Lottery Loophole

LOTTERY STRATEGY What is a two-digit lottery? Previously one-digit lottery was available in the market.
You could choose any number between 0 to 9, the wheel of fortune was spun and if the number you choose came up, you won. The Government and the Courts decided that this kind of lottery went against public interest and thus it was banned. The lottery companies came up with an ingenious idea to work around this ban. Hence, the birth of the two-digit lottery. The only difference between this lottery and the previous banned one is in technicality. Here too, you can choose any number between 0 to 9. The winning number is displayed as two digits wherein the last digit does not have any significance, only the second last number is valid and that is the winning number. See any difference? Facts about the two-digit lottery of the Government of Sikkim. The two-digit lottery of the Government of Sikkim was closed or stopped about two months before the last elections. It was felt that too many people were loosing too much money and instead of blaming themselves for playing, the people were looking for someone else to blame. About a month or so ago, the Sikkim Government Two-Digit lottery was started once again. The government entered into a contract for sale of this two-digit lottery with a company called Daman & Diu. Few facts that people may find to be of interest: (1) No advertisement calling for tenders or bids was issued in any local or national paper. This raises one obvious question: How is it that this company was the only one to get the information? (2)The company running the lottery did not have live display of the draws for the winning number. This meant that there was substantial passage of time between the draw of the winning number and communication of this information to the various ticket outlets. (3)In the case of other lottery companies the general public is free to enter and watch the draws for the winning numbers but in this case the entry is restricted. Why? How many different two-digit lotteries are available in the market? Besides the twodigit lottery of the Sikkim Government, two-digit lottery of Arunachal Pradesh, Nagaland and Meghalaya governments are available in the market.
How many kinds of two-digit lotteries are there? The rules of the game being same the only way to categorize the lotteries is by price. Almost all the governments have lotteries of five different prices. The price per ticket are- Rs 1.10, Rs 2.20, Rs 3.30, Rs 5.50, Rs 11. The puzzling fact is that you are not allowed to buy only one ticket. The minimum number of tickets you have to buy is ten (10). Say for example you wish to buy a ticket which is priced at Rs 1.10. The minimum that you have to buy in order to play is Rs. 11 worth of ticket, that is, ten tickets each worth Rs1.10. In general, one unit of anything is the minimum dividable amount or number of that thing. Hence, as ten tickets is equal to one unit, the price per ticket is not Rs1.10, Rs 2.20, Rs 3.30, Rs5.50 and Rs.11, in reality it is Rs11, Rs22, Rs33, Rs55 and Rs110 respectively. If you are wondering how such a thing is being allowed? Strictly speaking, if only the words and not the spirit of the
Indian Contract Act are taken into consideration, then such a thing can be considered legal. But if the government decides that such an act goes against public interest and is also resulting into loss of very vast sums of revenue (calculated in later part of this article) provisions of the Consumer Protection laws and other relevant laws could be looked at to deem such a thing illegal. Taxes to be paid by the lottery companies: Under the powers granted by the Constitution the Governor of Sikkim promulgated an Ordinance (a law passed when the State Assembly is not in session) on the 30th day of March, 2005 which was published in the Sikkim Government Gazette on 4th April, 2005. The Ordinance amended the Sikkim Sales Tax Act, 1983 by substituting provisions of section 5A to make provisions for levying sales tax on the basis of sales of actual number of lottery tickets in conformity with the provisions of the Principal Act. The objective of the Ordinance as stated is to levy sales tax on the basis of draw of lotteries where prizes are offered on the basis of last two digit number printed on the body of the lottery ticket and draws of which are held either on weekly, fortnightly or monthly basis. This could be exploited by the twodigit lottery companies operating in Sikkim. The draws in Sikkim are on a daily basis (46 draws a day everyday), so technically this Ordinance would not apply as it is only for those two-digit lottery draws of which are held on a weekly, fortnightly or monthly basis and not daily as is the case here. So though an Ordinance has been passed it is inapplicable in our state. The Ordinance states that dealers can choose to pay the tax as per the Ordinance instead of the rate of twenty percentum on sales. The taxes as per the Ordinance are to be paid per draw and the amount to be paid is dependent on the price per ticket. SCHEDULE OF TAX AS PER THE ORDINANCE Type of draw on the basis of Compounded Price of ticket rate per draw Draw for tickets having a price Upto Re. 1/Above Re. 1/- and upto Rs. 2/Above Rs. 2/- and upto Rs. 5/Above Rs. 5/- and upto Rs. 10/Above Rs. 10/- and upto Rs. 20/Above Rs. 20/- but less than Rs. 50/Of Rs. 50/- and above Rs. 5,000/ Rs. 10,000/ Rs. 15,000/ Rs. 20,000/.... Rs. 25,000/ Rs. 30,000/ Rs. 50,000/-
Thus as per the Ordinance tax payable per day by dealers: 1. Five types of prices, Re. 1.10/-, Rs. 2.20/-, Rs. 3.30/-, Rs. 5.50 and Rs. 11. 2. Number of draws per day for ticket priced at Re. 1.10/- = 52 draws, thus tax payable per day: Rs. 10,000/- X 52 = Rs. 52,000/-. 3. Number of draws for the other four types of tickets, is 46 draws per day, thus tax payable per day: For ticket priced at Rs. 2.20/-: Rs. 15,000 X 46 = Rs. 6,90,000/-. For ticket priced at Rs. 3.30/-: Rs. 15,000 X 46 = Rs. 6,90,000/-.
For ticket priced at Rs. 5.50/-: Rs.20,000 X 46 = Rs.9,20,000/-. For ticket priced at Rs.11.00/-: Rs.25,000 X 46 = Rs.11,50,000/Total tax receivable per day from one dealer: Rs.41,92,000/- (Rupees Forty One Lakh, Ninety Two Thousand only) Tax avoidance by dealers If you remember the part of this article where we talked about the price per ticket

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LOTTERY STRATEGY What is a two-digit lottery? Previously one-digit lottery was available in the market.

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