Gambling in India: Legal or Illegal By: Simran Sabharwal

The Author, Simran Sabharwal is a 1st year student of Rajiv Gandhi National Law University, Patiala, Punjab. She is currently interning with LatestLaws.com.

Introduction

Games in any form, social games or casino games are enjoyed by every person of every age group. It acts as a form of recreation.  Though gambling is considered not be a good form of recreation, but is practised from time immemorial. Even before the invention of dice, Indians used the Bibhitaki tree as dice. The reference to gambling in the Indian culture can be seen even in Mahabharat. Mahabharata is one of the oldest mythological epics in which the game of board and dice was played than waging wars.

There has been a paradigm shift in gaming industry. The social media or the television has influenced the youth in such a manner that the definition of gaming has changed. The recent developments in the infrastructure facilities in India has changed everything. Reliance Jio provided a better internet speed at minimal charges has led to the more consumption of content and exposure to more resources. All this has led to the development of huge gaming industry in India. There have been numerous online gaming sites launched in India like Poker and Rummy. Indian youth is also fantasized about these games. This can be seen as there is huge demand for good gaming quality in every phone that a company sells. Gaming has become one of the most profitable business industries in India. Entrepreneurs all over the world have an eye to expand their market in Indian territory.

There has been an increase in the Indian betting market. The reports issued by the International Centre for Sports Security claims that India has US $130 billion industry alone. The companies around the world are focused in selling their products in India. the definition of gaming has changed into two – traditional and online forms and skill based social or casual gaming.

The Gambling Industry

The Constitution of India has empowered the states to make state specific laws on betting and gambling.[1] State of Assam has Assam Gaming and Betting Act, 1970, Goa has Goa, Daman and Diu Public Gambling Act, 1976. Every state in India has its own gambling laws. The gambling laws were introduced before the era of online gambling. Sikkim and Nagaland are the only state that have adopted specific permits and regulations on online gambling. The state of Telangana has amended its law on gambling and now online gambling is included in its ambit. The first online casino was established on August 18, 1995. There was only one casino back then and now there is a complex maze of online gambling.  It is one of the highest revenue grosser industry, 30% of them are from Asia.[2]

The gambling legislations regulate the casinos in India. The laws of Goa, Daman and Diu i.e. The Gambling Legislations of Goa, Daman and Diu[3] and Sikkim[4] allow gambling in these states up to a limited extent. The casinos can be opened only in five stars hotel. However, in Goa, casinos can also be played on board on an offshore vessel.

The Constitution of India gives the power to Centre to make laws on Lotteries. Lotteries have been excluded from the Gambling Legislations of the State and are governed under the Lotteries (Regulation) Act, 1998 and Lottery (Regulation) Rules, 2010. Lottery is banned in certain states in India like Madhya Pradesh. Horse Racing is another form of gambling. It has been given a special status under the Gambling Legislation. In KR Lakshmanan v State of Tamil Nadu[5], the Apex Court held that the game of horse racing involves skills like fitness and also involves the skill of horse. These were the traditional forms of gambling. The current market is overtaken by the online industry.

The online industry games involve mostly card games like teen patti, poker, rummy and there is sports betting. Online website hosts gambling tournaments to attract users. But is this all legal?  Gambling under Gambling Legislations mean “the act of wagering or betting” for consideration.

Gambling Legal or Illegal in India

The casinos or gambling is illegal in India at large. A lot of Indian illegal gaming depends on sports gambling. A lot of money is wagered illegally on IPL matches or any cricket matches.

The Public Gambling Act,1867

The Public Gaming Act was enacted in the year 1867 and this very Act is responsible to make gambling in India a grey area. This law was created during the period of British era. Indian Government followed this rule while the Pakistani government has abolished it. This Act makes the person liable to own a gamble house, visit a gamble house or financially assist a person to possess a gamble house. The penalty imposed in the Act is also not much. Though there are now states legislations which govern matters like this.

The skill games are legal in India. The Act does not apply to skill-based games. The wagering on skill-based games is legal. The Supreme Court in the year 1996 defined the skill-based games, “the competitions where success depends on substantial degree of skill are not gambling and even though there is element of chance in the game that will never be called a game of ‘mere skill’.” The game of Poker is in grey area. The newly emerged online trending game Teen Patti are banned in India due to its illegal format. The game of rummy is allowed. Another interesting point of law is that wagering on horse racing allowed but wagering on cricket is not allowed.

Gambling Legal in Casinos of India

Gambling is allowed in some of the casinos in India. The state legislature of Goa has amended two provisions in the Goa, Daman and Diu Public Gambling Act, 1976. In October 2011, there were 7 land-based casinos and various offshore casinos in Goa. The second state to legalise Gambling is Sikkim. The Sikkim Casino Games (Control and Tax Rules) 2002 has the authority to grant license and to operate business of casinos in Sikkim. The Sikkim Regulation Act 2005 has given the power to authorities to allow gambling on certain days and to prohibit it in certain days.

Online Gambling

The Central Government has no jurisdiction on online gambling games. The licenses of the online gambling firms are obtained by the UK licensed bookmakers which are legal under the European and International Law. However, the Indian laws have taken some action to make the use of these site difficult.

In 2011, the Information Technology (Intermediaries Guidelines) Rules, 2011 was issued under the Information Technology Act,2000 that instructed the website holders to block access to certain websites and content. Section 2B of the said Act includes anything that relates or encourages money laundering or gambling. However, the CEO of the International Cricket Council has asked the Indian Officials to make the betting on Indian Cricket but the Legislation is not going to do so.

Landmark Judgements

In the case of Dr. K.R. Lakshmanan v State of Tamil Nadu and Anr.[6], it was held that gambling is payment of a price for a chance to win something. Games can be of any form; it can have skill as well as luck involved. The throw of a dice is entirely based on luck. A game of skill also involves chance but is not completely depended on chance. The success depends on the knowledge imbibed. Rummy was considered to be a game of skill in this judgement. In a game of chance, though there is some amount of skill involved, but the chance takes an upper hand in the game. So, the game which involves skill is valid and luck-based games are illegal.

In another judgement of State of Andhra Pradesh v K. Satyanarayana and Ors.[7], it was decided that the game of rummy is not entirely a game of chance. Rummy requires a certain amount of skill; you need to memorise the cards and for that considerable amount of skill is required. The game of rummy was compared to the game of Bridge.

In the case of The Director General of Police v Mahalakshmi Cultural Association[8], decided that even though rummy involves skill and chance: predominately skill is legal. But when it is played for stakes that would be illegal. The Mahalakshmi Association filed a Special Leave Petition with the Apex Court of India. The Supreme Court dismissed the other petitions that the Madras High Court judgement did not deal with online games. In the year 2015, the SC allowed the Association to withdraw its Original Writ Petition as the petitioners case was based on the game ‘ulle,velliye’ for profit and the case was not based on rummy. Thus, the observations made by the Madras High Court does not survive.

The case of M/s Gaussian Network Pvt. Ltd. v Ms. Monica Lakhanpal[9] is another landmark case in online gambling. The Gaussian Network approached the District Court in Delhi under the Order 36 of CPC. The question raised was related to online gaming. The court observed that there exists a difference in games of skill played online and that played in physical form. The court took the help of Mahalakshmi Case and declared that there is a difference between the cases of online games and offline games. In real games, the games require more presence of mind. An argument can be that if it is legal online then it can be legal offline. There are websites which provide free online games and that is legal. The judgement of the case was binding only on the aprties involved and not on the whole India.

The recent case is of 2017, Dominance Games Pvt Ltd v. State of Gujarat[10], it was held that the judgement of the Gaussian case can be taken into cognizance. The game of Poker is illegal under the Gujarat prevention of Gambling Act,1887.

Penalties

The offences under the Gambling Legislation attract penalties and punishments. No one is allowed to own any house for gambling. The Act also prohibits anyone to lend money for the purpose of gambling. No one is allowed to play such games in the vicinity of street or any public place. The states have specific gambling laws. The state of Orissa prohibits gambling per se. the state of Telangana prohibits online gaming. The offering of skills for online gaming is prohibited in the state of Nagaland, however permitted when there is a valid license. There is a punishment imposed in every Act.

The Supreme Court in the case of State of Andhra Pradesh v. K. Satyanarayana and Ors.[11], tested the game of rummy on the principle of skill and chance. It was held that the game of rummy is not entirely based on luck. The game of rummy requires skill and not luck.

Conclusion

In the current scenario, gambling is illegal in India. certain state legislations make it valid but only in that state. The gambling is legal in horse racing, lottery and rummy. These games involve skill and not luck. The laws in India do not apply a strait jacket formula to every sport. The place and the law is different in entire of India. in the UK, there are various functioning legal websites involved in gambling which provides easy access to Indians. The Indian laws are more focused to scare Indians to not gamble than to prevent them from gambling.

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