The legality of lotteries

We have all heard more or less about lottery. Whenever we walk along the roadside, we often notice some people selling lottery tickets. They tempt our minds by offering a chance to become rich. How many of us think of the validity of lottery tickets from the perspective of the law? Is it even legal?

A lottery is a wagering contract. A wagering contract is an agreement to pay money or money's worth on the happening or non-happening of a specified uncertain event. 
In Thacker vs Hardey, Cotton LJ said, "The essence of gaming and wagering is that one party is to win and other to lose upon a future event which at the time of contract is of an uncertain nature, i.e., that if the future event turns out one way A will lose, but if it turns out the other way, he will win."

For example in a football match, Mr X tells Mr Y that Brazil will win the world cup in football. Mr Y challenges the statement of Mr X. Now they bet with each other over the result, which is an uncertain event. Here no one knows which team will win the match. So, this is a wagering contract.

A wagering contract is void ab-initio. Ab initio, in the legal context, means from the very beginning. So a wagering contract void ab initio means it has no legal effect from the very beginning of it. As per the Section 30 of the Contract Act 1872 in our country, "Agreements by way of wager are void and no suit shall be brought for recovering anything alleged to be owned on any wager."

However, it has to be kept in mind that Section 30 makes some exception for wagering contract. It does not render an unlawful bet on a horse race carrying a prize of 500 taka or upwards to the winners, as well as not below the abovementioned amount, in order to protect poor persons from gambling.

'Lottery is a wagering contract' means by selling a lottery ticket, the seller makes a mutual agreement with the purchaser to pay certain amount of money on the happening of a specified uncertain event in future. 

Here, "specified uncertain event" means a raffle draw. In brief, if the coupon number printed in the lottery ticket wins at the raffle draw, the purchaser of the lottery will be declared winner and be paid the certain amount of the promised money. 

It means any wagering contract, including lottery, is void and any sum paid or payable in respect of the contract is also void.

No legal remedies are available for the sufferers deceived by such kind of lottery since the contract is initially void or invalid. 

Thus, if someone buys a lottery from the roadside and the buyer is refused to be paid the promised money after winning the lottery, the winner cannot sue the authorities concerned for the recovery of the amount as the contract is initially void. 

In Md Jafar Ullah vs Bangladesh, 2014, 43 CLC (HCD) case, Jafar Ulla entered into a lease-agreement with Bangladesh Muktijodhya Welfare Club under which the club gave him permission to conduct indoor games including Nipun Khela, Charchari, Dice, Howji and cultural programmes in the premises of the Naogaon Muktijodhya Welfare Club. 

The respondent argued that these games include elements of lottery and gambling, which are punishable both under section 294A of the Penal Code 1860 and section 3 and 4 of the Public Gambling Act 1867.

The court said that all of these games were void since they fell within the element of lottery, which is a wagering contract.

Now, it seems quite confusing whether lotteries issued and authorised by the government is valid or not. Lottery issued and approved by the state authority is valid. Section 294A of the Penal Code 1860 provides lottery issued and authorised by Bangladesh government is valid. Section 294A says: Whoever keeps any office or place for the purpose of drawing any lottery not being a state lottery authorised by the government shall be punished with six months of imprisonment, fine or both. 

It also provides punishment to those who propose to pay sum, to deliver any goods or to do or forbear doing anything for the benefit of any person, on any event or contingency relative or applicable to the drawing of any ticket, lot, number or figure, in any such lottery shall be punished with fine which may extend to Tk1,000.

So it can be said that any lottery approved by the government is valid. So prize bond issued by the Bangladesh Bank is valid.

We can look at a case of our neighbouring country India, as the Contract Act, 1872 is also applicable there. In H Anraj vs government Of Tamil Nadu case, the Supreme Court of the country upheld the lotteries authorised by the govt as legal. So it conferred the right upon the winner to receive the prize from the draw liable to sales tax.

In India, wagering contract is also void as per Section 30 of the Indian Contract Act. The expression "wager" has not been defined in the Indian Contract Act. 

A classic definition is however available in the case of Carllic VS Carbolic Smoke balls -- A wagering contract is one by which two persons professing to hold opposite views touching the issue of a future uncertain event mutually agree, which depend on the determination of that event, one shall win from another, and that other shall hand over to him a sum of money or other stake; neither of the parties having any other interest in that contract than the sum or stake he will win or lose, there being no other consideration for making of such contract by either of the parties. If either of the parties may win but cannot lose, or may lose but cannot win it is not a wagering contract.

But in the case of Gherulal Parekh vs Mahadeo, Indian Supreme Court laid down that though a wager is void; a wagering agreement under section 23 of the Contract Act is not unlawful. Hence a wagering agreement is enforceable and valid.

Finally, in September 2015, the Supreme Court of India conferred the power on state governments to decide on whether the activities can be carried out or not in their jurisdiction. Currently, only 13 provinces of India allow lottery as a legal contract.

If we look at the legal status of lottery in western countries like in the USA, there each state authority has the power to enact laws in respect of lottery within their jurisdiction. Federal lottery law prohibits any kinds of online transaction of lotteries. Several state governments allow state-sponsored lottery tickets for greater revenue. However, Alabama, Alaska, Hawai, Nevada and Utah have completely restricted the sale of lottery tickets.

However it is very difficult to testify the authenticity of the lottery. A mass of lottery seller claims their lottery to be valid and approved by the government. So it is better to purchase a lottery from any branch of an authorized bank as they make valid transaction.

Lottery is totally an uncertain event. There are many lotteries sold on roadside, which are not approved by the government but they make people believe they are so. People often get tempted by the prize money but at last they are deceived. Having no legal remedies in their hand, nothing remains except for regretting. Though no legal remedy exists for recovery of the money, legal punishment prevails for those who are selling lotteries, which are not approved by the government. Section 294A of the Penal Code declares that these types of sellers to be punished with six months of imprisonment or fine or both. More vigilance of the authorities concerned is very necessary to bring the frauds under law. Awareness should be created through mass media so that people become aware of the legal status of lottery.

The writer is a student at the Department of Law in Chittagong University