State lotteries remain gambling, not protected trade, and statutory controls creating lottery-free zones were upheld.

State-organised lotteries remain gambling even when authorised and regulated by law, so they do not become trade or commerce protected by Articles 301 to 303. The Court held that legalisation, taxation and State participation do not alter the inherent element of chance, and Article 298 does not expand such activity into Part XIII trade. It further upheld section 5 of the Lotteries (Regulation) Act, 1998 and the related section 4 conditions, construing them as a controlled scheme that permits States to create lottery-free zones and impose regulatory restrictions. The constitutional challenge under Articles 14, 301 and 303, and the attack for excessive delegation, therefore failed.

---

---

Issues: (i) Whether State-organised lotteries are gambling and therefore remain outside the concept of trade or commerce under Articles 301 to 303 of the Constitution, notwithstanding their legalisation and regulation under the Act. (ii) Whether section 5 of the Lotteries (Regulation) Act, 1998 and the related conditions in section 4 are unconstitutional as violative of Articles 14, 301 and 303, or as an excessive and unguided delegation of legislative power.

Issue (i): Whether State-organised lotteries are gambling and therefore remain outside the concept of trade or commerce under Articles 301 to 303 of the Constitution, notwithstanding their legalisation and regulation under the Act.

Analysis: The Court held that lotteries are inherently a form of gambling and that the element of chance remains even when a lottery is organised by a State. Legalisation and regulation do not alter its basic character into ordinary trade or commerce. The distinction in the constitutional scheme between State lotteries and other lotteries, and the fact that State lotteries may be authorised and taxed, does not convert them into trade protected by Part XIII. The Court further held that Article 298 enlarges executive power to carry on any trade or business and is wider than Article 301, but that does not mean every activity carried on by a State becomes trade in the Part XIII sense.

Conclusion: State lotteries are gambling and do not constitute trade or commerce protected by Articles 301 to 303; the point is against the assessees and petitioners.

Issue (ii): Whether section 5 of the Lotteries (Regulation) Act, 1998 and the related conditions in section 4 are unconstitutional as violative of Articles 14, 301 and 303, or as an excessive and unguided delegation of legislative power.

Analysis: The Court read section 5 in the context of the scheme, object and structure of the Act and held that the provision is intended to enable a State to create a lottery-free zone within its territory. On that construction, the power is controlled by the statutory setting and is not an arbitrary or naked delegation. The Court also held that once State lotteries are not trade for purposes of Article 301, the challenge based on Articles 301 and 303 fails. The conditions in section 4, including the restrictions as to draw location, frequency and single-digit prizes, were treated as regulatory measures within legislative competence and not as unconstitutional restrictions.

Conclusion: Section 5 and the impugned conditions in section 4 are valid; the constitutional challenge fails.

Final Conclusion: The impugned provisions were upheld, the contrary High Court view was set aside, and all connected matters were disposed of accordingly.

Ratio Decidendi: A State lottery remains gambling even when authorised and regulated by law, and an activity that is inherently gambling does not become trade or commerce for the purposes of Part XIII merely because the State undertakes or regulates it; a delegation enabling States to prohibit such lotteries within their territory is valid when construed consistently with the statutory scheme and object.

---