India Gambling Online Law
- India Internet Gambling Law
- Online Gambling Laws In India
- Online Gambling Laws In India
- India Gambling Online Laws
- Indian Online Gambling Laws
Regulation, rather than a ban, could bring with it several benefits as seen in other countries
A few weeks ago, Google pulled Paytm from the Play Store for violating its gambling policies. The growing popularity of gaming platforms like Dream11 and Paytm First Games raise questions about whether they are proxies for online gambling as they can involve financial transactions but are currently classified as ‘games of skill’. In a conversation moderated by Jayant Sriram, Jay Sayta (has extensively tracked issues pertaining to the gaming industry and gaming laws over the last decade and now advises several gaming companies on policy, regulatory, tax and legal issues) and Vidushpat Singhania (Managing Partner of Krida Legal and specialises in sports and gaming laws) discuss the current legal position in India on games of skill versus games of chance, the size of the gambling industry, and issues of regulation. Edited excerpts:
Jay Sayta:As you said, games of skill are exempt from the ambit of gambling. Gambling and betting are a State subject. Every State has its own legislation on gambling, and most States have an exemption for games of skill. However, these statutes are pretty old, and they do not clearly define or enumerate which games fall within this skill category. Nagaland, for instance, has a separate legislation which details what are games of skill. But for the most part, most States do not have that kind of clarity. So, it falls within the judiciary’s ambit to interpret whether a particular game falls within the ambit of skill or not.
Now, with regards to Dream11 and daily fantasy sports, the matter has gone to multiple High Courts starting from 2017. In 2017, the Punjab and Haryana High Court ruled that the format of Dream11, which involves picking 11 players from a real-life match from both sides and allocating points based on their real-life performance, is a game of skill and does not fall within the definition of gambling. Following that, in 2019, the Bombay High Court also passed a similar ruling. The Rajasthan High Court gave a similar ruling earlier this year. However, on March 6 this year, the Supreme Court, while hearing the appeals from the Maharashtra government against the Bombay High Court’s order on Dream11, issued notice to all parties and stayed the operation of the Bombay order, which means that they will go into the merits of the matter in detail and adjudicate finally on whether it is a game of skill or not.
Vidushpat Singhania: The State Acts largely don’t define what is a game of skill. What you go by is the interpretation given by the Supreme Court in various judgments starting from Satyanarayana (pertaining to the card game Rummy), where it said skill predominates over chance. It’s still open to interpretation for a range of other games. The Rajasthan High Court, Punjab and Haryana High Court, and then the Bombay High Court all held that in the format being offered currently, Dream11 is a game of skill. There have been several appeals filed and dismissed against these judgments. But earlier this year, in another petition that is pending, the Supreme Court looked at it and stayed the order of the Bombay High Court and is looking to hear the matter afresh. What this means is, if the Supreme Court says that daily fantasy sports are games of chance, then the entire industry shuts down and the issue goes back to the States in a sense. State governments can issue licences for these games. If the Supreme Court says it is a game of skill, then the industry is open all over India.
Online Gaming Law in India By the expansion of the scope technology in varied arenas including gaming, the availability of the games has increased on the virtual space as well. In absence of appropriate regulations, online gaming in many States is being controlled by the available respective gaming/ gambling legislations. Answer: Yes, online betting is legal in India. There are no federal laws against online betting in India. Each state may decide if they want to impose laws on online betting. And so far, only a few states in India have made laws against online betting.
Vidushpat Singhania: It’s a very tricky question because the gaming industry has legal as well as illegal components. And not everything is about paid gaming; there is also a lot of free gaming, casual gaming, gaming just for entertainment. Some parts of it are regulated. Betting on horse racing is regulated, casinos in Sikkim and Goa are regulated, certain games of skill are also regulated in States like Nagaland. According to companies like KPMG, the gaming industry in India would be worth about $150 billion.
- The Scope and extent of online gaming: In India, law classifies games into two broad categories viz. Game of skill and game of chance.The rapid growth and spread of the internet were not foreseen.
- Online gambling is in its infancy in India, but Sikkim planned to offer three online gambling licences in 2010. This failed despite India being the most sought out country for online gambling. 8 Sikkim also permits an online lottery, which takes bets from players throughout India.
Jay Sayta: Within that, the category of skill-based games is a complicated one because while these games can involve monetary transactions, they are largely offered for free. These skill-based games themselves could cross a billion dollars in value, the KPMG report states, and are growing at around 30% annually. Now that’s the skill part, but if you’re looking generically at gaming, both skill or chance, it is a very high number. Largely it is unregulated and in the grey space.
Jay Sayta: Just taking a step back from how to go about regulation or legalisation, the question we need to ask is whether this is desirable or not; whether a ban or more stringent laws are the answer; or whether we need to take a more nuanced perspective and recognise that even if we pass new laws, this would still continue in some manner or shape.
In my view, regulation, rather than a ban, has certain benefits. One is the revenue argument. Since it’s happening largely underground, it’s a huge source of black money. So, if it is legalised and taxed in a realistic and reasonable manner, it can be a huge source of revenue for the government. The second is with regard to sports betting where there are a lot of allegations of match-fixing. Now, regulated and licensed betting regimes, as in the U.K. and many European countries, have a strong mechanism to monitor each of the betting websites, track suspicious patterns if there is a sudden spike in betting for certain events, and investigate them. And there are, of course, other ancillary benefits like employment.
Vidushpat Singhania:By way of a legal framework, we have regulations in Goa and Sikkim, where there is a licensing regime to allow certain types of casino games. So, you could expand that kind of legislation itself. Or you could look at international examples like the U.K. which has the Gambling Act of 2005. The Act has four or five categories, and they regulate it based on those categories. So, they have casual gaming, mid-level gaming, serious gaming, high-stake gaming. They’ve divided the games into four or five categories, and then based on that, they have a licensing regime. This applies across all games, whether skill or chance. That is the closest we could also go, where we divide various games into various categories and have a different licensing fee for each. Now, whether that can be pan-India or State by State is the issue.
Vidushpat Singhania: Games of skill are largely self-regulated. There are bodies such as the All India Gaming Federation, FIFS [Federation of Indian Fantasy Sports] and The Rummy Federation which have developed self-regulation codes for advertisements, the way of playing, taxation… The only State where gaming or skill gaming has been regulated is Nagaland. Otherwise, games of skill are generally self-regulated by these industry bodies, which is not bad. I don’t think we need the government to step in to regulate everything. Maybe a basic level of licensing regime can come in, but the operational regulation, I think, should always be with the industry.
Jay Sayta: I have a bit of a different opinion because self-regulation, be it in gaming or in broadcasting or anywhere else, has always been less than satisfactory. There are no sanctions or penal measures that can be invoked against any erring operators. While it is great that these guidelines or charters are there, there are various operators out there who don’t follow them and there is nothing that can be done against them apart from naming and shaming them. A lot of people must have also seen advertisements about skill gaming companies. Some of them are misleading and give false assurances.
The Consumer Protection Ministry has issued certain guidelines on advertising. Perhaps these real money games can be included in that ambit and certain dos and don’ts [can be specified]. For example, I don’t think it is appropriate to give the message that during the lockdown, you can play day and night on these platforms and use them as instruments to solve your social or financial problems. So, the government should step in.
Vidushpat Singhania: This is an issue that the Law Commission of India has also gone into. It has said we will have to demarcate serious gaming and casual gaming limits. If somebody is putting up ₹100 or ₹200 a day, you can allow it as a kind of social gaming, because the prizes will also be limited in that sense and you don’t really need a licence. But where the monies are bigger, say you are allowed to put ₹5,000 and you can win up to a crore, that goes into the serious gaming or gambling aspect and that will definitely need complete regulation.
Vidushpat Singhania: GST [Goods and Services Tax] and income tax are still applicable to these games. It’s only a licensing fee which may not be applicable at this point of time. Dream11, for instance, is paying GST, and the winners will end up paying income tax as well. So, if it is regulated as a game of skill, and the court allows it, then there will be an exponential growth in this game and the collection of GST will increase.
Jay Sayta: The activity is already being taxed. The only aspect is the category of tax. Right now, the argument is that it has legal basis as a game of skill and so it does not fall within the sin category of, say, gambling and casinos. So they are paying a lower amount of tax. That is one aspect which needs to be thought through — whether there needs to be a slightly higher rate of tax for these kinds of activities.
The revenue potential has also been weighed in. If taxed in a rational and reasonable manner, games of skill or chance could lead to tens of thousands of crores in revenue. For instance, the Maharashtra government is already looking at the aspect of regulating sports betting, as per reports.
Vidushpat Singhania is the Managing Partner of Krida Legal and specialises in sports and gaming laws; Jay Sayta has extensively tracked issues pertaining to the gaming industry and gaming laws over the last decade and now advises several gaming companies on policy, regulatory, tax and legal issues.
Written By: Jayant Sriram
Article Found on: The Hindu
Article link:https://www.thehindu.com/opinion/op-ed/should-online-gambling-in-india-be-regulated/article32746687.ece
Online gambling laws in India are vague and open to
interpretation. Ask 50 different people about the legality of
betting in India and you’ll get 50 different answers. On this
page, we’ll attempt to give you a thorough but concise overview
of the current legal situation.
Gambling is regulated in India at the national and state
levels. On the national stage, gambling is mostly addressed by
two or three acts depending on who you ask:
- The Public Gambling Act of 1867
- Prize Competition Act, 1955
- The Information Technology Act of 2000 (maybe)
Online gambling isn’t specifically mentioned in any of these
acts so it resides in a grey area of the law. Some could argue
that the Public Gambling act of 1867 applies to online gambling
since it restricts all forms of “gambling.” Additionally,
there’s the problem that “gambling” itself is never defined by
the act.
The states also have the authority to regulate gambling to a
degree. Two states, Goa and Sikkim, have authorized a limited
number of brick-and-mortar casinos. The other states outlaw most
forms of gambling, betting, and poker. The one nationwide
exception is horse racing betting, which the Supreme Court ruled
was a game of skill in 1996.
Although most forms of real-world gambling are banned in
India, there are no legal means for prosecuting those who choose
to place their bets online. For that reason, India is a
fast-growing market for online gambling. With 1.2 billion
inhabitants and a growing middle class, India shows great
potential for e-gaming operators.
India Internet Gambling Law
Offshore betting sites such as Bet365 have already entered
the market and cater to Indians. At Bet365, you may deposit with
Indian rupees and are welcomed to register and play all games
from India. Bet365 resides outside of India and is therefore
safe from the laws that ban the operation of gambling websites.
And since there are no laws that prohibit individual people from
placing bets online, Bet365 is able to take advantage of the
legal loophole.
The Public Gambling Act of 1867
The Public Gambling Act of 1867 made it illegal to run a
gaming house or be found in one. The act describes a gaming
house as “any house, walled enclosure, room or place, playing or
gaming with cards, dice, counters, money or other instruments of
gaming or is found there present for the purpose of gaming,
whether playing for any money, wager, stake or otherwise.” The
penalty for being caught in one is up to a month in jail.
This act predates the internet by well over a hundred years
so there’s a good deal of debate as to whether or not it applies
to online gambling. Does a website count as a “place” where
instruments of gaming are present? It depends on who you ask.
Further complicating matters, an amendment in 1976 added the
following text:
or place” wherever they occur, the words “house, room, tent,
enclosure, space, vehicle, vessel or place” shall be
substituted.”
The question remains: does the internet count as a “vehicle,
vessel or place?” The 1976 amendment also predates the internet,
but it could be interpreted as applying to the internet.
Additionally, there’s no ironclad definition of the word
“gambling.” The closest the Public Gambling Act of 1867 comes to
defining “gambling” is in section 12:
provisions of this Act contained shall be held to apply to any
game of mere skill wherever played.”
Prize Competition Act, 1955
The Prize Competition Act, 1955 seems to address a very
specific type of gambling, but it has been interpreted as
applying to all forms of gaming in which a prize is awarded. In
short, the act bans prize competitions in which the prizes
exceed a thousand rupees a month.
The act defines “prize competition” with the following text:
cross- word prize competition, a missing- word prize
competition, a picture prize competition or by any other name)
in which prizes are offered for the solution of any puzzle based
upon the building up, arrangement, combination, or permutation
of letters, words, or figures.”
The Information Technology Act of 2000
The Information Technology Act of 2000 is even more difficult
than the other two acts described above, because it’s so broad
in scope. This act still causes a great deal of controversy
today due to its vague wording and harsh punishments for a wide
range of infractions.
Online Gambling Laws In India
Like the other two acts on this page, the Information
Technology Act doesn’t specifically mention online gambling.
However, the following text could be interpreted to apply to
internet wagering. No internet betting cases have yet to be
tried under the act, so we don’t yet know if it applies to
gambling or not. We will have to wait and see.
The most controversial portion of the act is also the part
that may or may not apply to online gambling:
any information through an electronic message that is grossly
offensive or has menacing character and might cause insult,
injury, criminal intimidation, enmity, hatred, or ill will, etc.
or sending such mail intended to deceive or to mislead the
addressee or recipient about the origin of such messages”
A violation of this portion of the act may result in
imprisonment for up to three years and an unspecified crime. The
Bombay High Court has already ruled that this act can be applied
to content published on websites.
Online Gambling Laws In India
Could online gambling be considered a message that may cause
insult, injury, or ill will? Does it fall under the comically vague
“etc.”? We don’t know. So far, we have yet to read about anyone
being charged with placing bets under the law.
What This All Means
In summary, gambling laws in India are confusing, poorly
written, and haphazardly enforced. The reality of it all for
online gambling specifically is that people across India bet
online every day. There are no laws that criminalize the mere
act of placing a few bets online. If you live in India, you have
access to a wide range of internet casinos, sportsbooks, and
poker rooms.
India Gambling Online Laws
There’s no reason to limit yourself from enjoying the
excitement and convenience provided by gaming websites. In most
locations, betting over the internet is safer than doing it in
person. Millions of Indians already gamble online and have had
no legal issues to date.
Indian Online Gambling Laws
The one bit of caution we would recommend is to look into the
laws in your area. Indian gaming law makes little sense and is
enforced at random. You should always check with the local
authorities before you place real money bets anywhere.