REGULATION OF LOTTERIES AND PRIZE CHITS IN TAMIL NADU

ByShelley Anandhavalli. E

Advocate

Altacit GlobalEmail: info@altacit.com Website: www.altacit.com

INTRODUCTION

• In Indian law any contract entered into by speaking or in writing by way of wagering or gaming are held to be null and void.

• Gambling is highly frowned upon in many parts of India and that means that the lottery laws are very strict.

• Lottery is outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments.

Lotteries and Prize Chits

• Running of Lotteries and promoting Prize Chit Schemes were adjudicated by the Courts under two enactments:

– Section 30 of the Indian Contracts Act which says Agreements by way of wager are void.

– Section 294 A of the Indian Penal Code which says running a lottery house is an offence.

Acts and Rules

• The Lotteries and Prize chits are governed and regulated by the following acts:– The Lotteries (Regulations) Act, 1998– The Prize Chits and Money Circulation Schemes

(Banning) Act 1978– The Prize Chits and Money Circulation Schemes

(Banning) Tamil Nadu Rules, 1980– The Prize Competition Act, 1955 – The Tamil Nadu Prize Schemes (Prohibition) Act,

1979– The Tamil Nadu Lottery (Regulations) Rules, 2002

LOTTERIES

• The Lotteries (Regulation) Act, 1998 defines-– BUMPER LOTTERY

• A special draw of lottery conducted on or during any festival or other special occasion wherein the prize money offered is greater than the prize money offered in the case of other ordinary draw of lotteries.

– LOTTERY• 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.

CONDITIONS

• Section 4 in The Lotteries (Regulation) Act, 1998– Conditions subject to which lotteries may be

organized, etc.- • A State Government may organize, conduct or promote

a lottery, subject to the following conditions, namely:-• (a) prizes shall not be offered on any pre- announced

number or on the basis of a single digit; • (b) the State Government shall print the lottery tickets

bearing the imprint and log of the State in such manner that the authenticity of the lottery ticket is ensured;

Contd..

• (c) the State Government shall sell the tickets either itself or through distributors or selling agents;

• (d) the proceeds of the sale of lottery tickets shall be credited into the public account of the State;

• (e) the State Government itself shall conduct the draws of all the lotteries;

• (f) the prize money unclaimed within such time as may be prescribed by the State Government or not otherwise distributed, shall become the property of that Government;

• (g) the place of draw shall be located within the State concerned;

Contd..

• (h) no lottery shall have more than one draw in a week; • (i) the draws of all kinds of lotteries shall be conducted

between such period of the day as may be prescribed by the State Government;

• (j) the number of bumper draws of a lottery shall not be more than six in a calendar year;

• (k) such other conditions as may be prescribed by the Central Government.

OFFENCES

• The Act bans Prohibition of Sale of Tickets and Prohibition of Organisation of Lotteries.

• The Offences under this section shall be cognizable and non bailable.

Power of State Government to make Rules

• 12. (1) The State government may, by notification in the Official Gazette, make rules to carry out the provisions of this Act.

• (2) (a) time to be fixed for claiming prize money under clause (f) of section4;

• (2) (b) period to be fixed for draws of all lotteries under clause(i) of section 4; and

• (2) (c) any other matter which is required to be, or may be prescribed.

The Tamil Nadu Lottery (Regulation) Rules, 2002

• Under Section 12 of the Act, the State of Tamil Nadu framed the Tamil Nadu State Lotteries (Regulation) Rules, 2002 and the Tamil Nadu State On-Line Lottery (Regulation) Rules, 2002.

• The Tamil Nadu Government banned the sale of lottery tickets in Tamil Nadu.

PRIZE CHIT

• Prize Chit

– A form of lottery– any transaction in which a person collects money in

a lump sum or installments by way of subscription or in any other manner.

– In return, it gives, periodically, a specified number of prizes or refund of subscription.

– Several prize chit schemes run by jewellery shops come under this category.

The Prize Chits and Money Circulation Schemes (Banning) (Tamil

Nadu) Rules 1980

• The penalty for promoting or conducting such schemes or prize chits or participating is imprisonment for a term up to three years.

• Anyone who prints, sells, distributes or advertises tickets or coupons for such schemes is punishable with imprisonment up to two years.

• except the chits registered with Registrar of Chits and schemes run by Non-Banking Finance Companies registered with Reserve Bank of India, all are illegal.

Cntd…

• Section 4 provides that who ever contravenes the provision of Section 3 shall be punished for rigorous imprisonment which may extend upto 3 years.

• Provided such rigorous imprisonment shall not be less than 3 months.

• Section 7 deals with offences by Companies

Application for being notified under Section 11

• Section 11 of The Prize Chits and Money Circulation Schemes (Banning) Act, 1978 provides for lists of chits that are exempted from the act.– A state Government or any officer or authority on its

behalf– A company wholly owned by a State Government that

carries on business of conducting only prize chits– A banking company– any charitable or educational institution.The Tamil Nadu Rules, 1980 provides for any charitable or

educational institution to be notified under section 11 by making an application to the authorised officer.

REGULATIONS

• Particulars of the Schemes and winding up plans to be furnished by the promoter

• Procedure for disposal of the plan or application

• Promoter to be informed of the terms and consitions

• Extension of time to close the business of the scheme

• Refund of monies or subscriptions collected by the promoter

THANK YOU