The petitioner, C. M. Rawat, had earlier stated that the Lotteries (Regulation) Act, 1998,was passed by Parliament to regulate the haphazard and complex trade of lotteries within the Union of India. As per clause (a) of Section 4 a state government may organise, conduct or promote a lottery, but the prizes should not be offered on any pre-announced number or on the basis of a single-digit number. Clause (h) further stipulates that no lottery should have more than one draw in a week. This apart Section 3 of the Act prohibits the state government from organising, conducting or promoting any lottery in contravention to the guidelines laid down under Section 4 of the Act.

However, despite the fact that any lottery contrary to Section 4 of the Act cannot be conducted or promoted, the UT Administration is allowing the sale of lotteries organised by states of Nagaland, Arunachal Pradesh and Manipur in the Union Territory.