Gambling in India

Gambling in India is under strict control except for a few categories like horse racing and lotteries. Gambling in India, being a state subject, entitles the states to formulate laws to govern such activities within their states. The article critically analyses the sport in India and explains what lies ahead and why it is better to legalise it.

Wed Jun 01 2022 | Immigration, Appeal and Others | Comments (0)

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Gambling in India is under strict control except for a few categories like horse racing and lotteries. Gambling in India, being a state subject, entitles the states to  formulate laws to govern such activities within their states. The Public Gambling Act, 1867 being a central law, prohibits running or operating public gaming houses. Any violation of the law would attract a fine of Indian rupees of 200 or imprisonment of up to 3 months.

There are different kinds of gambling in India that are prevalent and  practiced in India in the past i.e. Horse Racing, Lottery, Skill Games, Casino Gambling, Online Gambling and Sports betting. The legal position on gambling in India is divided into two broad categories i.e. games involving skill and games of chance.

Legal nod on Skill Games

Gambling in India is an act of putting money or betting for money or equivalent.  The Public Gambling Act, 1867 has clearly declared all such Gambling and betting acts illegal except games where skill is needed.

The fact that interests the most would be definition of ‘Skill games’.  The Apex Court in India has defined Skill Games as, “The competitions where success depends on substantial degree of skill are not ‘gambling’ and despite there being an element of chance if a game is preponderantly a game of skill it would nevertheless be a game of mere skill.”

As per the given definition, it has been declared that Horse racing or Dog Racing includes substantial amount of skill and does not fall under the definition of gambling except under certain conditions.

The above definition also allows the game of rummy, which later was declared as ‘Game of Skill’ by Supreme Court. It does not  allow the game of ‘three cards’ as known as ‘flash’, ‘brag’ etc under this category as it is entirely a game of chance.

Indian Lottery laws

Government lotteries are governed under Central Lotteries (Regulation) Act, 1998. The Act authorizes State Governments to hold lotteries and to frame regulations that should not intervene with Central Lotteries Act. It restricts the drawing of Lotteries to one draw per week.

Grey Legality:  Most of our Indian States have given permission to open lottery terminals in abundance where draws take place every 15 minutes, surprisingly Sikkim is one State which is popular for its gambling terminals and its own regulatory framework. The reason for not following the Central Lotteries Act is their constitutional right under Seventh Schedule, which allows them to create their own laws for all kinds of Gambling.

Legal Status on Casino Gambling

Casino Gambling is regulated by Public Gambling Act, 1867 and is outside the legal ambit of gambling. But, Indian Gamblers who prefer to play their luck in casinos can enjoy it in Sikkim and Goa. These 2 states are the only states, which have legalized Casino Gambling to a limited extent only under state approved license i.e. at five star Hotels. In Goa, it is also allowed on the board of an offshore vessel/ship.

Legal status on Online Gambling in India

Sikkim was the first state to legalize Internet Gambling. It is easy to obtain license for running an online gambling game from the state government which includes license to run an organization, management or receipt bets.

Public Gambling Act, 1867 is an old Act and does  not contain any regulations with regard to online/internet gambling. There are online betting agencies including bet365, Ladbrokes, Bet fair or William Hill that entice gamblers to place bets. Today, internet gambling is making wealth out of organized betting . Due to lack of any servers, advertising or any concrete law in India, it is giving Indians an easy way to gamble on sports by use of e-wallet etc. It also includes IPL matches.

In order to regulate and restrict online gambling in India, the Payment & Settlement Act, 2008 authorizes the Reserve Bank of India, to start or operate a payment system for regulation of all kinds of electronic payment mechanisms. FDI Policy has also restricted enterprises to involve in Lotteries, Gambling and Betting Activities. Also, we have IT (intermediary guidelines) Rules, 2011 to block access to prescribed types of websites and content.

All cyber activities or online gambling in India are regulated under the IT Act, 2000. The act prohibits online gambling activities and prescribes a punishment for persons indulging in such activities, with a fine of Indian Rupees 100,000 or  imprisonment of up to 5 years.

The IT Act of 2000

The IT Act of 2000 made provisions for various offences relating to online activity, although there’s no specific mention of online gambling being illegal. It does give the Indian government the power to block foreign websites but the Government has used this power to instruct ISP providers to prevent Indian residents from accessing certain foreign betting and gaming sites, but  the effectiveness of  this is debatable

For the most part, it is the operator itself that blocks the website in India. That is, if you were to visit such a site, you would see a message along the lines of ‘our platform is not available in your region.’

So far, there are plenty of online casinos who are offering online gambling services to Indian audiences. They can be accessed rather easily and you can play any game of your choice.

There is no law applicable if you are  betting at online websites based outside India.  No  law explicitly makes online betting and gambling an illegal activity. It means that theoretically, you can bet on these leading casino platforms online, without running the risk of getting caught.

Payment options

One of the more significant obstacles faced by gamblers in India is payment options. It is because of the RBI, which has instructed the banks and payment gateways to not process transactions related to gambling and online casino sites.

The majority of users deposit online (sports) bookies using Skrill or Neteller. Attempts to deposit using Visa or MasterCard may fail and the same is true of online bank transfers. E-Wallet services have proven a functional way to go. These include typical options such as Skrill, Muchbetter, Entropay, Astropay, etc.

Further legal and Technical Hurdles

There is a definition of gambling in the Constitution of India. In order to change the overall picture, the government needs to change certain articles in the Constitution, and that is not going to happen. Therefore, the legal base will remain what it is today.

In many ways, the present legal scene that we have in India is hypocritical. Bookmakers offer services legally at racecourses where operators provide pool betting. Horse racing betting is also legal of course, and betting parlours exist in many parts of the country. The only reason it is legal is because of the assumption that specific skills are required to know and pick a winning horse and jockey.

Issue of Taxation

The reason why a few games are made legal is that they can be taxed easily. The Lotteries (Regulation) Act of 1998 gives the state governments the right to authorise lotteries within their jurisdictions, including laying down the tax clauses. This  happens, despite being a game of pure chance. Even if someone were to win a crore out of sheer luck, the winnings will be taxed by the government as they can track the winner easily.

Similarly, when one plays poker online at an Indian site, a TDS is automatically deducted on their winnings. It goes the same for other ‘legal’ gambling games like Rummy and Dream 11 too, where your winnings are taxed at the source itself. Doing so online where there are a plethora of operators is a bit difficult, at least for the time being. We need to have a more advanced technological framework to support this kind of environment.

Furthermore, the reason why online gambling is heavily frowned upon is because of its connection to money laundering and other negative connotations. But if developed countries like Germany, United Kingdom, Spain, and others can find a way to legalise online casinos and betting, while ensuring that their people do not succumb to the dark underside of gambling, then why can’t we? We can start with commitment to responsible gambling and proceed from there. The taboo needs to be broken.

Efforts by Law Commission of India

Authorities are aware of the extensive illegal gambling throughout the country. In fact, as recently as July 2018 the Law Commission of India (LCI) urged the Government to legalise gambling and betting.

The LCI is an Executive body of the Government itself, and its function is to work towards legal reform. It was tasked with examining the best way to deal with the country’s “rampant gambling activity”. It     came out with a detailed Report recommending that India should legalise sports betting and gambling to raise badly needed government revenue and reduce problem gambling behaviour.

Among specific recommendations, the LCI distinguished between ‘proper’ and ‘small’ gambling, with ‘proper’ referring to higher gambling stakes. Income thresholds would be introduced with those in mind, and people on social assistance or with low income would be barred from all legal gambling.”

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