All Kerala Online Lottery Dealers Association v. State of Kerala & Ors.
Background
In January and April 2005, the State of Kerala issued notifications banning computerised, online and internet lotteries in the state, and later declared Kerala a lottery-free zone for lotteries run by other states, while allowing paper lotteries. Online lottery dealers and others challenged the ban in the High Court, arguing that the distinction between paper and online lotteries was discriminatory, that the notification was made in bad faith, and that the state lacked power to issue it. The single judge and the Division Bench rejected their challenge, and the dealers appealed.
Decision Breakdown
The Supreme Court dismissed the appeals and writ petitions and upheld the Kerala ban. The Court held that Section 5 of the Lotteries Act allows a state to prohibit a particular form of lottery, such as online lotteries, when the state does not run that form itself, and that the earlier decision in B.R. Enterprises applies to online lotteries as a separate class. The Court read the Act's purpose of suppressing the mischief of lotteries as the key guide, and noted that the state's prohibition was valid because it complied with the Act's conditions. The Court found no infirmity in the Division Bench's order, and each side bore its own costs.
Lesson Learnt
A state can ban a particular type of lottery, such as online lotteries, under the central law even while allowing other types, provided the ban fits the law's purpose. Individuals and businesses in such sectors should check the state notifications that govern their activity, since they can change quickly.