(a) The State of Kerala, by notification dated 13.01.2005, issued in exercise of the power conferred by Section 5 of the Lotteries (Regulation) Act, 1998, (in short ‘the Act’), prohibited the sale of all computerized and online lottery tickets marketed and operated through vending machines, terminals, electronic machines and tickets sold through internet in the State with immediate effect and declared that Kerala shall be a free zone from online and internet lotteries.
2) 01.2005, issued a subsequent notification dated 22.04.2005, permitting the sale of paper lotteries organized, conducted or promoted by every State Government including the State of Kerala and the prohibition imposed on the sale of computerized and on-line lottery tickets organized, conducted or promoted by every State Government continued to remain in force declaring the territory of the State of Kerala to be online, internet and computerized lotteries free zone
3)Being aggrieved by the notification dated 22.04.2005 discriminating between the paper lotteries and online lotteries, the All Kerala Online Lottery Dealers Association, State of Sikkim and one Sreekala and others filed Writ Petition (C) Nos. 19582, 14495 and 16063 of 2005 respectively before the High Court.
4) learned single Judge of the High Court, by judgment and order dated 27.07.2005, dismissed the writ petitions.
(f) Being aggrieved by the decision of the learned single Judge, the petitioners therein preferred Writ Appeal Nos. 2011, 2012 and 2235 of 2005 before the Division Bench of the High Court.
(g) The Division Bench, by a common judgment and order dated 23.05.2006, dismissed the appeals.
5)SC held we are of the considered opinion that State of Kerala was well within its rights to prohibit the sale of online or internet lotteries in its State and there is no fault in it. It is well within the powers conferred on it under Section 5 of the Act. A State Government can organize, conduct or promote a lottery subject to conditions mentioned in Section 4 and if there is any violation of the conditions mentioned in Section 4, it would be always open to the State Government to prohibit such lottery and that would be within the legislative power vested with the State under Section 5 of the Act as in that case the State would be only complying with the provisions of the Act made by the Parliament.