Can states override federal business licences for lotteries?

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States Cannot Override Federal Lottery Licences Through Premises Licensing Refusal

The Kedah state government cannot override federal business licenses for lotteries by refusing to renew premises licenses. The Court of Appeal ruled that such a refusal is unconstitutional and unlawful, as it encroaches upon the federal government's exclusive power to regulate betting and lotteries. While states have authority over local government matters, including the regulation of business premises, this power cannot be used to prohibit federally licensed activities.
Constitutional Division of Powers

The Federal Constitution delineates distinct legislative powers between the federal and state governments. Specifically, "betting and lotteries" fall under the purview of federal law-making powers. Conversely, "local government" matters, which include the regulation of business premises, fall under state legislative powers. This division means that while state local authorities can regulate aspects of premises such as suitability, safety, and public order, they cannot use these powers to ban an activity that is already licensed by the federal government.
Limits on State Authority in Premises Licensing

A state authority cannot employ its power to regulate business premises as a means to prohibit an activity that is regulated under a federal license. The Kedah government's blanket refusal to issue or renew premises licenses for lottery operators was not based on any defects in the physical premises themselves, such as safety or sanitation issues. Instead, the refusal stemmed from the state's disapproval of the lottery activity itself, effectively acting as a prohibition of a federally licensed business.
Violation of Federal Authority

The act of refusing to renew business premises licenses for pool betting businesses, which are exclusively regulated by the federal government, constitutes a violation of the Federal Constitution. One Court of Appeal judge highlighted that this action infringes upon Article 81 of the Federal Constitution, which mandates that each state must exercise its executive authority without impeding or obstructing the federal government's exercise of its federal authority. Therefore, a state cannot effectively ban a federally licensed activity through the denial of state-level premises licenses.

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Can states override federal business licences for lotteries?

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