Why Is Gambling Illegal In India

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Online Gaming/Gambling laws in India prohibit betting or wagering and any act which is intended to aid or facilitate the same. Gaming/Gambling being a State subject, gaming/gambling in India have laws which differ from state to state . This would mean what is permitted in one State may be an offence in another. The Public Gambling Act, 1867, is the central enactment on the subject, which has been adopted by certain states of India like Uttar Pradesh, Punjab, Madhya Pradesh etc. The other States have enacted their own legislation to regulate gaming / gambling in India activities within its territory. It is to be noted that State Legislations have been enacted prior to the advent of virtual / online gambling in India and therefore references of gaming/gambling in India, in respective state legislatures are in relation to physical premises only, barring Sikkim and Nagaland which are the only States who have introduced regulations pertaining the online gaming.

After going through the State gambling laws for online gambling in India, it is found that, except the State of Orissa and Assam, most of the States have excluded ‘games of skill’ from applicability of its respective gaming/gambling laws. Further, playing certain games including ‘Poker’, both online and offline, is permitted under the laws of West Bengal, Nagaland and Sikkim subject to licence from the appropriate State Authorities. But this would be applicable only in the territorial limits of the respective State. In Goa, gambling is permitted only in Government permitted places operated as casinos.

The issue of online gambling in India laws in India still remains a grey area which is yet to be adjudicated by Courts of India. Having said that, necessary inferences can be drawn from orders passed by the Court while deciding the issue of whether a particular game is a ‘game of skill’ or a ‘game of chance’. But the issue of whether a ‘game of chance’, if played like a sport without stakes amount to gambling or not? still remains largely undecided.

  1. In India gambling is considered an illegal activity where a person is wholly depending on his luck by betting a certain amount in games, sports, poker or in other activity. As per the India Contract Act, 1872 if any loss is incurred by performing parties the court of law will not entertain such pleas for recovery amount.
  2. Online Gambling is legal. Gambling is illegal in most of India. But there is no law that makes online betting an illegal activity. Since March 2020, when Covid-19 necessitated lockdowns were imposed around the world, online activity has gone through the roof. Gambling is no different.
  3. The illegal gambling market in India is worth more than $100 billion, growing at a rate of 7% every year! Majority of it is sports betting.

Game of Skill v. Game of Chance:

The Indian Laws are highly discretionary and ambiguous in nature, when it comes to online gambling and betting. Hence, online gambling in India is not illegal, unless the Indian government formulates a law explicitly stating about its status.

There has been a substantial discussion by 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 preponderance of skill over chance is a ‘game of skill’ and vice-versa.

Why Is Gambling Illegal In India Now

By taking the above ratio into account, SC in the matter of State of AP v. K.Satyanarayana(1968) 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 profit from the game of rummy, then it could amount to an offense under the laws of AP. It was further observed by SC that the three card game which goes under different names such as flush, brag, etc. is a game of pure chance. This was relied upon by SC in another its other judgments viz. M.J.Sivani v. State of Karnataka (1995) and Dr. K.R. Lakshmanan vs State Of Tamil Nadu And Anr (1996).

The issue of whether rummy if played with stakes amounts to gambling or not has not been decided by Supreme Court. However, Andra Pradesh High Court in D. Krishna Kumar And Anr. vs State Of A.P.(2002) (Annexure-2) relying upon the SC decision of 1968 held that till such time the state gambling Act is amended to lay down that playing Rummy with stakes is 'gaming', playing Rummy with stakes is not 'gaming' within the meaning of the Act and is therefore allowed.

Delhi District Court: Gaussian Network Pvt. Ltd. Vs. Monica Lakhanpal

The issue of Online Gaming/gambling laws in India was discussed in detailed in the above case when the issue was put up before the Court under Order 36 Rule(1) of CPC by the parties. The Court held the following:

  • Game of skills, if played with stakes does not amount to gambling;
  • Playing games of skill for money is only legal in the real form, online games cannot be compared to real games;
  • Attracting business or enticing players by alluring them with prize money is illegal;
  • Gaming sites partaking a slice on the winning hand are illegal as they amount to a virtual gambling house.

Having said that, the said ruling was rendered infructuous as during the final arguments in the Revision petition, parties sought to withdraw the petition. So the effect being there is no ruling which can be treated as a precedent as regards online gambling.

Gujarat High Court on Poker:

The issue whether Poker is a ‘game of skill’ or a ‘game of chance’ was never discussed in detail by any Court in India until the recent decision/order dated December 4, 2017 passed by Gujrat High Court in Dominance Games Pvt. Ltd. V. State of Gujarat, wherein, the said issue was extensively pondered upon. The Court in its said decision held that Poker is a ‘game of chance’ and therefore amounts to gambling under Gujarat Prevention of Gambling Act, 1887. While arriving at the aforesaid decision, the Court inter alia observed the following:

  • That the game of poker originated from ‘flush’ or ‘Indian teenpatti’ which has been observed by SC as a game of chance in its 1968 judgment and consequently, as a corollary, the game of poker is also to be construed as a game of chance;
  • The game of poker involves a process wherein the players have no control or say on the cards received by them and the final outcome is based on mere luck or chance depending upon how the cards are received by the player. Poker face to bet, would be a part of bluffing or deception and the so-called strategy, cannot be considered as a skill. The outcome also depends on the ability of a player to spend money and how deep are his pockets. It is a game of deceiving, bluffing and duping other players;
  • The game of Rummy is different than Poker. While poker involves betting or wagering, rummy has nothing to do with stakes and betting or wagering is not essential to the game of rummy;
  • The Court while noting the ills of gambling and impact of gambling on the moral fibre of society noted that ‘one must not overlook the ground realities in India or the country like India, where the majority of the population is struggling for the basic necessity and there is lack of awareness amongst the people and if they are permitted by betting in the craze of easy money, they do not know what to do if the things go wrong.’

Mr. K.N Suresh, Secretary of Indian Poker Association has filed an appeal against the said order, being Letters Patent Appeal No. 2625 of 2017 before the Division Bench of Gujarat High Court. The bench after hearing the matter briefly on December 28, 2017 issued notice to the state government and other respondents, and till date the matter is not heard finally. Having said that, since no ad-interim/interim reliefs are granted presently, the Single Judge order stands valid and enforceable.

Though the order does not specifically make any observation on Poker, if played as a sport and/or without stakes, however, while differentiating between rummy and poker, the Hon’ble Court at para 60 of the said order makes a presumption that wagering or betting is an inseparable part of the game of poker and therefore would involve stake. The Court while holding Poker to be a ‘game of chance’ has also predominantly relied upon moral religious and social grounds. In the absence of the said order being overruled and the issue being addressed specifically, the game of poker, even if played as a sport and/or without stakes remains a grey area which is then left at the discretion of police authorities.

POSITION:

Though the issue of Poker was considered by Gujarat High Court in view of the provisions of Gujarat Prevention of Gambling Act, 1887, in arriving at the decision of Poker being a ‘game of chance’, the court made several observations like how the game is played, origin of the game, reference to ancient Indian literature, moral and religious grounds, etc. which may be applied by other states/state machinery having similar gambling laws. The issue is likely to be clarified by Division Bench of Gujarat High Court, once the appeal is finally heard.

In view of the above, it is clear that if a game is considered to be a ‘game of chance’ under the state laws and rulings by the Courts and is played with stakes, would constitute gambling under the respective state laws with exception pertaining to a few states as mentioned above. If an entity is able to show that a particular online game or a particular on-ground gaming activity has preponderance of skill over chance and/or is played as a sport without stakes, it may fall within the exception of gaming/gambling under the state gambling laws. It is pertinent to note however that if online gaming is illegal in any State, the promotion of the same in such State would amount to violation of ASCI Code as well as Cable TV Network Regulation Act, 1994.

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Why is gambling illegal in india currency

In India, don’t we have a large middle-class population with a disposable income, a passion for sports, and a desire to gamble? (Hint — ‘no’ is not the correct answer).

A survey says that 40% of all internet users in India like to gamble. Though the existing legal framework makes it illegal, nothing can stop Indians, right? The illegal gambling market in India is worth more than $100 billion, growing at a rate of 7% every year! Majority of it is sports betting.

If the legal framework has failed to prevent gambling from taking place and if it is unstoppable, then why not regulate it so that at least some of the illegal activities can be curbed?

Well, let’s evaluate.

The Indian law discriminates each game to be a “game of skill” and “game of chance”. This differentiates fantasy sports from traditional betting. Betting in “game of skill” is legal in India. Fantasy sports betting is legal because it is a game of skill. And, in fantasy sports, your opponents are other human players, rather than bookmakers like in traditional betting. The ‘Dimmag se Dhoni’ campaign by Dream11 was aimed at reaffirming this skill-based nature.
Compared to traditional betting, the fantasy sports market in India is peanuts. Revenue from the music industry, movies and TV put together is far lesser than the market of illegal traditional sports betting.

Traditional sports betting is legal in many parts of the world, including Australia and western Europe, with the largest legal market in the UK. Football betting leads to the global sports betting industry. According to FIFA, an estimated amount of $136 billion dollars was wagered in the 2018 World Cup throughout the tournament, and $7.2 billion on the final match. This is way more than the bets placed on ‘The Money Fight’ between Mayweather and McGregor (around $100 million). This shows the strength in popularity of the game among ‘punters’.

Other popular sports for betting are Cricket, Tennis and Basketball. Around 80% of illegal sports betting in India is on Cricket.
According to research, more than 60% of sports bets placed globally are on the black market. This shows that the underground betting market would continue to operate even if India were to legalize sports betting.

Though the legal sports betting market won’t substitute the illegal one, the Indian government would gain from the tax revenues by taxing these activities. Take UK or China, for example, they have been utilizing tax revenues, generated from taxing betting activities, for good causes. Today, winnings from lotteries and horse races are taxed at 30% flat. A betting market, with such a huge potential, shall undoubtedly contribute hefty revenue to the government.
But as far as the intention of the government is concerned, it is not in favour of providing any support or allowing any type of FDI in betting platforms. Is it their morality that is stopping them? Because morals shall not stop Indians. Indians are betting in billions. Though it is perfectly reasonable and acceptable for someone to have a moral or personal objection to gambling.

And, it’s not just the government who would make money. Consider this: Allowing viewers to legally become sports bettors will make them more likely to watch sports. This will help the broadcasters due to an increase in viewership. Thus, the direct output, jobs, income, GDP, etc.
Employees in illegal sports betting operations currently spend a portion of their earnings on legal activities, so there would be a gain in legal economic activity. If this new sector emerges, it shall be needless to say that it will spark employment and also create new opportunities for startups.

Leagues tend to benefit too due to increased interest and engagement with games. But a proper framework should be developed by the government first. Else, it could kill the legal market before it even starts. There is no single rule or law for sports betting which can be applied across the globe. Different countries have followed a different approach based on socio-economic needs, public interest, political interest, etc.

The approach adopted by France has been widely criticized as involving excessive taxation and bureaucracy. As a result, many operators who originally decided to take licenses in France have found it impossible to carry on business.

India can learn a lot from this example if it wants the industry to flourish and contribute to GDP and the state revenue. After betting was legalized in the US, many leagues, including the National Basketball Association (NBA) and the Major League Baseball (MLB), demanded a 1% fee on bets placed on their games. This is what they called the “integrity fee” to monitor and investigate ethical concerns. The casino lobby opposed this fee, making a point that the games would be in operation regardless of the number of bets placed. They had a point though.

A proper framework should be developed to avoid such clashes.
Rules would also need to be framed to tax a betting firm based on where the customer is located, not based on where the firm is located. Because, if this approach is not followed, then bets placed offshore, by Indian customers, would generate no revenue to the state.

If you are an Indian and a cricket fan (or should I say — if you’re an Indian, you are a cricket fan), you would’ve heard about the match-fixing cases. Integrity in sports is crucial. If the betting is legalized, integrity and honesty will be under great threat. Match-fixing and spot-fixing would drastically increase. Athletes and players will be tempted. Creating a framework for controlling access to players, a few days before the match, would be the best way to mitigate this risk.

We mentioned earlier that more than 60% of sports bets placed globally are on the black market. When international bookmakers participate in betting activities in India, it encourages money laundering to support the outflow of funds. Systems such as Hawala or smuggling not only help in achieving this objective but also indirectly support criminal activities such as terrorism financing. So, legalizing the activity will not only help in curtailing an important source of black money but will also stop fund flows to terror agencies.

Why Is Gambling Illegal In India Currency

There is no doubt that regulating sports betting with proper laws will be better than banning it. Else, there would be a substantial monetary loss which is neither feasible nor desirable.

Why Is Gambling Illegal In India

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