Gambling laws in India: time to challenge the ambiguity

Unfolding since the time of Mahabharata, when the proficiency of foes was tested by their expertise at dice and board games, using the nuts of Bibhitaki tree as an archetype of later six side dice, Gambling, irrespective of its moral turpitudes, has been a part of the Indian culture since time immemorial. Gambling, in its literal meaning, refers to the act of betting or wagering for money or money’s worth. With the advent of technology and internet, the gaming industry in India has witnessed a paradigm shift. Subsequent to demonetization, online digital payments have been prevalent enough to result in the popularity of online games. The modish nature of online games is well substantiated by the ascension of online card games like Rummy, Poker and other new-age fantasy games. Owing to these, there is a surge in the number of online gaming sites in the country. On that account, the ‘gambling’ industry in India is of two types- traditional and online or casual gaming. This gambling industry can be categorized into different forms such as Physical Gambling & Sports Betting, Online Gambling, Casinos, Lotteries, Horse Racing and Online Fantasy Games. This sets off the debatable question of the legality of gambling and other skill games in India. The gambling laws in India are considered to be unclear and poorly-framed.


LEGAL REGIME REGULATING INDIAN GAMBLING INDUSTRY

A. PHYSICAL AND ONLINE GAMBLING

While the Constitution of India has regarded ‘gambling and betting’ as a state subject and deputed the states to frame laws on it, some of the states still adhere to the laws enacted by the general gambling legislation i.e. The Public Gambling Act, 1867. Notwithstanding the shoot up and high revenue generated by gambling and betting in India, Indian laws remained disinclined towards any such games, except in the states of Goa and Sikkim, which have legitimized betting and gambling, subject to the mandate of their state government. However, most of these legislations (central or State mandated) were enacted anterior to the emergence of online or virtual gambling and thus, primarily refer to the gambling and betting activities done physically. Ergo, online gambling has not been contemplated within the provisions of these laws and there is no licensing regime for such games at the federal level.

The states of Sikkim & Nagaland are the only two states providing guidelines regarding online gambling. Sikkim Online Gaming (Regulation) Act, 2008 aims to control and regulate online gaming in the form of enacting a licensing regime for online games and sports games and also impose a tax for such games in Sikkim. Nagaland Prohibition of Gambling & Promotion and Regulation of Online Games of Skill Act 2016 and Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Rules, 2016 prohibits every game involving wagering or betting based on chance and not skill. However, it has excluded Poker, categorizing it as a game of skill. Poker has been specifically recognized as a game of skill in several other states such as West Bengal and Karnataka.

B. CASINOS

The Gambling Legislation regulates the establishment of Casinos in India and hence most of such enactments chose to prohibit them. Be that as it may, Goa and Daman & Diu prescribes license for casinos in five-star hotels and gaming onboard offshore vessels. Also, The Sikkim Casino Act provides for the license to run casinos in five-star hotels only. The Sikkim Act covers games such as roulette, casino brags and blackjack.

C. LOTTERIES

In India, the central legislature has been sanctioned to make laws concerning lotteries. The Central Lottery Laws have excluded lotteries from the purview of Gambling Legislations and allowed state governments to organize or conduct a lottery, subject to the conditions of Central Lottery Laws.

D. HORSE RACING

Under Gambling Legislations, horse betting enjoys a distinctive position. Most of the enactments consider horse betting as a game of skill and thus exclude it from the purview of ‘gambling & betting’. In the case of K. R. Lakshmanan v. State of Tamil Nadu[1], the Supreme Court held that horse betting was a game of skill since factors like fitness, the skill of the horse have to be scrutinized by a person before placing a bet.

E. DAILY FANTASY SPORTS

In the Indian context, certain fantasy games are asserted to be predominantly skill-based. Some examples of this type are Dream 11 and Rummy. In the case of the State of Andhra Pradesh v. K. Satyanarayana & Ors, [2], the Supreme Court precisely tested the game of Rummy based on the theory of skill versus chance and declared that Rummy was not a game fully supported by chance. Rather, it was a game involving a preponderance of skill over chance. The Supreme Court grounded its conclusion on the reasoning that playing Rummy requires a particular amount of skill as the fall of cards needs to be memorized and the building up of Rummy was dependent on how the cards were discarded. Nevertheless, in the case of Ramachandran K. v. The Circle Inspector of Police, it was held that playing rummy for stakes would amount to gambling under The Kerela Gaming Act, 1960. The High Court of Bombay in the case of Gurdeep Singh Sachar v. Union of India[3], held that Dream11 was a game of skill and not chance because the result wasn’t decided by mere chance or accident based upon the money put on the stake with a risk of loss or hope to gain. Arguably, there is a lack of proper jurisprudence in India regarding this matter and any other online betting games as the Indian laws do not specifically mention about them being illegal.


THE MAHALAKSHMI AND GAUSSIAN RIGMAROLES

In the famous case of Director General of Police, Chennai v. Mahalakshmi Cultural Association[4], an appeal was filed by the association relating to an Impugned Order by the Madras High Court where the issue of gaming houses collecting stakes and deriving profits aroused. It was expected that the Supreme Court would lay down guidelines as to what kind of business models (including online) would give rise to an offence of betting and gambling which is prohibited according to certain state enactments. Instead, the apex court disposed of the petitions on the ground that the order was based on Rummy which was specifically played with brick and mortar and therefore, it may not necessarily relate to online Rummy.

In M/s Gaussian Networks Pvt Ltd. v. Monica Lakhanpal and State of NCT[5], the question of whether a virtual platform could allow games of skills for stakes was brought up. A petition was filed under Order 36 Rule 1 of the CPC seeking the opinion of the district court on inter alia whether there was any restriction in allowing participants to play games of skill for stakes with the intention of making a profit. The Court was of the opinion that it was illegal to play any game for stakes in the virtual space. The Counsel for Gaussian sought permission for the withdrawing the review petition filed before the High Court and the Court acceded.

CONCLUSION

The law continues to remain grey in terms of the state gambling legislations covering online gaming sites as well. The Mahalakshmi and Gaussian cases were expected to make this ambiguity comprehensible and would lay down the law stating whether the state gaming enactments include online models as well. However, the silhouette of doubt on the part of judiciary is still not removed and the dilemma of the online gaming operators continues. The Indian judiciary has only made pronouncements regarding the exception of skill-based games determined by the skill versus chance principle. It is yet to reflect that there is a legal, judicial and executive policy to put games of skill in a different genus and specie from the game of chance. In July 2018, the Law Commission of India headed by Justice B.S. Chauhan, released a report, ‘Legal Framework: Gambling & Sports Betting[6]’, which emphasized that its principal exhortation was to ban betting and gambling in India. However, it also highlighted the advantages of legitimizing betting and gambling, for example, the possibility of generating revenue and employment as well as supporting industries such as tourism and IT. It also underlined that a regulated industry would curb issues of money laundering and fraud. Whatsoever, gambling and betting practices are still illegal in India, centrally. Though, some states have made it legal through their state-wise enactments, it has been poorly-drafted and irregularly implemented. The lines between Gambling & Indian laws relating to it are as blurry as lines can get.

Footnotes:

[1] K. R. Lakshmanan v. State of Tamil Nadu, A. I. R. 1996 S. C. 1153. [2] State of Andhra Pradesh v. K. Satyanarayana, A. I. R. 1968 S. C. 825. [3] Gurdeep Singh Sachar v. Union of India, Bombay High Court, Criminal Public Interest Litigation Stamp No.22 Of 2019. [4] Director General of Police, Chennai v. Mahalakshmi Cultural Association, W. A. No. 2287 of 2011, Madras High Court. [5] M/s Gaussian Networks Pvt Ltd. v. Monica Lakhanpal and State of NCT, Suit No 32/2012, Delhi District Court. [6] http://lawcommissionofindia.nic.in/reports/Report276.pdf Report No. 276, Law Commission of India, ‘Legal Framework: Gambling and Sports Betting,’ July 2018.

Submitted by,

Sonali Priyadarsani,

Tamil Nadu National Law University.


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