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Why is Lucky Draw Legal in India Whereas Lottery is Not?

Author - Associate Aliza Abdin

What is a Lucky Draw?

A typical kind of lucky draw is a type of game usually played in carnivals where contestants try their luck and pick out a gift from a container without looking. The gifts range from very expensive ones to cheaper smaller ones. It is also known as lucky dip. Nowadays, lucky draws are mostly all about spinning wheels, etc. 

Lucky draws also include raffles in which a person buys a cheap raffle ticket and try their luck at winning big prizes like cars, bikes, mobile phones, refrigerators, etc. But the question is “Is raffle legal in India?”. Raffles and lucky draws are most common in school fetes, carnivals, festivals, etc.

What is a Lottery?

 Lottery is a type of gambling in which a person buys a lottery ticket bearing a specific number for a small amount. When all tickets have been sold out a number is drawn at random, for a prize. The prizes usually include big cash prizes for the top three contestants. Many countries have banned lotteries in an attempt to stop gambling and bankruptcy in the poor section of the country; while other countries organize national and state lotteries by following certain rules like licensed vendors to sell lottery tickets and a ban on selling to children. Lotteries were very popular worldwide during the 90s and were a source of income but since the start of the 21st century they have been made illegal in most countries. And there is one more trend that is in run now days i.e.  online legal lottery in India. Is it possible in India?

There are many kinds of lotteries like single digit or double digit, a 50-50 draw where the lottery organizers give half the amount earned as prize money. The lotteries allow governments to make revenue without generating taxes.

 Is lottery legal in india?

So a big question to be answered is- is lottery legal in India? Or online legal lottery in india? And if not then why  is lucky draw legal in India? Lottery in India is governed by the Lotteries Regulation Act, 1998, according to which the states are allowed to conduct a lottery following 11 conditions. A few years ago, the Supreme Court of India permitted all state governments to ban or allow lottery in India accordingly and refused to make the sale of lottery a fundamental right. This law however does not allow the sale of one digit lottery.

Is online legal lottery in india?As per our research the fact of legalizing online lottery we find is Because these draws are held outside India, buying lottery tickets online is legal throughout the country, regardless of the gambling laws in any particular state. So according to this above statement can we say that online legal lottery in india.

As of 2019  lottery in India doesn’t have all India ban but all states have banned lotteries except for the 13 states that include Kerala, Goa, Maharashtra, Madhya Pradesh, Punjab, West Bengal, Assam, Arunachal Pradesh, Meghalaya, Manipur, Sikkim, Nagaland and Mizoram. Lotteries are very popular in these states and the social activists are continuously trying to raise awareness about how the people are getting addicted to gambling.

But another concept to be added here is the legal online lottery in India. Lotto India is the legal online lottery in India for the players and has more jackpots than the others.

Is the Ban Effective? 

As all bans, the bans on lotteries are also not very successful as most trade is carried out underground by illegal means and thus the trade still continues but the government does not get revenues. Online lottery functions in a way that give small prizes for single digit lotteries daily and big prizes for weekly draws. In spite of being banned, lotteries have not disappeared completely and are very popular for earning money illegally. The online lottery does not require the players to disclose their identities and thus they can participate anonymously and avoid getting caught.

Lucky Draw Rules in India (Legal Lotteries)

Legal lotteries(lucky draw rules in india) and lottery rules differ from state to state within India. There are now 13 states that allow lottery games, with the remaining ones prohibiting them. There is no national prohibition, but following a 2015 ruling by the State Supreme Court of India, individual states decide whether or not to allow lotteries. States have the authority to supervise lottery games in their own jurisdiction (not worldwide) and ensure that all lottery draws are conducted fairly and in accordance with the rules and regulations of that specific game.

Lotteries are quite popular in states where they are legal and are held with a specific set of lucky draw rules or the question arises that, “ is lucky draw legal in india”. All active state lotteries provide a range of games, including Bumper draws throughout the year. You must be 18 years old and a resident of a state where you are allowed to play to participate. Kerala State, India's oldest government-run lottery, has been in operation since 1967. Lotto India is a national online lottery with greater jackpots than some state games. Unlike state lotteries, anyone can participate in Lotto India. You can participate online regardless of where you live in the country as long as you are at least 18 years old. The game is even available globally. Lotto India is totally licenced and regulated, and the draws will always take place twice a week as scheduled. Because it is an online game, your numbers are safely saved, and you will be notified immediately if you win, with reward payments made promptly. 

Why are private lotteries illegal or  is lottery legal in india?

A private entity running a lottery is ILLEGAL under federal and state law. This is one fact that is why are private lotteries illegal.

A lottery is a contest that has all three of the following elements: PRIZE, CHANCE, and CONSIDERATION.

PRIZE: Anything of worth given to victors, such as cash, trips, automobiles, or items.

CHANCE: The winners are chosen at random (i.e., drawing, seeded winning objects, pre-selected numbers)

CONSIDERATION: Purchase of a Sponsor's goods or service, or other form of payment

Non-Monetary- Time or effort expended that directly benefits the Sponsor.

These points are the basic facts which answers the question “ is lottery legal in india.?”which states that the lottery is not legal in India.

For a promotion to be legal, one of the three criteria must be removed (Promotions may not require consideration). Consideration can be avoided by offering an alternate (free) method of admission through mail, online, or toll-free number.

If you are arranging a sweepstakes or promotion, make sure you give free methods of entry equal standing: same entry limit, same time period to submit entries, and random drawing from a single pool of entries regardless of method of entry.

And these are the facts that’s why are private lotteries illegal here and as we learned above that the bases consist in an private lotteries are against the rule of government so as which thing base is against the norms of the government so how can that thing be legal that’s why are private lotteries illegal.

Why is Lucky Draw Legal in India whereas  is lottery legal in india? 

So to answer this question as per the lucky draw rules in india and the reason why is lucky draw legal in India recently the NITI Aayog clarified that the Lotteries Regulation Act, 1998 Section 2(b) states that the lucky draws which are conducted to promote digital transactions do not come under the category of lottery and are thus are not banned. Private lotteries are illegal according to the federal and state laws.The Act defines lottery as ‘a scheme, in whatever form and by whatever name called, for distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing tickets’

The Supreme Court permits state governments to ban lottery in India because it is a form of gambling and it makes the poorer section of the society an addict and bankrupt. However this is not the case in lucky draws because the lucky draw scheme which is included in the Lotteries Regulation Act,1998 has to stay within the given parameters, and most lucky draws which are organized by the governments do not require a ticket purchase and the participants can directly come and try their luck, and thus this does not account to gambling.Online lucky draws require the payment of a small amount which is usually collected by companies like Mastercard or Rupay, or by other banks used for payment and hence the government on their side does not charge anything and offer prizes gratuitously. Therefore it is very clear that a lucky draw is very different from a lottery, and this would not fall under the category of gambling. So this answers the question if lottery is legal in India.

And for making it legalised the lucky draw rules in india plays a crucial role for it that if there is something is upto lucky draw that should be as per the rules mentioned in lucky draw rules in india.

The Section 2(1)(r) Consumer Protection Act, 1986 also prohibits any kind of unfair trade practice  which includes “conducting any lottery or contests whether skill or chance to promote the sale, use or supply of any goods or for the provision of any service.”  The NITI Aayog has clarified this too as offering lucky draws to promote digital transactions does not include any service and the customer does not pay anything for getting the reward. These kinds of lucky draws usually include small cash back offers for payment by digital means.

And thus the lucky draw scheme stays out of the ambit of consumer protection laws as well as the Lottery Regulation Act.

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