Legal Gambling In India Online

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.

Online gambling: legal or illegal? Such confusion among the people is no surprise given the lack of clear rules in the country regarding online gambling, including those who might be using websites such as Online Casino India. Gambling in India is primarily governed by the Public Gaming Act of 1867. Get The Full Seth Klarman Series in PDF. The main way that India has tried to stop online sports gambling is by restricting the banking methods that you can use. For instance, the Bank of India has blocked the use of the VISA or MasterCard credit cards from being used to deposit money into online bookmakers.

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.

• Sikkim is the only state to have a law on online gaming- the Sikkim Online Gaming (Regulation) Act, 2008 under which licenses may be obtained for conducting online gambling in India. In short, this act made online sports betting in the state of Sikkim legal.
• If there are no clear rules or laws for online gambling, it’s best to assume that it’s illegal in India. Look at what happened with cryptocurrencies. Only because RBI (not the govt.) banned cryptocurrencies, the larger audience including law enfor.

Game of Skill v. Game of Chance:

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.

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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The world is swiftly moving towards a more liberal viewpoint towards games of ‘skill’; Indian gambling and online gaming laws are either archaic or non-existent. The current government hasn’t put forth any dedicated gambling laws in India, and this century has hardly seen any techno-legal framework being formed.

While the age-old debate about what form of gambling is legal or not continues; it’s pretty evident that Indians love to gamble. According to a report published by the International Centre for Sports Security (ICSS), the betting market in India might be worth over US$130 billion. When you’ve finished reading up on the gambling laws in India – place a bet at any of the bookmakers listed below!

In this article, we’ll clarify the latest stance of the legislative authorities on betting and gambling laws. We’ll answer the following questions:

Is gambling legal in India?

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It’s a tough question to answer. The Indian government’s outlook towards gambling and betting remains in a grey area. A few sports revel in complete approval from the authorities while other (though sharing the exact same characteristics) are completely shunned.

Horse racing and rummy are considered games of skill and thus free to bet on, while cricket and poker don’t share the same distinction in the eyes of Indian lawmakers.

Poker is a major grey area in Indian law. It’s quite interesting that games such as Teen Patti (flush) and Texas Hold ’em are banned while Rummy is allowed. Perhaps even more interesting – horse racing (one of the easiest games to fix) is legal to wager on based it is a skill game, yet cricket betting which requires the same sort of skill set is banned?!!

Gone are the days of matka gambling and the likes in India. Nowadays, you can only bet on a few sports/games, that too in particular states. Currently, horse racing, online poker, online rummy, lottery, and a few casinos are legal in India. To understand the convoluted stance of each state on the legality of these sports will take time and patience for the reader. Let’s try to address all of these issues today.

Why are there different state gambling laws in India?

If you notice, different states have different gambling laws even though there are centralized Acts in place. So, why do gambling/betting laws differ in different states?

The answer is the Seventh Schedule of the Constitution of India which explicitly gives states the right to legislate and make policies related to “gambling and betting”. It is quite clear in the Seventh Schedule Entry 34 List II which says states could legalize gambling should they choose to do so.

Every state government is free to enact as well as legislate gambling laws as per their discretion. Also, the Central Government cannot intervene in any of the state proceedings.

To date, 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. With a country as diverse as India and 29 separate states, you can only imagine the variance in gambling laws.

Let’s look at a few state examples:

Legal Casino Gambling in Goa

Goa has made two amendments to the Goa, Daman and Diu Public Gambling Act, 1976 to legalize certain forms of gambling. The relevant section from that act is listed below:

26[13A. Authorised Game.– (1) Notwithstanding anything contained in this Act, the Government may authorised 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.

27 Inserted by the Amendment Act 13 of 1996.

As of October 2011, there are seven land-based casinos and several offshore casinos that operate legally in Goa.

Legal Gambling in Sikkim

Sikkim is a second Indian State that has legalized gambling.

1) The Sikkim Casino Games (Control and Tax Rules), 2002 gives the Sikkim Government the authority to grant licenses to individual and business interested in operating casinos.

2) The Sikkim Regulation of Gambling (Amendment) Act, 2005 gives the Sikkim Government the authority to authorize gambling on certain days and to make specific gambling houses legal at their own discretion by way of a license.

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

The state of Sikkim has begun taking applications to license online gambling where the servers are located within the state. This includes casino gambling, lottery, and sports betting.

Many believe that once these licensed sports betting sites come online that players located in states where there are no gambling laws will be able to use them legally. This has caused popular online gambling sites such as William Hill and Betfair to eye India as the next major market to expand to.

This, however, has a major challenge – foreign investments involving gambling are illegal under Indian law.

Gambling Laws and Betting Acts in India

Despite gambling being in a grey area in India, there are many legislations in place. We will look closely at the important ones. The following are a few examples:

• The Public Gambling Act, 1867
• Payment and Settlement Act, 2007
• Assam Gaming and Betting Act, 1970
• Bombay Prevention of Gambling Act, 1887
• Goa, Daman and Diu Public Gambling Act, 1976
• Karnataka Police Act, 1963
• Madhya Pradesh (C.P.) Public Gambling Act,1867
• Madhya Bharat Gambling Act, 1949
• Orissa Prevention of Gambling Act, 1955
• Public Gambling Act, 1867 Constitution of India, Seventh Schedule, List II, Entry No. 34
• Punjab Public Gambling Act, 1867
• Sikkim Online Gaming (Regulation) Act, 2008
• Tamil Nadu City Police Gaming Rules, 1949
• Tamil Nadu Gaming Act, 1930
• The Andhra Pradesh Gaming Act, 1974
• The Andhra Pradesh Gaming Rules, 1976
• The Delhi Public Gambling Act, 1955
• The J. & K. Public Gambling Act, 1977
• The Kerala Gambling Act, 1960
• The Meghalaya Prevention of Gambling Act, 1970
• The Pondicherry Gaming Act, 1965
• The Rajasthan Public Gambling Ordinance, 1949
• The West Bengal Gambling and Prize Competitions Act, 1957
• The West Bengal Gambling Rules, 1958
• Uttar Pradesh Public Gambling Act,1961

The Public Gambling Act, 1867

The primary legislative document that makes gambling in India a ‘grey’ legality is the Public Gambling Act. This is an old law created during British rule. This 145-year-old law makes operating a gambling house, assisting in the operation of a gambling house, visiting a gambling house (whether gambling or not), financing gambling and being in possession of gambling devices a crime. The penalty is a fine not exceeding 200 rupees or up to three months in prison.

The Public Gambling Act explicitly states “nothing in this Act shall apply to games of mere skill wherever played” which means, in absence of other laws against them, wagering on games of skill is legal. The competitions where success depends on a 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”.

Payment and Settlement Act, 2007

Madame President Patil signed the Payment and Settlement Systems Act, 2007 on 20th December 2007 and it went into effect on 12th August 2008. This act gives authority to the Reserve Bank of India (RBI) to regulate all forms of electronic payment. Section 4 is key which in part states:

Payment system not to operate without authorization: (1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorization issued by the Reserve Bank under the provisions of this Act:

The act goes on to say any payment system or clearing house with less than 51% of the equity held by an Indian bank requires authorization to operate in India. Much the rest of this 14-page Act, gives RBI all sorts of authority over all aspects of payment processing in India, as well as the rights to enter and inspect with or without notice and access to all financial and customer data upon request.

The most important factor here is RBI has the right to make policies almost on demand (in concordance with this Act) for all things involving payment processing. They have exercised this authority numerous times. This is what caused the PayPal in India fiasco, and also what caused Neteller to stop issuing Neteller plus cards, and EntroPay to stop issuing Plastic MasterCard branded debit cards. So, in short, RBI has the full right to instruct banks to decline or refuse and payments or deposits involving any particular payment processor, e-wallet or clearing house. While they seem more concerned with going after businesses and freelancers who might be evading tax, should they in the future decide to go after gambling processors, the legal framework and authority for them to do so already exists? Again, to be clear, at the current time this does not seem to be a priority for them.

Information Technology Act, 2000

On 14 April 2011, the Gazette of India published the Information Technology (Intermediaries guidelines) Rules, 2011. This legal document is issued under authority granted in Information Technology Act, 2000. In short, this act instructs Internet Service Providers and Website Hosts, to block access to certain types of websites and content. While the majority of this is for areas of National Security, things that would shine India in an improper light, things that are blasphemous, illegal, pornographic etc., Section 2 item B includes anything “relating or encouraging money laundering or gambling”.

The addition of gambling to the IT Act of 2000 is in conflict where much the rest of India is headed. Again, the Sikkim Government has legalized sports betting and casino gambling, Goa has legal casinos, and 13 states have legalized lottery. Even Mr. Haroon Lorgat, the CEO of the International Cricket Council (ICC), has urged Indian officials to make cricket betting sites legal, as he feels this is the best way to prevent corruption and match-fixing in the sport. So while the push for legal gambling in India is strong and has made some progress, the Central Government is still taking action in an attempt to make it more difficult.

At the current time – most gambling in India is illegal. However, legal gambling does exist for horse racing, lottery, and rummy (paplu). There is also a high number of betting sites legal in the UK which service Indian players with only minor hassles. The law at this time seems more concerned with scaring Indian players not to gamble than it does to prevent it. It seems highly likely fully legal gambling will come to India at some point – how far away that is, is anyone’s guess.

Gambling Laws in India make Skilled Games Legal

Although a good percentage is wagered legally on horse racing and lottery, a large amount is wagered on cricket and other sports via illegal and “technically illegal” channels. In this article, I’ll tackle the complex Indian gambling laws, including what forms of gambling are prohibited, which are explicitly allowed, and what grey areas still exist.

Is Betting On Rummy Legal in India?

In 1968 Rummy (also known as Paplu) was determined to be a skill game:

“Rummy, on the other hand, requires a certain amount of skill because the fall of the cards has to be memorized and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge.”

Is Lottery Legal According to the Gambling Laws in India?

The Central Lotteries (Regulation) Act of 1998 gave state governments the authority to hold lotteries but stipulated this was restricted to a maximum of one draw per week. Today in most Indian states there are lottery terminals excessively available and some lotteries are drawn every 15 minutes.

Also, Sikkim licensed PlayWin Lotto is highly popular and Indians from any state can purchase tickets online, or via terminal. The reason the one draw per week is not followed is because most states believe fully, they already had the right to create their own laws for all forms of gambling and didn’t need the Central Lotteries Act to do so. This is a right given to them by the Constitution of India. What is interesting is that Satta Matka gambling, which is a simple form of lottery, is strictly forbidden.

Is Online Cricket Betting Legal in India?

There are no gambling laws in India that strictly prohibiting Indians from betting on cricket, but the federal government does not see betting on the sport as a game of skill like horse racing. IPL and cricket satta has irony written all over it, as far as gambling is concerned.

According to a report by the All India Gaming Federation, the Indian exchequer loses almost INR 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 industry estimations.

Cricket gambling laws in India – key events

After the 2013 match-fixing scandal in IPL, the Lodha commission was appointed by the Supreme Court to look into the matter of legalization of cricket betting. In July 2015, the Patiala High Court discharged all 36 people accused in the Spot-fixing scandal. Judge Neena Badal adjudged that cricket betting is not illegal and therefore no action can be taken for betting on cricket matches.

In August 2017, the Delhi Police filed an appeal against the discharge order. Also, in 2016, an order passed by a division bench of the Supreme Court recommended: “recommendation of legalizing betting involves the enactment of a law that may be examined by the Law Commission and the Government for such action that it deems fit”.

In June 2018, the law commission submitted a recommendation to the government favouring the legalization of betting in India under stringent control to curb money laundering. The Commission inferred that since it’s almost impossible to completely ban cricket betting in India; regulating cricket betting and gambling under stringent laws is the correct course of action.

The law commission suggested that as per Articles 249 or 252 of the constitution, the government has the power to formulate laws for regulating gambling. In case the legislation is made under Article 252, non-consenting states would be free to adopt them as well. This would help the states work around years of red tape.

Though we get a sense that India is moving towards legalization of cricket betting, it still remains to be seen when exactly the government takes a concrete decision!

Is Betting on Horse Racing Legal in India?

Horse racing and gambling go hand-in-hand in India. It is one of the few sports in which gambling has been legalized and there are clear-cut laws in place. Many times, the legality of horse race gambling has been challenged in the courts as well the Supreme Court.

As discussed in earlier sections, states have the option of enacting the Central Public Gaming Act of 1867 or ratify their own Gaming Acts and statutes.

Provisions in State Gaming Acts

Currently, there are eight state legislations which have enacted specific statutes on the legalization of horse racing betting. The states of Delhi, Maharashtra, West Bengal, Karnataka, West Bengal, Andhra Pradesh, Tamil Nadu, and Meghalaya have passed rulings allowing betting on horses in licensed race courses.

Bombay Race Courses Licensing Act, 1912 (Maharashtra) and West Bengal Gambling Rules, 1958 (West Bengal) are examples of state-implemented Acts which have provisions for betting on horse racing.

Supreme Court Rulings on Horse Racing Betting

In the landmark case of Dr. KR Lakshmanan v. State of Tamil Nadu, a three-judge bench of the Supreme Court of India ruled favourably on the legality of betting in horse racing.

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In this important ruling, the Supreme Court explicitly ruled that horse racing is a game of skill and not chance; therefore, it’s legal to bet on horse racing. Sadly, though this ruling by the apex court of India is excellent news for horse racing; at the same time, there is a gamut of sports like poker, cricket, fantasy sports, blackjack and rummy which deserve a similar ruling based on their preponderance to skill than luck.

Regulatory Authorities on horse racing in India

In India, the primary authority of horse racing is the Turf Authority of India. A few race courses are separate entities which have their own governing bodies and membership criteria. Following are the names of different race courses in India:

1. Delhi Race Club in Delhi
2. Mysore Race Club in Mysore
3. Royal Calcutta Turf Club in Kolkatta
4. Royal Western India Turf Club racing in Mumbai and Pune
5. Madras Race Club racing in Chennai
6. Bangalore Turf Club Ltd in Bengaluru
7. Hyderabad Turf Club in Hyderabad

Major Races in India

In India, there are primarily five ‘Classic’ races which take place. The Indian 1000 and 2000 Guineas, the Indian Oaks, the Indian Derby, the Indian St. Leger and the Bangalore Derby. There’s also the Invitation cup which rotates between the various turf authorities and includes races like Sprinter, Stayer and Super mile.

Taxation Policy of Horse racing

Given the popularity of horse racing in India and the legal clarity on horse racing betting; the government created provisions for income generated from horse races in the Income Tax Act of 1961.

According to Section 115BB of the Income Tax Act 1961, flat 30% tax would be charged on winnings from all forms of betting, horse racing, lotteries, and all other wagering activities.

Further, as per Section 194BB of the Income Tax Act 1961, all licensed bookmakers in registered race courses are stipulated to deduct 30% tax at source on any winnings above INR 5,000.

As a society, India prohibits/criminalizes most forms of gambling and considers it immoral. However, we can see that the government’s outlook towards horse racing is quite clear. Betting on horse races as well as lotteries is by-and-large legal in India. Many state legislations have banned horse racing and lottery altogether; however, there are states which have licensed race courses and bookmakers. Also, there are some race courses which even permit remote betting!

International Gaming Sites used by Indian Players

Internet gambling is a truly global business. Although the Central Government has no jurisdiction over UK licensed bookmakers who operate legally under European and International Law, they have taken some action to make using these sites more difficult. This comes in the form of two laws, neither of which has been highly effective.

For example, Betway is a Malta-based company, but they have customers globally. Their betting site is available in several languages and currencies (including Indian Rupee – INR). As far as international sites are concerned, Indian laws don’t apply to them directly as they operate under a legal gambling license in other jurisdictions. With no servers, advertising or anything else going on in India, the authorities can’t do much to stop them from servicing Indian customers. This makes it easy for Indians to use an e-wallet and bet on matches including IPL cricket at sites such as Betway and 10Cric.

Online Gambling Legal In India

Translation: भारतीय द्युत कानून

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