Why Is Gambling Illegal In India

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Gambling was first prohibited in India during the colonial period under the Public Gambling Act of 1867. This law made it illegal to offer gambling services on a federal level, as well as to visit and use a public gambling facility. Gambling, as such, has been illegal in India since the Public Gaming Act. Persons caught breaking the law receive rather mild punishment; up to 200 rupees fine, or up to 3 months imprisonment. The Act does, however, not completely ban all forms of gambling. Instead, it differentiates between games of skill and games of chance. Gambling in India varies by state as states in India are entitled to formulate their own laws for gambling activities. Some states like Goa have legalised casinos.Common gambling activities like organized betting is restricted except for selective categories including lotteries and horse racing.

The Public Gaming Act made it illegal to operate a venue where gambling took place. It also made it illegal to visit such a venue. While this is clear enough, there’s no precise definition of gambling within the act which makes it hard to determine, for example, whether betting on a game of cricket is illegal online in the same way as betting on the roll of a dice might be. We have further examined the laws pertaining to online gambling below in order to ascertain its legality and if investments can be made within the same or not.

Online Gambling Legislations:

The Public Gaming Act of 1867 makes no reference to online gambling. This is no surprise, given that the internet was a long way from being invented when it was introduced. It can be ascertained that a gambling website in India is deemed illegal under the terms of this act, given its wording.

There’s also another act which could be considered to relate to online betting and gaming: The Information Technology Act of 2000. This makes provisions for various offences relating to online activity. Even though investments in online gambling is profusely prohibited by foreign investors, it does give the Indian government the power to block any foreign websites.

The government has used this power to instruct Internet Service Providers to prevent Indian residents from accessing certain foreign betting and gaming sites. On a state level, there are two states which have introduced legislations relating specifically to online gambling. In Maharashtra, it’s completely prohibited, while in Sikkim the government has now provided the authority to issue licenses to operators wishing to provide online gambling services within the state and under the guidance of the law. This is a notable step forward for regulated gambling in India, provided it is strictly in adherence to the specific law mentioned above.

How Online Gambling Laws can affect us:-

In every sense of the way, the legal situation relating to the usage of online gambling sites in India is decidedly complicated but can be made clear through an analysis. Many of the major gambling sites welcome Indian customers readily, but since these sites are operated overseas they aren’t governed by Indian law and can be deemed as illegal under the present law, if found in contradiction to any provisions relating to the same.

With that being said, with the exception of Maharashtra, there are no such laws which clearly state that it is illegal for an Indian resident to gamble online. Even though gonline gambling may be banned in most parts of the country, if one wishes to indulge in this activity one may only do so through a site which is reputable and trustworthy and which accepts Indian customers and complies with the state governed laws with regards to gambling.

The Foreign Exchange Management Act (FEMA) 1999 was introduced within India in 1999 in order to govern the exchange of foreign currencies. Technically, depositing to a gambling site in a currency other than rupees could be considered an exchange of foreign currencies and thus be covered by the act however, no direct provision for the same has been made clearly available till date.

This is why many Indians find it difficult to deposit at sites from their bank or by using a credit card.

Why

Changes within the Indian Online Gambling Legislation:-

It’s not unreasonable to expect that in the coming years, the gambling legislation in India will be updated and amended in order to provide a clearer idea of what’s illegal and what’s not however, the latest changes, if any have been elaborated below:-

October, 2014

The Sikkim state government issues its first license for an online gambling operator; Future Gaming Solutions Private Limited. Future Gaming will now be able to legally offer real money for online betting and gaming services within the state.

LEGAL POSITION OF ONLINE GAMBLING IN INDIA

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 had indicated that if there is gambling or if the gambling house is making any profit whatsoever from the game of rummy, then it could amount to an offense under the laws of AP. It was further observed by the 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 of 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 the Gujarat 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 hence amounts to gambling under the 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 teen Patti’ which has been observed by the 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 over the cards received by them and the final outcome is based upon 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 upon the ability of a player to spend money and how deep his pockets are. It is a game of deceiving, bluffing and duping other players;
  • The game of Rummy is different from the game of 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 the impact of gambling on the moral fibre of society noted that ‘one must not overlook the ground realities in India or a country like India, where the majority of the population is struggling for the basic necessity and there is a lack of awareness amongst the people as to, if they are permitted to bet at all, in the craze of earning easy money and hence 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 a 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.

Why Is Gambling Illegal In India Now

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 makes a presumption that wagering or betting is an inseparable part of the game of poker and therefore would involve stakes higher than imagined. 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 any stakes, remains a grey area which is then left at the discretion of police authorities.

POSITION:

Though the issue of poker was considered by the Gujarat High Court in view of the provisions of the Gujarat Prevention of Gambling Act, 1887, in arriving at the decision of poker being a ‘game of chance’, the court made several observations as to how the game is played, the origin of the game, reference to ancient Indian literature, moral and religious grounds, etc. which may be applied by other states/state machineries having similar gambling laws. The issue is likely to be clarified by the Division Bench of the 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, it would constitute as gambling under the respective state laws with exceptions 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 gambling under the state gambling laws. It is pertinent to note however that if online gambling is illegal in any state, the promotion of the same in such a state would amount to violation of ASCI Code as well as Cable TV Network Regulation Act, 1994.

FDI and Online Gambling in India:

The law in India very strictly and straight forwardly bans Foreign Direct Investment in the gambling sector in India. There has been a clear and consistent policy decision that no foreign investment is allowed in Indian gambling businesses. No foreign company or subsidiary of such a company can directly or in joint venture with Indian companies participate in legal gambling businesses in India. Even foreign holding of securities is not allowed in an Indian venture, even if such shareholding is minority or marginal.

Taking capital in the form of debt from foreign investors is also not an option since Indian entities must toe the lines drawn by External Commercial Borrowings (ECB) Guidelines. Automatic route under the current ECB rules do not allow borrowing for the gambling sector

FDI is prohibited in the following activities/sectors:


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(a) Retail Trading (except single brand product retailing)
(b) Atomic Energy
(c) Lottery Business including Government /private lottery, online lotteries,etc.
(d) Gambling and Betting including casinos etc.
(e) Business of chit fund
(f) Nidhi company
(g) Trading in Transferable Development Rights (TDRs)
(h) Real Estate Business or Construction of Farm Houses
(i) Activities / sectors not opened to private sector investment.

Besides, foreign investment in any form, foreign technology collaboration in any form, including licensing for franchise, trademark, brand name, management contract etc., is also completely prohibited for Lottery Businesses and Gambling and Betting activities.

Get the full overview of the legal situation of gambling in India right here

Many of our readers have asked us if it’s legal to gamble in India. We understand why many of you are having this concern, so we decided to write this in-depth article to give you the most correct answer and guide you to gamble legally in India. The Indian gambling law is vague and unclear, which makes a lot of people confused. We are all good citizens, and none of us wants to break the law.

Through our own research, we have always believed that gambling is legal in India, but to make the point very clear, we decided to team up with some of India’s top legal experts to make absolutely sure that we are on the right side of the law.

When it comes to gambling, the practice is frowned upon by some Indians and embraced by many others. Gambling is really an issue that divides the country. Some believe it should be fully legal, others believe it should be regulated and some conservatives believe it should be completely prohibited.

But what is the current legal situation of gambling in India? Unfortunately, the answer is not that straightforward. In this article, you will discover how and where you can gamble legally, which depends a lot on where you live and how you intend to gamble.

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Is it legal to gamble in India?

To give you the most correct answer to this question. We have allied ourselves with one of the top legal experts on gambling in India. Mr. Sameer Kapoor Senior Advocate in the Odisha State Bar Council. Through our interview, He will attempt to give us the most legal and correct information in this article. So let’s start from the beginning.

Gambling was first prohibited in India during the colonial period under the Public Gambling Act of 1867. This law made it illegal to offer gambling services on a federal level, as well as to visit and use a public gambling facility. The law did not ake any mention of online gambling, as it was made many years before the invention of the internet.

So along comes the internet, and people start asking: Does that mean online gambling is legal, because it is not expressly forbidden under the law of 1867? The short answer is yes. If the government of India had wanted to fully prohibit online gambling, they could have amended the law to prohibit online gambling, but they never did that.

Instead, they left it up to the individual states to decide whether or not to legalize or prohibit gambling in their territory. In the state of Maharashtra, online gambling is completely prohibited, whereas, in the states of Sikkim and Goa, online gambling is officially legal and regulated.

In most other Indian states, there are no specific laws regarding online gambling, which makes it a legal grey area. For example, in the state of Tamil Nadu, it is neither legal nor illegal to gamble online. Therefore, it is not a prosecutable offense to gamble online in any state except Maharashtra.

We understand that some people may have different interpretations of the law, but after having consulted with Mr. Manoj Mishra and several other legal experts in India, they have ensured us that online gambling is not a prosecutable offense, and no one has ever been convicted or let alone prosecuted for online gambling.

The law simply states that gambling providers may not operate on Indian territory unless expressly allowed by the individual states. That is why all of the betting sites and online casinos we recommend are located outside India. It is still completely legal and possible for Indian players to start an account and place bets with these online gambling sites.

Horse racing is legal but cricket is not

In 1996, it was decided by the Supreme Court of India that horse race betting should be legal because it is skill-based rather than based on luck. This beckons the question, why is horse race betting based on skill when cricket or football bet is not? It takes at least the same amount of skill to predict the outcome of a cricket match, no?

Although we certainly agree that horse race betting should be legal, it seems completely ridiculous to make this distinction from any other sport. The only reason why policymakers decided to legalize horse race betting, is because they know that if they prohibited this, it would be the end of horse breeding in India, which has become a very profitable and prominent industry in India.

One could then ask, isn’t it kind of hypocritical to say gambling is illegal, but still legalize gambling on a few select sports such as horse racing and rummy? This is a classic example of the contradictory gambling laws of India. The government should be consistent in its policy and legalize gambling on all sports throughout India.

When will gambling be fully legalised in India?

The Indian Government is perfectly aware that many citizens are engaged in online gambling and if they wanted to illegal, they would have amended the current law to include the prohibition of online gambling. This has never been done, which means that online gambling continues to be legal in India to this day.

Now the government of India and many state governments are debating whether to legalize gambling in India completely. We believe that this would be a very smart thing to do. It would allow the government of India to collect taxes on the enormous online gambling industry. Citizens donating all this tax money to foreign governments.

It would help the Indian people feel more comfortable with online gambling. Knowing that not only legal, but also sanctioned and regulated by the federal government of India.

Why Is Gambling Illegal In India

Please note that the information found on this page does not constitute legal advice.

Frequently Asked Questions about Indian Gambling Laws

Is it legal to gamble in India?

Why Is Gambling Illegal In India Right Now

Do I risk anything by gambling in India?

Why Is Gambling Illegal In India Currency

In our opinion, no. According to some of the top legal experts in India. They do not know anyone who has been prosecuted or convicted for online gambling ever.

Why Is Gambling Illegal In India Today

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