A brief overview.
The primary legal document that regulates gambling within India is the Public Gambling Act, 1867. It was ratified during the British era when there was not much of technological development and expansion. This Act being a Central enactment prohibits running or operating any public gaming houses. The Public Gambling Act, 1867 is stringent with respect to certain categories of gambling, but still has no unhindered regulations with respect to other categories such as horse racing or lotteries. Even though the Act prohibits certain gambling activities, the imposition of penalty is very lenient. Due to such imprecise liability, there continues to be extensive illegal gambling practices across India.
Legislative Powers
Under the federal structure of the Indian Constitution, both the Centre and the States have the power to legislate with respect to betting and gambling. The Parliament has the power to make laws on ‘Lotteries organized by the Government of India as well as the Government of any State by virtue of Entry 40 of the Union List. Moreover, the State Governments are exclusively empowered to make laws on gambling, including the power to prohibit or regulate gambling in their respective territorial jurisdiction under Entry 34 of the State List.. However, any legislation made by the Parliament on the subject of betting and gambling must not be vitiated on the ground of incompetence or infringement of the legislative powers of the State.
Gambling Laws in India: Grey Legality
States and Union Territories such as Andaman Nicobar Islands, Arunachal Pradesh, Chandigarh, Dadra and Nagar Haveli, Haryana, Himachal Pradesh, Lakshadweep, Punjab, Madhya Pradesh, Chattisgarh, Manipur, Mizoram, Tripura, and Uttarakhand have adopted the Public Gambling Act, 1867 the way it is . Whereas, states like Andhra Pradesh, Delhi, Maharashtra, Gujarat, Jammu and Kashmir and Goa among several other states have enacted their own gambling legislations. The Public Gambling Act, 1867 has not mentioned any provisions with respect to the legality of online gaming/gambling in India. Most of the State Legislatures have permitted to open lottery or gambling houses which is why the gambling regulations in India fall under the ‘grey legality’.
Motive behind regulation of gambling activities
The intention behind the regulation of gambling or betting activities is rooted from the supreme law of India, that is, the Constitution. Gambling activities shall be regulated to ensure social order and welfare of the people. Gambling activities shall in no way hamper the process of securing justice- social, economic and political. Furthermore, regulation of betting and gambling is essential to avert practices that might lead to unfair accumulation of wealth.
Jurisprudence
Gambling is deeply associated with ‘immorality’ and ‘depravity’ by the Indian society. Gambling is an act of moral turpitude which tarnishes the rich culture and values of India. It is believed that gambling and betting cause damage to the individual as well as the society. Not only the society but the judicial system of India is of the similar opinion. The Supreme Court held that betting and gambling affect a person’s morality. Such activities lead to infringement of right to life enshrined under Article 21 of the Constitution[1]. The analogy between gambling and morality is merely derivative and conjoined, thereby making the regulation activities within the country much easier.
Section 23 of the Indian Contract Act, 1872 regards an object or consideration of an agreement to be illegal if it is immoral or opposed to the norms of public policy. per ‘Public Policy’ is a common law doctrine. It is implored whenever an action affects or offends the public interest and causes injury to the people, at large. Thus, Gambling and betting activities are considered to be against the public policy.
Doctrine of Res Extra Commercium
The States have the power to inimically effect the gambling trade and business by mere application of its executive power. Another viability for the State is to constraint those who are employed in distilleries or lottery agencies since such activities are held to be erroneous[2]. This is based on the “Doctrine of Res Extra Commercium” which means, either permitted or not. Although gambling has deleterious impact on the society, the State can freely permit the operation of such gambling casinos within its territory.
Gambling is not a trade
Gambling is ‘not a trade’. It does not fall within the scope of Article 19(1) (g) and Article 301 of the Constitution because these provisions make it mandatory for the trading activities to be ‘lawful’[3]. It was held that gambling essentially depends on chance or fate. Skills of a person are of worthless in case of gambling.
Enforcement and Liability:
Games are broadly classified into two categories which play a major role in determining whether or not it is a ‘gambling activity’. The two groups are as follows:
- Games of Skills/ Games of Wits: In such games, the result is determined mainly by intellectual or bodily skills, and not by mere consequence of anticipation or “chance”. However, a game of skill may consist of elements of chance, but skill plays a significant role in ascertaining the outcome.
- Games of Chance: Games where some an adventitious device is used such as a dice, numbered balls, cards, spinning tops, or roulette wheels, to get the end result. In games of chance, ‘chance’ and ‘fate’ are the dominating factors. However, game of chance may involve skills or expertise but ‘chance’ continues to be the commanding element.
A game of skills or wits does not fall within the purview of ‘gambling activity’. There has been a constant baffle in deciding whether the game is based on ‘skill’ or ‘chance’. Circumstances like these mostly arise with respect to games such as rummy and poker. According to the Courts, penal statutes are required to be rigorously construed and the benefit deriving from any ambiguity in the statutory provisions must be given to the accused. Therefore, it is the responsibility of the legislature to revise the provisions in such a way that it creates no ambiguity in decoding which game is to be considered a gambling/gaming activity within the meaning of law[4].
Whether a virtual platform could permit games of skills to be played for stakes?
The Delhi District Court held that playing games of skill for money in a virtual platform is illegal. There is always a possibility of manipulation of results by collusion and cheating in online gambling. Henceforth, it can be assumed that the degree of chance would also increase[5]. Video games might be considered as game of skills but in such circumstances too there is a possibility of manipulation of outcome by tampering with the machines. Thus, the Court declined the proposal to permit poker games to be played in machines[6].
Clubs and common gaming houses do have an undisputable right to engage in recreational activities which are not prohibited by law. Nevertheless, State authorities can charge such clubs under appropriate charges for indulging in betting or gambling. Therefore, the club owners must meticulously determine the manner in which stakes are collected for the services provided to the participants. In case of default, such club operators might be imposed with fine or punished under the gambling law[7].
Most of the offences and prohibitions under the local gaming enactments are with reference to a ‘gaming house’ or a ‘common gaming house’. However, irrespective of the medium or location, gaming/gambling activities are a punishable offence in states of Assam and Odisha.
Gambling has been classified into two groups by the Law Commission[8].
– Proper Gambling: The higher income groups shall be permitted to pander in “proper gambling” which is characterized by higher stakes.
– Small Gambling: Lower income groups shall only be permitted to indulge in “small gambling”’ whose stakes fall below the categorization of stakes permitted in “proper gambling”.
Online Gaming
Online gaming is a well-established industry in India. In spite of the fact, India has no exclusive online gaming laws in India. The Central Act, that is, the Public Gambling Act, 1867 has no provision related to ‘online gaming”. The only resort for the fantasy sports industry are the respective State Legislations. Lack of effective attempts on the part of the States has only contributed to the perplexity as to ‘What is considered to be a game of skill?’ However, the state of Nagaland has clearly asserted the scope of skill-based games and has properly regulated online gaming.
Daily fantasy sports such as Dream 11, which requires selecting 11 players from a live match from both the teams and points are awarded on the basis of the performance of the sportsmen, have been held to be game of skill and does not fall within the ambit of gambling by various high courts. The Rajasthan High Court, Punjab and Haryana High Court, and the Bombay High Court have upheld the decision that the Dream 11 game format is completely based on the skills of the player. Thus, it shall not be categorized as a gambling activity. However, a petition continues to be pending before the Supreme Court regarding this matter. The decision of the Supreme Court shall resolve the complication as to daily fantasy sports are ‘games of skill’ or ‘games of chance’. If it is ruled that daily fancy sports are games of chance, then the fantasy sports industry will be compelled to cease its business operations. This issue shall revert back to the State authorities such that they can exercise their powers and issue licenses for such operations. On the other hand, the Supreme Court may rule that apps like Dream 11 can operate smoothly in the market because they are ‘games of skill’[9].
Offences
Following are the prohibition under most of the gambling legislations across India:
a) Act of taking care and managing (owning, keeping, or occupying) any Gaming House.
b) The act of advancing money for the purposes of gambling to persons attending any such gaming house.
c) The act of gambling in a common gaming house or present with the motive of gambling in the common gaming house.
d) Engaging in gambling or is suspected of gambling in any public street, place or throughways.
e) Circulating, publishing, printing or distributing anything with the intention of aiding or facilitating gambling.
f) The act of offering skill-based online games in Nagaland is unlawful.
g) Any gambling activity, offline or online, is strictly and completely prohibited in the states of Odisha and Assam.
h) The act of offering games in the state of Sikkim without a license to operate online games.
i) The act of offering any games in the state of Telangana.
Liability for Offences
The liability for offences under these Gaming enactments are usually imposed upon:
a) The owner/occupier of the ‘gaming house’ or the ‘common gaming house’.
b) The person keeping or having charge of the gaming house or the ‘common gaming house’. The Gaming enactments in several states specifically furnishes the liability for the directors, the persons who are accountable and responsible to the company for the conduct of its business as well as the company, at the time of commission of offence.
c) The owner or occupier who willfully permits the ‘gaming house’ or ‘common gaming house’.
d) The person who is takes “care” and looks after the management of or in any manner assists in the conducting of business of the ‘common gaming house’.
e) The person who advances or furnishes money towards the purpose of gaming with persons frequenting such house, room or place.
f) Any person who is gambling or possessing instruments or records of betting, or a person who is suspected of gambling, or any person who is possessing such instruments in a ‘common gaming house’.
g) The persons found in common gaming houses, playing or gaming, and present for the purpose of gaming.
h) With respect to Sikkim, a registered licensee under the Sikkim Act, or any operator acting on his behalf, or any person who has not procured a license under the Sikkim Act but volunteers online or offline sports betting recreational activities.
i) With respect to the State of Nagaland, the registered licensee under the Nagaland Act.
Under the Foreign Exchange Management Act, 1999 the remitter who is an Indian resident is responsible to comply with the regulations while making any remittance abroad. The foreign party receiving the remittance has no such compliance duty.
In particular, certain class of individuals including (i) Minors, (ii) those who receive subsidiaries from the government, or (iii) those who do not fall within the purview of the Income Tax Act, 1961 or under the GST Act, 2017, must be prohibited from participating in offline as well as online gambling practices.
As per the 276th Law Commission Report of India, only licensed operators can grant permission to carry out gambling and betting businesses in India. There should be a limit on the number of such transactions made by the participants during a specific time period. This time period can be on monthly, half-yearly or yearly basis. It was further recommended that such transactions between the operators and the participants shall be cashless. In case of cash transactions, penalty shall be imposed.
Gambling laws across in India are not uniform. These laws and regulations are contrasting when compared to state-wise. In the west, Maharashtra and Gujarat are governed by the Bombay Prevention of Gambling Act, 1887. Wagering and betting on horse-race and dog race are excluded from the ambit of the prohibition of “wagering and betting”. The State of Rajasthan abides by the provisions of the Rajasthan Public Gaming Ordinance, 1949. The Rajasthan Ordinance even prohibits games of skill if played in a common gaming house.
Southwards, Tamil Nadu has its own gambling legislation- The Tamil Nadu Gaming Act, 1930. “Gaming” includes wagering or betting but excludes lottery, under this Act. Betting on horse races is legal in Tamil Nadu. In the Union Territory of Goa, Daman and Diu, the State Government may authorize amusement games or slot machines in luxury hotels and such other table games and gaming in vessels offshore, as may be notified.
North-eastern states like Meghalaya, Sikkim and Nagaland have their separate gambling legislations- The Meghalaya Prevention of Gambling Act regulates gambling activities in Meghalaya. This act permits “games of mere skill wherever played” provided that gambling activities are not encouraged in the State. The Sikkim Casinos (Control & Tax) Act, 2002 authorizes the government of Sikkim to grant licenses to businesses and individuals to operate casinos for “games of chance” within the State. The Sikkim Online Gaming (Regulation) Act, 2008 expressly permits and regulates online gaming. The State of Nagaland is the only legislation in India that clearly defines “games of skill” and “games of chance” under section 2(3) and 2(4) of the Act, respectively. The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015 renders “gambling” to be an act of wagering or betting on games of chance (and not on games of skill).
In my opinion, with the growth in the gaming or gambling sector all over India, regulations must be regularly put to check. These laws must be systematically be amended and framed as per the needs of the gambling sector.
-Anuradha Panda
KIIT School of Law
[1] Guru Prasad Biswas & Anr. V. State of West Bengal (1998) 2 Cal LT 215.
[2] Khoday Distilleries Ltd. V. State of Karnataka (1995) 1 SCC 574.
[3] State of Bombay V. RMD Chamarbaugwala
[4] D. Krishna Kumar and Anr. V. State of Andhra Pradesh 2003 CriLJ 143.
[5] M/s Gaussian Networks Pvt. Ltd. V. Monica Lakhanpal and State of NCT, Suit no. 32/2012, Delhi District Court.
[6] M.J. Sivani & Ors. V. State of Karnataka & Ors. AIR 1995 SC 1770.
[7] State of Andhra Pradesh V. K. Satyanarayana & Ors. AIR 1968 SC 825.
[8] https://lawcommissionofindia.nic.in/reports/Report276.pdf
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