Delhi Race Club Limited versus Union of India: Delegation of Legislative Functions

Introduction:

In the case of Delhi Race Club V. Union Of India[1], the Petitioner, Delhi Race Club Limited, was formerly known as the Delhi Race Club and was founded in 1926. In 1940, it was reorganized as a limited-liability corporation, with the assets and liabilities of the former club transferred to it. The main objective of the Petitioner was to promote Indian-bred horses and Indian Jockeys, as well as to give horse races the legitimacy of a sport or a game.

Facts

In this Lawsuit, we are challenging: (1) the Central Government’s notification dated October 19, 1984, which stretched the Mysore Race Course Licensing Act 1952 (later referred to as the Act) to the Union Territory of Delhi; and (2) the Lt. Governor’s notification dated March 7, 2001, which purportedly exercised Section 2 of the Mysore Race Course Licensing Act 1952 (later referred to as the Act) to the Union Territory of Delhi and (3) the Delhi Race Course Licensing Rules 2001, as well as (4) the demands dated 31.1.2002, in which the Petitioner was ordered to pay the amended/enhanced Licence Fee of Rs.17,80,000/- for the financial year 2001-2002 by Respondent No.3 (Commissioner of Excise, Entertainment & Luxury Tax, New Delhi) and for the year 2002-03, Rs. 18,00,000.

The Central Government, in exercising the rights vested on it by Section 2 of the Union Territories (Laws) Act, 1950, restricted to the Union Territory of Delhi, the Mysore Race Courses Licensing Act, 1952, as it was in power in the State of Karnataka on the date of the aforementioned notification, relating to the adjustments stated therein by the first notification, dated October 19, 1984. The aforementioned Act, as it was extended to the Union territory of Delhi allowed the granting of horse racing licenses by the state, as well as the imposition of a Licence Fee. But, no charge amount was established in the Act as it pertained to Delhi. The Government has the right to enact rules under Section 11 of the aforementioned Act, which was extended to Delhi, including the charges payable for such licenses. As a result, the Administrator of the Union Territory of Delhi issued a notification on March 1, 1985, notifying the Guidelines thereunder, which were termed as the Delhi Race Course Licensing Rules 1985. (later referred to as the said Licensing Rules). The license fee for horse racing on the racing track (i.e., venue racing) shall be an amount of Rs.2000/- per race day on which the race is hosted, and the license fee for organizing for gambling or placing bets on a horse race on any other racecourse (i.e., inter-venue racing) will henceforth be an amount of Rs.500/- per race on the day which the race is conducted, according to Rule 6 of the said Delhi Licensing Rules. The second notification, that is,  the aforementioned Rule 6 of the said Delhi Licensing Rules was effectively altered by the Notification of 7th March 2001, which increased the license price from Rs. 2000 to Rs. 20,000 per day for venue races and from Rs.500 to Rs.5000 per day for inter-venue races. The demand dated January 31, 2002, is focused on the increased license fee announced in the 2^nd notification dated March 7, 2001.

Issues

In light of this, it is evident that the most important issues are:

1. Is the licensing charge set forth in Rule 6 of the relevant Licence Rules a fee or not?
2. Is the fee extremely high or not?

Decision

In the Liberty Cinema case, it is evident that the Constitution Bench did not assess what a fee is or the criteria by which it should be decided. It also didn’t address whether, in order for a tax to be considered a fee, the legislature establishing it must aim to confer the advantages of the services mainly on those who paid it.

It is evident, then, that the Supreme Court ruling in the Liberty Cinema case did not address the issues of fees that were addressed in later Supreme Court judgments, particularly in the A.P. Paper Mill’s case as well as Secundrabad’s case. 

We conclude that the petitioner’s claims are without substance, and therefore invalidate the writ petition. Parties are responsible for their own fees.

Horse Racing

Many states have enacted the Public Gambling Act of 1867, which includes an addendum that expressly prohibits horse racing. The following definition of gambling is included in the revised gambling acts of the states:

“Gaming’ includes wagering or betting on any figures or numbers or dates to be subsequently ascertained or disclosed, or on the occurrence or non-occurrence of any natural event, or in any other manner whatsoever except wagering or betting upon a horse-race when such wagering or betting upon a horse-race takes place:”

1. “On the day on which such race is to be run; and”
2.  “In any enclosure where such race is to be run, and sanction of the Provincial Government set apart from the purpose, but does not include a lottery.”

The Supreme Court of India defined horse racing, football, chess, rummy, golf, and baseball as skill games in the judgment of Dr. KR Lakshmanan v. State of Tamil Nadu[2]. It went on to say that gambling on horse racing was a skill game because it required analyzing the performance of the horse and jockey, as well as the nature of the race, among several other things.

Telangana, Assam, Delhi, Haryana, Karnataka, Maharashtra, Meghalaya, Punjab, Tamil Nadu, Uttar Pradesh, and West Bengal are among the states and union territories that permit horse racing bets. Professional horse racing is currently held at Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Mysore, Pune, and Ooty turf clubs.

Since many Indian states (except Assam[3], Odisha[4], Andhra Pradesh[5], Tamil Nadu[6], and Telangana[7]) have wagering laws that exempt games of skill from the definition of gambling, they have been designated as a different category. In the lack of a legislative definition of a game of skill, the Supreme Court in Dr. KR Lakshmanan v. State of Tamil Nadu [8], State of Andhra Pradesh v. K Satyanarayana [9], andState of Bombay v. RMD Chamarbaugwala[10] have determined that a game of chance is one in which the component of luck prevails over the component of skill, while a game of skill is one in which the factor of skill prevails over the factor of luck.

Laws in India Relating to Horse Racing and Race Course Licensing

During the 1800s, when the Royal Empire of Britain dominated over every element of India’s economic and socio-cultural growth, including the nation’s position on horse race gambling restrictions, a majority of India’s regulations were impacted by the perspective of their British colonists. Horse racing was first introduced to Indians as a sport and leisure by the British. Whereas many Indians think gambling is a sin, horse racing gambling became an exception shortly. The vast, though not all, forms of gambling are forbidden by federal and state gaming laws; although, exceptions have been established for lotteries and skill-based games. Indian gambling regulations alter as they cross borders are regarded as a state subject by virtue of the 1949 addendum to the Indian Constitution, which permits individual states to either embrace central gaming rules or create their own.

Race Course Licensing and Horse Racing Details

Gambling is still a state matter in India, and practically all of the 29 states in India have written exclusions for horse racing in their gaming legislation. The West Bengal Gambling Rules of 1958 is an example of how states create exclusions to their gambling laws to explicitly exclude horse racing. Other states, such as Maharashtra, may have adopted different horse racing license laws from their general betting regulations. The Bombay Race Course Licensing Act of 1912, for example, permitted the state to specifically handle the rules and regulations of gaming within its territory. The West Bengal Gambling Rules and the Bombay Race Course Licensing Act are comparable or identical in all states. Many horse race licensing regulations describe how operators can get a license, as well as the repercussions for breaking the law, exceptions, and basic guidelines they need to follow. These legislations also provide legal definitions for horse racing and race tracks, though not all definitions are identical between states.

Conclusion

The truth is that, much like with lotteries, the technical validity of horse racing and racecourse licensing rules is fairly muddled. While these rules primarily affect India’s horse racing sector, they also have an indirect effect on how states and people approach other kinds of gambling. Horse race wagering is regarded as the most skilled kind of wagering because it necessitates extensive knowledge of the racing industry. This is in stark contradiction to the fact that, despite their basic similarities, gambling in sports such as cricket remains outlawed in India.

Many people argue that the rule is unjust because horse racing is permitted despite the fact that it involves a factor of chance, i.e. gambling, but other sports betting is banned. This frequently irritates Indian sports bettors who seek a greater range of domestic sports betting options.

These regulations efficiently established legal procedures for dealing with illegal racetracks and sports betting while also defining the boundaries for legal racetracks and gamblers. Horse race and racecourse licensing laws have no direct impact on gaming because gambling is divided into two categories: games of chance and games of skill, with horse race gambling falling under the second category.

To support this argument, the Supreme Court of India held in 1996 that horse racing is a legitimate sport and means of public enjoyment and that it is neither prohibited under the 1888 Police Act or the 1930 Gaming Act. They go on to argue that effectively betting on horse races involves skill rather than luck, confirming its status as a skill game. The Turf Authority of India regulates racing events, pari-mutuel gambling booths, and trackside bookkeepers, as well as managing and overseeing India’s nine licensed race tracks. The Turf Authority of India is made up of only six Turf clubs, and while the industry is flourishing, rigorous laws prevent many online operators from offering horse race bets to foreign players.

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References:

[1] Delhi Race Club Limited v. Union of India & Others, 2003 3 AD (DELHI) 497 (2003).

[2] Dr KR Lakshmanan v. State of Tamil Nadu (1996) 2 SCC 226

[3]  The Assam Game and Betting Act 1970

[4] The Orissa Prevention of Gambling Act 1955

[5] The Andhra Pradesh Gaming (Amendment) Ordinance, 2020

[6] The Tamil Nadu Gaming and Police Laws (Amendment) Ordinance, 2020.

[7]  The Telangana Gaming (Amendment) Act, 2017.

[8] Dr KR Lakshmanan v. State of Tamil Nadu, 1996 AIR 1153.

[9] State of Andhra Pradesh v. K Satyanarayana (1968) 2 SCR 387, AIR 1968 SC 825.

[10] State of Bombay v. RMD Chamarbaugwala AIR 1957 SC 699

Bibliography

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• Horse Racing Laws and Legislations | HorseRacing.com, HorseRacing.com (2021), https://www.horseracing.com/reference/laws/ (last visited Aug 19, 2021).
• Abanti Bose, Major types of cyber gambling, punishment laws, and countermeasures – iPleaders iPleaders (2021), https://blog.ipleaders.in/major-types-cyber-gambling-punishment-laws-countermeasures/#Introduction (last visited Aug 19, 2021).
• Staff Reporter, ‘No horse races till further orders’ The Hindu (2018), https://www.thehindu.com/news/cities/Delhi/no-horse-races-till-further-orders/article22820151.ece (last visited Aug 19, 2021).
• India’s Laws Regarding Horse Racing & Race Course Licensing, India Legal Online Casinos, https://www.legalonlinecasinos.in/laws/horse-racing-laws/ (last visited Aug 19, 2021).