination of a process that set the ball rolling after the Supreme Court accepted Lodha Committee recommendations for reforming the Board of Control for Cricket in India (BCCI). It’s now up to the Government of India to either accept the report, and make gambling and sports betting legal by making the relevant laws, or reject it.
IT’S a different matter that most of the recommendations made by the committee, headed by former Chief Justice of India, R.M. Lodha are yet to be implemented, with the entrenched power centres in the board ensnaring the Committee of Administrators (COA), led by the former CAG, Vinod Rai, in a protracted legal tug-of-war that is still going on in the apex court. The ninth status report submitted by the COA in the SC on July 2 shows its helplessness to make the power brokers in the BCCI fall in line.
The Law Commission report at first glance appears to be driven by progressive thinking, despite one of the members, Prof. S. Sivakumar, striking a jarring dissenting note. But a closer reading of the conclusions and recommendations, which have been crunched into just nine pages out the total of 145 pages, reveal that it’s pitted with some serious flaws and confusing observations. In fact, it comes across as a piece of document that has been written in a hurry. It’s worth noting that the term of the current Chairman of the Law Commission, Justice Balbir Singh Chauhan is ending on August 31.
The section on conclusions and recommendations being on a promising note, but in the later paragraphs the confusion becomes quite clear, before devolving into defeatism to prevent illegal betting, therefore, legalising it is the only option. “With the advent of online gambling and the anonymity that it ensures, the gambling and betting activities have acquired a global presence. It has, therefore, become more challenging for countries to monitor or curb these activities,” it says in the opening paragraph (9.1). “The transnational character of online gambling platforms calls for a much needed change in approach. With the changing times, there could always be an option to have a relook at the earlier approach of a complete ban.”
It further goes on to bolster its case by citing examples how the global gambling market has registered rapid growth over the past few years, and how Japan, which is one of the countries to legalise sports betting more recently has become the fastest growing market in the world. It suggests that by legalising betting, the regulator will be able to tackle the problem of gambling by minors and ‘problem gamblers’ and tackle the menace of black money that’s generated through illegal betting and gambling. “It would also enable the Government to effectively curb the menace of black money generation through illegal gambling,” it says.
BUT after laying the groundwork for legalising betting, the conclusions devolve into a series of self-contradictory statements. One gets the feeling that the Law Commission treated the issue of illegal betting akin to making a pact with the devil, since it’s not possible to fight the devil. In paragraph 9.7, it mentions how the National Sports Development Code 2011 wants a blanket ban on betting: “Accordingly, the Commission reaches the inescapable conclusion that legalising betting and gambling is not desirable in India in the present scenario. Therefore, the State authorities must ensure enforcement of a complete ban on unlawful betting and gambling.”
But in the next paragraph it mentions that since it’s not possible to contain the menace, it’s better to legalise betting. “However, incapability to enforce a complete ban has resulted in rampant increase in illegal gambling, resulting in a boom in black-money generation and circulation. Since it is not possible to prevent these activities completely, effectively regulating them remains the only viable option,” it says.
While making the recommendations, the report suggests a three-pronged strategy that involves “reforming the existing gambling market (lottery, horse racing), regulating illegal gambling and introducing stringent and overarching regulations.” It’s rather curious that the Law Commission would even suggest regulating the illegal betting market. Because, it’s precisely due to the inability of the law enforcement agencies to detect, catch, prosecute and punish those involved with illegal betting that has resulted in the booming underground betting networks.
In the recommendations, the report suggests that since online betting is on ascendency, relevant law needs to be enacted by the Parliament. “Since online betting and gambling are offered and played over media (telephones, wireless, broadcasting and other like forms of communication) covered under Entry 31 of List I of the Seventh Schedule to the Constitution, the Parliament has the legislative competence to enact a law(s) dealing with the same,” it says. It also recommends that all betting activity in India should be carried out only by licensed operators.
SINCE gambling remains as a state subject, it will be up to the state whether to adopt the proposed model law or come up with their own laws, which is a sensible approach. “In case legislation is made under Article 252, States other than the consenting States will be free to adopt the same. Being a State subject under List II of the Seventh Schedule to the Constitution, it is needless to say that State Legislature(s) is competent to enact the required Law for the State(s) concerned, while duly taking note of the National Policy on gambling etc., and other legal considerations,” reads the report.
The report also recommends a host of changes and amendments that need to be made other related laws to legalise gambling and sports betting. These include Foreign Exchange Management Act 1999 for allowing Foreign Direct Investment “in the casino/online gaming industry, lawfully permitting technological collaborations, licensing and brand sharing agreements, etc.”, Information Technology (Intermediary Guidelines) 2011 for hosting and transmitting online gambling content, National Sports Development Code 2011 and Indian Contract Act 1872 to name a few.
The report places due emphasis on protecting the society at large from the ill-effects of betting and shielding economically vulnerable sections of the public and children below the age of 18. As such, it recommends that there should restrictions on the number of bets a person can place, which could be decided on a monthly, half-yearly or yearly basis and no one should be allowed to put more than 10 percent of their earnings into gambling or betting based on their income-tax returns.
To achieve this it recommends that “all betting and gambling transactions should be linked to the operator’s as well as the participant’s/player’s Aadhaar Card/PAN Card,” and make all betting transaction cashless. It further states that people with Jan Dhan accounts into which the government directly transfers subsidies should not be allowed to bet.
However, there is enough evidence available in the public domain that people have found ways to get around such restrictions. At present, online betting and making payments in foreign currency is banned. Yet, the punters with the help of bookies have managed to open sub-accounts on foreign betting sites that allow them to indulge in their passion. The transactions carried through the hawala channels enable the betters to pay in Indian rupees, who then park foreign currency in off-shore accounts.
THE recommendations are riddled with even more glaring omissions. For example, it dismisses the darkest side of the betting world, which is match-fixing, in just two lines. “Match-fixing and sports fraud should be specifically made criminal offences with severe punishments,” it says. At the core of the debate regarding legalising sports betting lies the well-established link between match-fixing and betting. It’s a fallout from the 2013 IPL scandal in which three players, S.Sreesanth, Ankit Chavan and Ajit Chandaliya, along with a couple of team owners were allegedly involved in fixing matches for the benefit of the bookies. The lengthy investigations led by Justice Mukul Mudgal led to the formation of the Lodha Committee to look into the sordid saga.
The three players were acquitted by a Delhi Court on technical grounds because they could not be prosecuted under to the existing laws as they could not deal with the peculiarities arising out match fixing. It was then the idea of enacting the Prevention of Sports Fraud Bill 2013 (PSF) was mooted by the Ministry of Sports and Youth affairs.
The Law Commission report in the section called pending legislation notes that the Prevention of Sports Fraud Bill 2013 and the National Sports Ethics Commission Bill 2016, introduced as a private members bill by BJP MP and former President of the BCCI, Anurag Thakur is pending the Lok Sabha. Both these bills are aimed at the preventing sports frauds like match fixing, doping and age fraud.
The PSF clearly defines sports fraud as any attempt to manipulate the result, irrespective of whether it has been achieved or not, for economic gains, wilfully underperforming for economic or any other advantage and being in possession of insider information which has been disclosed to an outsider for economic gains. The bill proposes to make all such offences as punishable crime.
One step ahead of the law
OVER the past few years enough evidence has surfaced about how the bookies, who control the cricket betting industry, have managed to remain one step ahead of the law enforcement agencies in India. The online news and views portal, The Wire carried two stories in April 2017 and June 2018, detailing the modus operandi of the bookies to game the online betting sites, taking advantage of the 7-12 second delay in the delivery of live action on television that’s is a industry norm.
According to the April 2017 story (initially commissioned by Sports Illustrated India, but was spiked by the management due to their unfounded fears of legal repercussions), bookies place ‘live commentators’ armed with multiple mobile phones in the stands to relay live ball-by-ball commentary to an Interactive Voice Response (IVR) system. In turn, when punters ‘subscribe’ to such a service, they know the outcome at any point in time in the game before the action is beamed to television sets or the odds updated in online betting website. With advance knowledge of the outcome, the betters their place bets, gaming the entire legal betting system to book profits in “in-play” stakes.
Even more startling revelations have come to light how bookies have acquired technical sophistication and technical knowhow to hack into live television feed from the ground even before its uplinked. It has left the law enforcement agencies and the broadcasters scratching their heads.
The two stories, have detailed how with the help and decoders and access to the 12-digit encryption code, which can be supplied only by someone with insider knowledge, the bookies are able to hack the live feed to take advantage of the lag in transmission. The advance information is passed on to the betters for a fee so that they have prior knowledge of the outcome on any particular ball.
The first such case came to light in 2015 when the Ahmadabad branch of the Enforcement Directorate stumbled upon the evidence during their investigations into a `2,000 crore betting racket. The second instance was in May 2018, when the Indore police was investigating a similar racket involving some of the top bookies during the 2018 IPL season. Both cases are still under investigation.
But in its recommendations, the Law Commission report is conspicuously silent on the absolute necessity of having the two crucial pieces of legislation in place even before any discussion on legalising betting can even begin. With the both the bills lying in cold storage, it’s futile to even think of legalising sports betting.
Yet another glaring omission is the lack of any framework for a betting regulator to operate. To prevent betting frauds and fixing, early detection system plays very vital role. For example, in the UK, which the world’s biggest legalised betting market, the British Gambling Commission is the apex body which keeps a watch on the betting industry through its investigative arm called the Sports Betting Intelligence Unit (SBIU). In the Law Commission report, such a role has not been defined clearly nor does it say what kind investigative and prosecution powers it should have. If it expects the existing arms of the law and economic offence watchdogs to carry out this role, then it’s a non-starter because to investigate an industry which sees massive churn of money almost on a daily basis needs a dedicated agency.
Another fallacy that the report suffers from is that it fails to outline what kind of betting products should be allowed in the market. In the attached annexure, it says that only end result betting should be allowed like horse racing, where the bets close before the start of the race. If that is the case, then legalising sports betting is a non-starter because most of the bets that are placed are on ‘in-play’ stakes. Various global studies have shown that restrictions on betting products have forced people to turn to illegal betting even in markets where it’s legal.
IT’S one thing to take the philosophical high ground that had betting regulations were in place Yudhisthra would not have staked his wife and brothers in a gamble, but it’s altogether a different kettle of fish when one is dealing with thousands of crores of rupees of black money moving in and out of the well-oiled machine that drives illegal sports betting. The report clearly suffers from clarity of thought while it was being drafted. In its present form, it will do nothing to dismantle the underground betting network. On the contrary, if the government proceeds further on the basis of this report, it will be weaponising illegal betting operations.
COVER STORY \ Betting \ Sports
VOL. 12 | ISSUE 4 | JULY 2018