Gambling in India

Gambling is an activity where chances are taken on a contingency of something happening or not happening. The Indian Gambling market is governed by the central legislation – The Public Gambling Act, 1867. However, gambling is a state subject and therefore, states are free to establish legislations for their respective jurisdictions. FDI of nay type is prohibited in this business altogether.

Fri Jul 22 2022 | Business Law | Comments (0)

Like

The Public Gambling Act, 1867 also known as the "Gambling Act", is the primary law which governs gambling in India. However, the state legislatures, under the Constitution of India, are currently entrusted with significant regulatory leeway to form state specific gambling laws pertaining to each specific State. The Gambling Act is the central enactment which has been adopted by some states in India, while other states have enacted their own legislations to regulate and govern their own gaming and gambling activities within their respective territories known as their "Gambling Legislations". Most of the Gambling Legislations have been enacted prior to the advent of the virtual or online gambling arenas  and hence, these Gambling Legislations mainly refer to gaming and gambling activities at  physical premises only.

Despite the mounting popularity and  heavy revenue generation through gambling and betting in India, the Indian laws and the Courts  have been averse to any game of chance and probability, except within the states of Goa and Sikkim. Since the advent of the British rule, several Indian states have enforced the Gambling Act, thereby prohibiting all forms of gambling and betting in their respective states. However, Goa and Sikkim are the only exceptions which have allowed gambling and betting in their own states, subject to regulation of their respective state Government’s legislation.

State Legislations over Gambling

India still enforces the laws drafted  prior to independence as its gambling legislations, apart from certain amendments within the same legislation. Goa has enabled gambling within its state by enacting the Goa, Daman and Diu Public Gambling Act, 1976. This act has  been amended to further allow card rooms within offshore vessels as well as slot machines inside five star hotels, as long as prior approval and authorisation by the State Government is acquired after  payment of the specific fee.

Sikkim has also made gambling legal through the enactment of the Sikkim Regulation of Gambling (Amendment), 2005. This amendment has authorized the State Government of Sikkim to notify the areas wherein permission is granted for establishing casinos on  payment of the specific fees for the same.

'Gambling' is not defined under the Gambling Legislations However,  the dictionary meaning of gambling is "to stake something on a contingency or take a chance". The gambling under the Gambling Legislations does not include the following:-

  • betting on a horse race (subject to the legal regulations);
  • games of skill (excluded under the Gambling Act and by the court's judgments); and (
  • lotteries (regulated by lottery laws of India).

Game Of Chance and Game Of Skill

The activity of gambling has been present since time immemorial and can be understood both, in its modern way and its traditional aspects. Historically, though, gambling has always been referred in its physical space whereas today, gambling encompasses computers and mobile phones and the internet, which may be connected to several other devices. Moreover, Gambling Legislations do not attract any legal penalties if the activity is a game of skill.

The Gambling Act, by virtue of Section 12, thus excludes 'games of skill' from the purview of the law.

The Supreme Court, in the case of Dr. R. K. Lakshmanan v. State of Tamil Nadu [AIR 1996 SC 1153], 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 predominates over the element of chance. It is basically the dominant element i.e., "skill" or "chance" which determines the true character of the game.

Establishing a gambling business in India

Despite the fact that gambling is a heavily restricted industry in our country, an official and legitimate gambling business can be set up in certain states and according to the specific licenses, as has been clear from the aforementioned  explanation. Anyone who wishes to acquire a license for a gambling set-up, like a casino,, must know that these can only be done in three states in India. The three states/Union Territories are as follows:

  • Goa;
  • Sikkim;
  • Daman

The Government has allowed the placement of casinos in five star hotels and on water, where tourists spend most their time according to the specific state legislations, respectively.

Moreover, these licenses, which permit the opening of a gambling business like perhaps, a casino, can also be registered offshore. Their main requirement is to provide all the necessary data about the institution, partners and finances.

FDI in gambling in India

The Ministry of Commerce and Industry as well as the Department of Industrial Policy and Promotion has clearly prohibited any foreign investments in lottery business, gambling as well as betting, via the following rules:-

  1. As per existing policy, lottery business, gambling and betting are not open to foreign investment, which applies to FDI, FII portfolio investment, NRI/OCB portfolio investment, NRI/OCB investment on non-repatriation basis and investment by foreign venture capital investors.
  2. The Government has been receiving queries from certain State Governments, prospective investors, technology providers, franchise / trademark / brand name licensors, management consultants, etc., as to whether FDI is permissible in Government / private lotteries, online lotteries, casinos, etc., and also whether foreign technology collaboration, including licensing of franchise / trademark / brand name, management contract, etc., are permitted in the lottery business, gambling and betting sector.

It is clarified that both foreign investment and foreign technology collaboration of  any form are completely prohibited in the lottery business, gambling and betting sector.

CONCLUSION

Thus, from the information above, it is evident that gambling and betting activities are a part of the State List under the VIIth Schedule of the Indian Constitution. Although the central legislation is the Public Gambling Act, 1867, the States have full leeway and authority to decide on the legitimacy of gambling and betting activities in their respective jurisdictions. The key element in such activities is to determine if the activity is a “game of skill” or not. Section 12 of the Gambling Act acts as an exception for games of skill. However, it is important to revolutionalise the gambling and betting laws in India, given the emergence of online gaming and internet gambling.

Copyright 2022 – Helpline Law - HLL001

ENQUIRY FORM

You could get in touch with our team to find a suitable lawyer for assistance.
Helplinelaw has been referring lawyers that fit your needs in terms of seniority and experience since 2001

Other Latest Articles