LEGAL VALIDITY OF ONLINE GAMBLING IN INDIA

Gambling has existed in India since time immemorial. Most of us know about the game of Chausar, which did not end well for the Pandava prince Yudhishthira. India has grown a lot with its technical innovation and evolution of the internet online gaming in India has become an extremely popular mode of entertainment in the rising market. 

Online games and lotteries are new to the otherwise offline industry of gambling, betting and wagering in physical gaming houses that have been strictly regulated in India. 

Online Gaming and gambling laws in India prohibit betting or wagering and any act which is intended to aid or facilitate the same. According to the Seventh Schedule of the Constitution of India, Gaming/ Gambling being a state subject [Entry 34 List II], gaming/gambling in India have laws that differ from state to state. This would mean that what is permitted in one state may be an offense in another.

The Public Gaming Act, 1867, is the central enactment on the subject, which has been adopted by many states in India like Madhya Pradesh, Punjab, Uttar Pradesh, etc. The other states have enacted their legislation. These all are legislation for physical gaming and gambling, only Sikkim and Nagaland have introduced regulations pertaining the online gaming.  

Playing certain games including Poker both online and offline are permitted under the laws of West Bengal, Nagaland, and Sikkim subject to a license from the appropriate State Authorities. In Goa, gambling is permitted only in Government permitted places operated as casinos.

The dictionary meaning of gambling is “to stake something on a contingency; take a chance”. The Constitution of India defines gambling as-

 “…gambling includes any activity or undertaking whose determination is controlled or influenced by chance or accident or any activity or undertaking which is entered into or undertaken with a consciousness of the risk of winning or losing (eg, prize competitions, a wagering contract)…” 

GAMBLING IN INDIA 

The first question arises in our minds is that Is gambling legal in India? The Indian Government’s outlook towards gambling and betting remains in a grey area. Horse racing and rummy are considered the game of skill and thus free to bet on, while cricket and poker don’t share the same distinction in the eyes of the Indian legal system.

It’s interesting to note here that games such as Teen Patti (flush) and Texas Hold’em are banned while Rummy is allowed. Even horse racing is legal to wager on based it is a skill game, yet cricket betting which required the same sort of skill set is banned. 

ONLINE GAMBLING IN INDIA

The issue of online gambling laws in India remains a grey area which is yet to be adjudicated by the Courts of India. The Public Gaming Act of 1867 does not refer to online gambling. It can still be argued that operating an online gambling website in India is not legal under the act but this is far from clear. 

At the state level, only two states have made legislation relating to online gambling. In Maharashtra, it’s completely prohibited, while in Sikkim the government now has the authority to issue a license to operators wishing to provide online gambling services within the state.

The Foreign Exchange Management Act (FEMA) 1999, was introduced to India in 1999 to govern the exchange of foreign currencies. Technically depositing to a gambling site in a currency other than rupees could be considered an exchange of foreign currencies, and thus be covered by the act. 

In 2011, the Information Technology (Intermediaries Guidelines) Rules, 2011 was issued under the Information Technology Act,2000 that instructed the website holders to block access to certain websites and content. Section 2B of the said Act includes anything that relates or encourages money laundering or gambling. 

GAME OF CHANCE AND GAME OF SKILL

There has been a substantial discussion by the Supreme Court and High Court on what constitutes a ‘game of skill’ and a ‘game of chance’. What is adduced from the judgments is that a game where there is the preponderance of skill over chance is a ‘game of skill’ and vice-versa.

Supreme Court in the matter of State of Andhra Pradesh v. K. Satyanarayana [AIR 1968 SC 824] held the game of Rummy to be a ‘game of skill’. However, the Court in its judgment has indicated that if there is gambling or if the gambling house is making a profit from the game of rummy, then it could amount to an offense under the laws of Andhra Pradesh. It was further observed by Supreme Court that the three-card game which goes under different names such as flush, brag, teen patti, etc. is a game of pure chance.

The Gambling Act, under Section 12 excludes ‘game of skill’ from the purview of the law. In the case of Dr. R.K. Lakshmanan v. State of Tamil Nadu [AIR 1996 SC 1153], the Supreme Court had defined ‘game of skill’ as “one in which success depends principally upon the superior knowledge, training, attention, experience, and adroitness of the player”. The Court pointed out that a game of chance is one in which the element of chance predominates over the element of skill and similarly a game of skill is one in which the element of skill prevail over the element of chance. 

In the case of The Director-General of Police v Mahalakshmi Cultural Association [AIR 2016 Mad 11438], the Apex Court decided that even though rummy involves skill and chance: predominately skill is legal. But when it is played for stakes that would be illegal. 

DIFFERENT STATE GAMBLING LAWS IN INDIA

Most Indian states have only made laws against gambling, while 13 states have legalized lottery, and two states (Goa and Sikkim) have legalized many other forms of gambling. There are 29 states in India because of which the diversity in gambling laws varies largely.

Goa-

In Goa gambling is regulated under the Goa, Daman, and Diu Public Gambling Act, 1976. To legalize certain forms of gambling, two amendments have been made in the act. 

“13A. Authorized Game.– (1) Notwithstanding anything contained in this Act, the Government may authorize any game of electronic amusement/slot machines in Five Star Hotels 27 {and such table games and gaming on board in vessels offshore as may be notified} subject to such conditions, including payment of such recurring and non-recurring fees, as may be prescribed.”

There are around seven land-based casinos and several offshore casinos that operate legally in Goa. 

Sikkim-

Sikkim is the second Indian State that has also legalized gambling. The laws governing gambling in Sikkim are Sikkim Casino Games (Control and Tax Rules), 2002 which gives the Sikkim Government the authority to grant licenses to individual and business interested in operating casinos, The Sikkim Regulation of Gambling (Amendment) Act, 2005 authorize gambling on certain days and to make specific gambling houses legal at their discretion by way of a license.

Sikkim also became the first Indian state to legalize internet gambling.

Maharashtra-

The State of Maharashtra is moderately friendly to betting. Horse betting a lottery is the only form of legalized betting within the State. Online Gambling is addressed with the Bombay Wager Act which specifies that it is illegal within the State. 

Tamil Nadu-

Rummy and Teen Patti both of which are very traditional games of Tamil Nadu. Recently on July 25, 2020, the Madras High Court raised eyebrows over why the state does not have a law to regulate online games and online gambling. The government was called upon to introduce suitable legislation in the field.

Justice Pugalendhi also observed that not only in the State of Tamil Nadu but also in the entire Country, such online games are increasing and there are so many advertisements appearing in almost all the social media and websites. It appears these advertisements are mostly targeting the unemployed youth, inducing them to play such games, on the pretext of earning money comfortably from their home"

Madhya Pradesh-

The heart of India (Madhya Pradesh) is the fifth-largest of India with over 75 million inhabitants in Madhya Pradesh. In the year 2016, Madhya Pradesh was declared as the gambling hub of the country by the National Crime Records Bureau (NCRB). 

The state follows the Public Gambling Act of 1867 thus, any sort of gambling is prohibited in Madhya Pradesh. However, the lottery is still permitted to be held within certain regulations like one draw in a week. 

RUMMY LEGAL OR ILLEGAL IN INDIA?

In 1968 Rummy was determined to be a skill game as it requires a certain amount of skill because the fall of the cards has to be memorized. Therefore, we can't say that the game of Rummy is a game of entire chance. It is mainly a game of skill.

LOTTERY LEGAL OR ILLEGAL IN INDIA?

The Central Lotteries (Regulation) Act of 1998 gave state governments the authority to hold lotteries but set forth this was restricted to one draw per week. Sikkim’s licensed PlayWin Lotto is highly popular and Indians from any state can purchase tickets online. The one draw per week is not followed because most states believe fully that they have full rights to create their laws for all forms of gambling.

ONLINE CRICKET BETTING LEGAL IN INDIA?

Betting on cricket is not seen as a game of skill like horse racing. There are no gambling laws in India that strictly prohibit Indians from betting on cricket. According to a report by the All India Gaming Federation, the people lost almost Rs. 2 lakh Crore each year due to illegal betting on cricket. About 50 million USD is wagered on every IPL betting match by Indian online bettors according to research.

After the 2013 match-fixing scandal in IPL, the Lodha committee was appointed by the Supreme Court to look into the matter of legislation of cricket betting. In 2016, the Supreme Court recommended of legalizing betting involves the enactment of a law.

In June 2018, the law commission submitted a recommendation to the government to legalize betting in India under strong laws to curb money laundering. The law commission suggested that as per Articles 249 or 252 of the Constitution, the government has the power to regulate gambling by enacting laws.

HORSE RACING LEGAL OR ILLEGAL IN INDIA?

Horse racing is one of the few sports in which gambling has been legalized and there are clear laws in place. In the case of Dr. KR Lakshmanan v. State of Tamil Nadu, a three-judge bench of the Supreme Court of India had ruled in favor of the legality of betting in horse racing. It ruled that horse racing is a game of skill and not chance. 

CONCLUSION

The gambling laws in India are vague, confusing, and poorly written and haphazardly enforced. In the reality for online gambling people across India bet online every day. While it cannot be definitively stated that you can legally gamble in India or not, it is not much of a thing to worry about also. There are various functioning legal websites in the United Kingdom involved in gambling which provide easy access to Indians. The Indian laws are more focused to scare Indians to not gamble than to prevent them from gambling.