KUALA LUMPUR, Aug 12 — The Kedah state government is asking the Federal Court today to allow it to proceed with its appeals, with the ultimate goal of stopping lotteries from operating in the state.
Known variously as “toto”, “4D”, “kedai empat nombor ekor”, number forecast operators or pool betting businesses, these lottery operators have been unable to open their physical outlets in Kedah since 2023 despite holding federal business licences.
Previously on December 12, 2025, the Court of Appeal had in a 2-1 decision said the Kedah state government had acted unconstitutionally, unlawfully and irrationally when it decided to not renew the physical outlets’ premises licences for these lotteries starting from 2023.
The Court of Appeal’s decision overturned Kedah’s refusal to renew the premises licences and upheld an order for the courts to assess the compensation amounts for losses arising from the non-renewals.
The Kedah state government wants to appeal this, but it has to first get leave or permission from the Federal Court for the appeal to be heard.
The Kedah government is expected to argue today that its appeal at the Federal Court should proceed based on six questions of law, while the lottery companies are expected to argue that the state government should not get leave to continue its appeal.
Here’s Malay Mail’s simplified summary about previous court decisions in this case and what it is actually about, based on the Court of Appeal judgments and other court documents:
What this case is not about
In short, the case is not about whether gambling should be allowed, but whether Kedah had exceeded its constitutional powers by encroaching on matters under the federal government.
Court of Appeal judge Datuk Faizah Jamaludin said the case did not concern unlicensed gambling, nor was the court being asked to decide whether gambling was socially or morally desirable.
She made clear that the lottery companies were not asking the court to decide whether Kedah should approve of gambling.
Faizah instead said the court has to decide a constitutional and public law question, which is whether the Kedah state government’s decision — implemented by refusing to give premises licences to all pool betting businesses in the state — can be used to impose a state-wide ban on these federally-licensed pool betting businesses.
Chief Judge of Sabah and Sarawak (CJSS) Datuk Azizah Nawawi, who was also on the Court of Appeal panel, had said this case is not about rights to gamble.
Instead, she said the only issue is whether the Kedah state government’s decision to stop issuing premises licences for pool betting businesses within the state is “ultra vires” or beyond its authority under the Federal Constitution.
Chronology of key events
On November 14, 2021, Kedah Menteri Besar Datuk Seri Muhammad Sanusi Md Nor announced that the Kedah government had decided to no longer renew premises licences for lotteries or gaming outlets in Kedah.
On December 8, 2021, the Kedah government (via the Kedah MB and state exco) in a meeting noted that the Finance Ministry had approved gambling licences for lotteries and their agents in Kedah from January 1 to December 31, 2022.
The Kedah government in that meeting decided on three things:
- agreed that the Finance Ministry should no longer consider renewing gambling licences in Kedah for 2023 since such licence applications were under the ministry;
- all premises licences for number forecast operators in Kedah will end on December 31, 2022 in line with the Finance Ministry’s gambling licences ending on that date;
- Kedah’s local councils and the police would carry out strict enforcement if any lotteries continue operating after December 31, 2022 in Kedah.
From November 2022 to January 2023, Kedah’s local councils in Kedah issued letters to the lotteries’ operators, informing them of the Kedah state government’s decision and also informing them that their premises licences would not be renewed starting January 1, 2023.
While some of the premises licences would only expire in 2023, these lotteries or pool betting businesses could not continue operating, as the local councils had said enforcement action would be taken if they continue operating after December 31, 2022.
Based on court documents, the Finance Minister actually did renew the annual pool betting licences for these lottery companies and their agents for January 1 to December 31, 2023.
So what happened was the lottery companies had the licence from the federal government to run their business, but they could not use the physical outlets or premises in Kedah.
The practical effect or result was they could no longer do business in Kedah.
Some of them had been running their business at their premises in Kedah for many years, with the earliest one since 1988.
Based on court documents including licence documents, the Finance Ministry imposes a list of conditions for pool betting licences, such as requiring “Judi Adalah Haram Di Sisi Agama Islam” (Gambling is forbidden in Islam) to be printed on each lottery ticket.
Another condition requires signboards to be placed outside the lottery ticket counters with these messages:
- “Judi Adalah Haram Di Sisi Agama Islam”;
- both Muslims and those aged below 21 are not allowed to enter the premises.
Other conditions include requiring pool betting licence holders to ensure those aged below 21 and Muslims do not enter the place where lottery tickets are sold, as well as not allowing Muslims to be number forecast ticket or lottery ticket sellers.
Total six cases
In 2023, lottery or pool betting companies STM Lottery Sdn Bhd (Sports Toto Berhad’s wholly-owned subsidiary) and ENE (Penang) Sdn Bhd (a regional office of Magnum 4D Bhd), their officers, and pool betting agents filed separate court challenges against Kedah’s refusal to renew their outlets’ premises licences there.
Six court challenges were filed via judicial review, with those named as respondents being the Kedah government, the Kedah menteri besar, the Alor Setar City Council and its mayor, the Sungai Petani Municipal Council and its president, the Baling district council and its president.
On October 17, 2023, the High Court only granted leave for the court challenges to be heard against the Kedah government.
What happened at the High Court in Alor Setar, Kedah
On June 20, 2024, High Court judge Mahazan Mat Taib decided in the lottery companies and agents’ favour for all six cases that were heard together, granting four orders:
- a declaration that the Kedah government had acted illegally and irrationally (through its December 8, 2021 decision and by causing the local councils to issue those letters);
- a declaration that the Kedah government’s decision is unconstitutional, null and void;
Kedah government’s decision is quashed, and that the court would assess how much it has to pay as compensation for the companies’ losses.
The High Court decision did not make any court orders regarding the Kedah MB, but the Kedah MB had together with the Kedah government appealed against both the High Court and Court of Appeal decisions.
What the Court of Appeal said
In her 25-page judgment, Court of Appeal judge Faizah agreed with the High Court’s decision, noting that the Kedah government had crossed over into the federal government’s powers to regulate lotteries.
This is because the Federal Constitution places “betting and lotteries” under the federal government’s law-making powers, while “local government” comes under the state governments’ law-making powers.
This would enable local authorities or local councils to regulate the use of business premises, public order, sanitation, safety, nuisance, suitability of location and other genuinely local factors.
Faizah said a local authority cannot use its power to regulate premises to prohibit an activity that comes under federal licence.
But in this case, the local councils’ letters did not identify defects, safety, sanitation, planning or nuisance reasons in any of the premises for the lottery outlets, and had instead referred to the state’s decision to stop issuing or renewing their premises licences from January 1, 2023.
In other words, the blanket refusal to give premises licences to these betting and lottery businesses throughout Kedah was not due to any defect in the premises or actually about regulating premises, but was purely because of disapproval of such activities and has the effect of prohibiting a federally-licensed activity.
Faizah said this does not mean every refusal of a premises licence to a pool betting operator is unconstitutional.
The judge said a local council can still refuse to give a premises licence if there are genuine and legitimate reasons, such as planning, zoning, safety, public health, nuisance, traffic, building non-compliance, or other matters that come under local governments.
Court of Appeal judge Datuk Lim Hock Leng, who agreed with Faizah and the High Court, said it is unconstitutional for a state to prohibit pool betting businesses (which is exclusively under the federal government’s regulation) by not renewing business premises licences.
In a 25-page judgment, Lim said the Kedah government’s decision violates the Federal Constitution’s Article 81, where every state shall exercise its executive authority without impeding or obstructing the federal government’s exercise of its federal authority.
CJSS Azizah disagreed with the other judges’ conclusion that the Kedah government’s decision was unconstitutional, irrational and illegal.
In her 70-page minority judgment, Azizah said the Kedah state exco’s decision is not “ultra vires” or stepping beyond the state’s powers under the Federal Constitution, as non-renewal of business premises licences comes under states’ law-making powers.
Azizah also said that the court cannot review or decide the court challenge on the Kedah government’s decision to not renew premise licences for all lotteries in the state, as she viewed it as a “policy” decided by the state government.
