PUTRAJAYA (Dec 12): The Court of Appeal (COA) has, in a 2-1 split decision, upheld the Kedah High Court’s ruling that reversed the Kedah state government’s move to ban lottery outlets statewide.

A three-member panel chaired by COA judge Datuk Azizah Nawawi delivered the judgement, with Azizah dissenting. While judges Datuk Faizah Jamaludin and Datuk Dr Lim Hock Leng agreed to uphold the High Court’s ruling, Azizah, who is also the Chief Judge of Sabah and Sarawak, held that the High Court had erred and that Kedah’s decision should stand.

In her dissent, Azizah referred to the Ninth Schedule of the Federal Constitution, citing Item 4 of the State List read together with Section 107 of the Local Government Act 1976. She argued that these provisions give the state the authority to regulate and license business premises.

According to her, the Kedah government’s move concerned only the regulation of premise licences including those used for gambling activities, and did not interfere with the issuance of pool betting licences under the federal Pool Betting Act 1967.

“The Pool Betting Act regulates licences for operating or organising pool betting, but it does not cover the premises. Section 107 of the Local Government Act regulates premises licences issued by local authorities,” she said.

Azizah described the Kedah State Exco’s decision as a valid exercise of administrative policy within state jurisdiction.

“In making the decision, the appellant took into account the welfare of the people of Kedah, particularly those of the Islamic faith, recognising that the adverse effects of gambling outweigh any benefits. Such effects include the breakdown of family institutions, serious indebtedness, and broader harm to societal values,” she said, adding that courts should not interfere with such policy matters and that the High Court judgement “must be set aside”.

“For all the said reasons, I am of the positive opinion that the decision of the High Court judge is erroneous and must be set aside,” she added.

However, Faizah, writing for the majority, found that Kedah’s decision effectively encroached into the federal domain.

She held that by ceasing to renew or issue business premise licences for pool betting activities, the state had undermined the statutory authority of the federal Minister of Finance, who regulates the industry under the Pool Betting Act.

"This undermines the statutory authority of the Minister of Finance, who is empowered to issue licences for pool betting and regulate the industry nationwide, thereby effectively nullifying such federal powers,” she said.

Faizah added that pursuant to Article 8.1 (b) of the Federal Constitution, "every state is obliged to exercise its executive authority, as not to impede or prejudice, the executive authority of the federation".

Lim concurred, agreeing that the Kedah government’s actions were inconsistent with federal constitutional provisions.

The High Court decision, delivered in 2024 by judge Mahazan Mat Taib, arose from six judicial review applications filed by pool betting agents, betting companies and their principal officers. The applicants challenged the state’s move to halt the renewal of business licences for lottery outlets.

Mahazan ruled that the Kedah government had acted beyond its powers by effectively implementing a ban that conflicted with federal law.

The controversy began in November 2021, when Kedah Menteri Besar Datuk Seri Muhammad Sanusi Nor announced that the state would stop renewing local council licences for lottery outlets starting Jan 1, 2023, as part of an initiative to curb social ills.

Azizah ordered that there be no order as to costs for the appeal.

Kedah was represented by state legal adviser Saifulrijal Azhari, while the pool betting companies were represented by Bryan ML Foong and Hiqmar Danial of Messrs Cheang & Arif.