Legality of Online Betting and Gambling in India

8 Jun 2021  Read 1009 Views

Gambling has existed in India since times immemorial. With the advancement in technology and the evolution of the internet, the concept of online betting and gambling in India has become an extremely popular mode of entertainment. Online games and lotteries are the new additions to the otherwise offline community of the gambling and betting industry. 

Amidst all the buzz, the question still remains whether online betting is legal in India or not. Given India’s complicated legal framework on gaming and the recent event where gaming platform was investigated for money laundering, the answer to the above question is not a clear one. The position of online gambling and betting laws in India still remains a grey area and is yet to be adjudicated by the Courts in India. 

Legal Framework

India has not established a unified law that states the legality of gambling in India. The Constitution of India in Entry 34 in List II in the Seventh Schedule empowers each state to make their own laws on gambling. It means that there are numerous state-specific deviations. For example, in West Bengal, the games of bridge, poker and rummy are excluded from the definition of gambling. Sikkim and Nagaland are required to have a license for online gambling. Tamil Nadu gives permit to skill-based online games whereas Andhra Pradesh have a complete ban on online gambling. The lack of uniformity and clarity in law relating to online betting has led to the rise of different opinions and views among the states. Hence the Supreme Court of India has issued a principal guideline stating that the games where chances dominate skills (game of chances) are illegal and the games where skills dominate chances (game of skill) is legal.

Landmark Case Laws

  1. Andhra Pradesh V. Satyanarayana

Supreme Court held that the game of rummy was a game of skill on the ground that unlike “three cards”, “flush” which are entirely based on chance, considerable skill is required for a game of rummy to hold and discard the cards.

  1. Lakshmanan, the Supreme Court, 

Referring to the cases of State of Bombay v R.M.D.  Chamarbaugwala and Satyanarayana case, stated that games, where success depends on the element of skill, are not gambling even if there is the presence of an element of chance. Although the element of chance cannot be ruled out, success in a game of skill depends upon the knowledge, experience and attention of the player.

What is the Game of Chance and Game of Skill?

The main difference between a game of chance and a game of skill is to look at the opposition. If the opposition is the House, as with slots, then the game is considered to be a Game of Chance. However, if the player is up against another player and if the game involves using strategies like statistics and maths, then it will be considered as a Game of Skill.

The Public Gambling Act, 1867

Public Gambling Act is the most prominent of the federal gambling laws in India. The Act was established during the British Colonial Rule in India. According to this Act, all forms of gambling and betting activities are illegal with an exception of horse racing. The Act bans all kinds of houses, residences or enclosed arear where betting takes place. However, the law is more than 150 years old hence the concept of online betting under this Act remains unclear. The Act only mentions that physical betting is illegal. Hence, the question of online betting, which does not take in a physical place, still remains in the grey area. Since these rules were drafted before the onset of modern online gambling, they mainly focus on the traditional betting methods. 

Here are a few restrictions:

  • Placing a bet.

  • Possessing a premise, building or enclosed area where gambling activities take place.

  • Participating in any cash transfers used for betting.

  • Placing any bet of any form of private property, roads or places without a valid license.

Any person found violating this law will be punished with a fine of Rs 200 or with imprisonment for a term of up to 3 months. A fine of Rs 100 or imprisonment for a term of up to 1 month is levied as a penalty on a person who is visiting gambling houses.

According to the Court, horse-racing is not considered betting. Hence all the activities relating to horse racing is legal.

Fantasy Sports

Unlike other online games, the concept of fantasy sports has received a lot of attention and consistent treatment by the Indian Courts and have been allowed based on the fact that they require skill. In the case of Rummy Circle, the game is not entirely dependent on luck, as in the case for the three-card game. Rummy required sufficient skill and brain to ace the game. Thus, one can conclude that Rummy is a game of skill and not chance. Games like Rummy Circle, MPL and Dream11 do not fall under the ambit of illegal games as their respective online websites fall under the act of Information and Technology, which states nothing regarding the illegality of online betting platforms. Hence, as of yet online gambling is considered to be legal. Both Punjab and Haryana and Bombay High Court have stated that the games offered by Dream11 are purely based on skill and judgement and hence they are outside the scope of gambling.

Is Ludo a Game of Chance or a Game of Skill?

The Bombay High Court on 3rd June, issued a notice to the Maharashtra Government on a plea seeking a declaration whether “Ludo is a game of chance or game of skill”. A petition was filed in November,2020, by a senior office bearer Mumbai politician, under the Prevention of Gambling Act against a company, Cashgrail Private Limited, that operated online Ludo where players have the opportunity to win real money. According to the petitioner, the provisions of the Maharashtra Prevention of Gambling Act apply to those games which puts money at stake. He stated that a chance of a 3 years old winning the game is no less than any other player, hence ludo cannot be considered to be a game of skill but a game of chance. In order to join the table, the player has to submit an entry fees and also, that the player has no control over what the dice is going to roll out. 

The Bombay High Court, headed by a bench of Justices SS Shinde and Abhay Ahuja, issued a notice and adjourned the matter to 22nd June,2021.

Conclusion

While the addition of online betting in fairly new in India, the government has already begun to absorb the concept of online betting into the system. Sikkim became the first state to issue its gambling license of operation to Future Gaming Solutions, in October 2014. Future Gaming Solutions have been provided with an operator license which allows them to participate in online betting. It also offers gaming services under the purview of the state, which has led to the rise of other gambling and poker websites.

The Constitution of India lacks the in-depth definition of gambling and as to what it constitutes. There is a need to amend the constitution, but the involved lawmakers do not find gambling a subject of priority at the moment.

About the Author: Antalina Guha | 29 Post(s)

Antalina Guha, is in the  5th year of B.A. LL.B course in Ajeenkya DY Patil University, with a core interest in Intellectual Property Rights and Criminal law.

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