The online gambling industry is a popular money-yielding industry of today. It
has the potential to allure the youth who happen to be the most active consumers
of the consumer market. Gambling through online means gives the joy and
relaxation that any person wishes for in a fast-paced world while offering
prospects of earning swift money. However, these games are addictive in nature,
and the people that are lured into these games become subject to irreversible
damage to physical and mental health while losing money.
Hence, governments all
over the world, as also in India, are befuddled with whether or not the online
gambling industry must continue to operate with all its consequences. In light
of the same, this article will analyze the current legal position of online
gambling in India and also traverses through judicial precedents in relation to
online gambling. It shall also discuss online gambling laws in different
countries and give suitable suggestions on revamping the existing legal
Current legal position in India
Currently, India has no central level legislation that regulates the online
gambling industry. Post-independence, when the Constitution of India was
promulgated, gambling and betting came specifically under Entry 34 of the State
List, thereby giving exclusive powers to the state legislatures to make laws
on the subject matter of gambling and betting. Therefore, different states have
enacted their own legislations on gambling. However, most of the states have not
updated their gambling laws to include online gambling games
The Public Gambling Act, 1867 is one of the first laws in India that
regulated gambling games. It prohibited all kinds of gaming rooms with respect
to games of chance and made all people managing, owning, or being in charge of
them liable. The said Act not only exempted games of skills but also did not
include online gambling within its purview.
Also, NITI Aayog's discussion paper floated in December 2020 provided draft
guiding principles for enabling online fantasy sports platforms to function.
These guiding principles encourage only skill-based fantasy sports games,
disallow minor players, disallow advertisements on games of chance, and also
make the rules and regulations of the games the same and transparent for all
It also proposes a self-regulatory form of governance for
fantasy sports gaming platforms instead of a top-down regulation by the
government. However, a self-regulatory body known as the Federation of Indian
Fantasy Sports is already in existence since 2017 for regulating fantasy
sports. These guiding principles are not sufficient to provide guidelines to
all online gaming platforms as these are specific to fantasy sports.
Advertising Standards Council of India (ASCI) Guidelines also exclusively
deal with one aspect which is the advertising of online gambling platforms.
While it lays down guidelines on how to cautiously advertise these platforms to
prevent falling into traps, it is not a direct regulator of gambling as such.
Generally, only a game of chance is considered to be gambling. As also seen in
the Public Gambling Act, 1867, a game of skill is exempted. However, the
question on what constitutes a game of skill or a game of chance had always
invited debates until the Indian judiciary came up with a conclusion.
Game of skill vs game of chance
A game of skill is played using a substantial quantum of skills. Individual
expertise and capabilities determine the success of a game of skill. In a game
of skill, players know the rules and execute several strategies while playing to
win. Chess, carrom and rummy are some examples of games of skill. On the other
hand, a game of chance does not involve any skill and the victory is based on
luck or any random factor. There is no way of telling how and who will win. The
Indian judiciary has differentiated between a game of skill and a game of chance
in its pronouncements.
The Supreme Court in the case of State of Bombay v. R. M. D. Chamarbaugwalal
held that games in which the victory is dependent on the usage of a substantial
amount of skill cannot be categorized as gambling
. Irrespective of the
presence of an element of luck, if the game is predominantly based on a skill,
it will be a game of skill.
Further, in the case of Dr. K.R. Lakshmanan v. State of Tamil Nadu
was held that a game of chance is determined by sheer luck, and that although
there may be an element of skill, a game of skill should depend primarily on
superior knowledge, coaching, attention and experience of the player. The
dominant element present here (whether it is skill
) is what determines the
true character of the game.
In the cases of Manoranjithan Manamyil Mandram v. State of Tamil Nadu
and M.J. Sivani & Ors. v. State of Karnataka, the courts held that whether a
game is a game of skill or game of chance will depend on the facts and the
circumstances of each case.
With these important judgements, the judiciary made it clear as to what
constitutes a game of skill and a game of chance. However, confusion regarding
whether fantasy sports is a game of skill or a game of chance still prevails.
Is fantasy sport a game of skill or a game of chance?
Indians have an extreme passion for the game of cricket which has been
instrumental in the growth of fantasy sports in the country. However, it is the
technological advancement coupled with the pandemic that has led the growth in
fantasy sports to skyrocket. According to KPMG, the Indian fantasy sports
industry is predicted to be worth US $3.7 billion by 2024. Despite this
massive growth potential, the industry barely has any support from the
government. The Indian judiciary has taken a stance on whether fantasy sports
is a game of skill or a game of chance.
In the case of Shri Varun Gumber v. Union Territory of Chandigarh and Ors
the Punjab and Haryana High Court held that fantasy sports is a game of skill as
it is predominantly based on skill.
In the case of Gurdeep Singh Sachar vs Union of India and Ors
. (2019), the
Bombay High Court held that the victory in Dream11 game depends on the user's
capacity to exercise his skill based on superior knowledge, judgement, and
attention. Therefore, fantasy sports such as Dream11 is a game of skill.
In the case of Chandresh Sankhla vs State of Rajasthan
 (2020), the Court
held that Dream11 cannot be considered to be gambling as it is a game of skill.
Therefore, it is clear from the above judgments that fantasy sports is a game of
skill and it is unreasonable to ban it.
In spite of the judiciary holding that a game of skill is not gambling, many
states have imposed a blanket ban on it. Nonetheless, some states have
legislation regulating only the games of skill, the others have legislation
regulating both the games of skill and chance in place. This shows the absence
of uniformity in relation to online gambling legislation across different
There are legislations of different states which differentiate a game of skill
and a game of chance. There are states which ban both a game of chance and a
game of skill if played for money. One such example is the recent Tamil Nadu
state legislation in relation to online gambling that not only received
criticism from the gaming community but was also struck down by the High Court
The Tamil Nadu Gaming and Police Laws (Amendment) Act, 2020 (Amendment) was
passed to amend the Tamil Nadu Gaming Act, 1930. The Amendment was specifically
made to prohibit games of skill when played for wager, bet, money, or other
stakes. This Amendment was challenged in the High Court of Madras. The court
struck down the Amendment on certain grounds.
Firstly, the court held that
games of skill are business activities protected under Article 19(1)(g) of the
Constitution of India. Therefore, held that games of skill cannot be
Secondly, the court held that the prohibitions laid down in the
Amendment are not proportionate to the object of the Amendment. The court held
that the State's intention was only to prohibit gambling in games of chance and
not in games of skill. Therefore, the Amendment is unreasonable and
Thirdly, the court held that the Constitution only grants
powers to the states to enact laws on betting and gambling confined to games of
chance and not games of skills. Therefore, the Amendment was held to be
Despite this, Karnataka passed a similar law recently. The Karnataka Police
(Amendment) Act, 2021 was passed to amend the Karnataka Police Act, 1963.
The said Act makes all kinds of gambling including gambling through online
gaming a cognizable and non-bailable offence. Essentially, all games including
games of skill would be prohibited, if played for a prize or money.
This was not
well received amongst the gaming community. Apart from Karnataka and Tamil Nadu,
the states of Andhra Pradesh and Telangana have banned online games including
games of skill, if played for money as well.
While the above-mentioned states have banned even games of skills if played for
money, there are a few states which have legalized them and have a proper
regulation of online gambling in place. Sikkim is the first state in the country
to legalize online gambling by introducing Sikkim Online Gaming (Regulation)
Act, 2008 and the Sikkim Online Gaming (Regulation) Rules, 2009. The
definition of online games
under the said Act includes all kinds of games
including games of chance which are prohibited in most other states.
government issues licenses for a period of five years to the applicants for
running online games and sports games. However, such games cannot be accessed by
people from other states through websites. Such licensed online games and sports
games are restricted to the gaming parlour's physical premises which are within
the boundaries of Sikkim.
Meghalaya's government introduced the Meghalaya Regulation of Gaming Act,
2021 in 2021 to regulate the online gaming industry in its state. It
regulates both a game of skill and a game of chance. The Meghalaya government
issues licenses to its applicants for a duration of five years. The Licensees
are bound to pay "gaming royalty" which is a percentage of sum of money earned
after deducting the prize money deductions and other expenses and charges.
Unlike Sikkim and Meghalaya, Nagaland only legalized online gambling games based
on skills and every game of chance is outlawed. It introduced the Nagaland
Prohibition of Gambling and Promotion and Regulation of Online Games of Skill
Act, 2015 to regulate online games of skill under which licenses are issued
to entities that offer games of skill on their platforms.
Having such clear cut legislations for regulating online gambling prevents the
existence of black market for online gambling websites. The central government
must take inspiration from these state legislations in order to regulate online
gambling uniformly across all states and to avoid ambiguity in interpretation
and enforcement of the same.
Time and again, discussions about regulating online gambling keep happening in
the Parliament like the recent one in the Rajya Sabha. Taking an initiative
to resolve the issue of regulating online gambling, the Indian politician,
Shashi Tharoor, who currently serves as a Member of Parliament in the Lok Sabha
introduced a private bill in relation to online gambling in 2018. Nevertheless,
such discussions and attempts have been futile.
The Sports (Online Gaming and Prevention of Fraud) Bill, 2018
The Sports (Online Gaming and Prevention of Fraud) Bill, 2018 (Bill) in Lok
Sabha in 2018 was introduced by Shashi Tharoor. However, the Bill was never
passed. The intent behind introducing the Bill was to regulate the largely
unorganized online gaming sector that includes online gambling at the central
level. Certain provisions from this Bill can be taken into consideration and be
incorporated by the legislators into the regulations for online gambling which
may be formulated in the future.
Section 3 of the Bill provides for all the different kinds of actions that would
amount to a sports fraud. This includes a wide range of acts such as
manipulation of sports result, irregular alteration of field of play,
misapplying the rules of the sport deliberately, etc. as specified. The
appropriate authority as designated by the Central government, investigates on
Section 6(2) imposes a fine of 5 times the reward earned through malpractice,
along with imprisonment. Section 8(1) states that if such condemnable activity
is performed by a company, then the company shall be held guilty. Section 14(1)
states that a license is required to operate an online gaming website and no
online sports happens except through such a website. However, the fine for
operating a site without a license as given in this provision, could have been
defined concretely by some numerical values.
The Bill also constitutes an Online Sports Gaming Commission (Commission) to
regulate the online gaming sector. The Commission grants licenses after making
an inquiry to applicants willing to run an online gaming server or an online
gaming website. This is a welcome move to prevent unauthorized people from
running online gaming websites.
Further, the Bill mandates the maintenance of
accounts relating to online sports gaming by the licensee which is a welcome
move as the auditors can go through the accounts to evaluate the safety of
deposits. If for any reason, the online gambling platform were to shut down, the
customers will be able to recover their funds.
Thus, maintaining of accounts and
auditing shall ensure fairness. Furthermore, the Bill also permits Foreign
Direct Investment (FDI) in the online gaming industry. The online gaming
industry is flourishing in India and FDI would definitely boost growth.
As provided for in the Bill, the authors suggest that a central-level
legislation is required to regulate online gambling activities as it will ensure
uniform, fair, and just laws that apply to all citizens of India equally without
distinguishing between them merely on the basis of borders. Further, such a
legislation must also aim at the welfare of the people by providing for a
mandatory disclaimer at the home page of every gambling app/website which
clearly indicates the risks regarding the game to be played and the conditions
to fulfill to become a player so that every player is fully aware of what they
are engaging in. Also, the legislation must clearly specify the age limit for
the players to ensure that children are not addicted to online gambling.
Keeping in mind the growth of online gambling, several countries have
legislations regulating online gambling in place. India could draw inspiration
from the foreign online gambling legislations to enact a central level online
In Canada, till date, as per the Criminal Code, hosting a gambling website
anywhere within Canada is deemed as illegal. However, each province of the
country has the permission to legalize particular types of gambling that may be
operated on or through a computer
within their borders. Therefore, the matter
of legalizing online gambling operations within its own confines is left to the
In the US, at a federal level, gambling (inclusive of online) is legal, but each
state has a different position on the legality of online gambling. Different
laws regulate online gambling. An important law in this regard is the Unlawful
Internet Gambling Act. This law doesn't prohibit players from playing games
however, the intention of the law was to stop money laundering, fraud, and other
financial crimes. This law prohibits online gambling companies from accepting
payments from an entity that violates federal or state laws. It regulates how
payments are made for online gambling transactions.
This law makes it illegal
for a company to accept payment from banks or credit card companies. The Illegal
Gambling Business Act was aimed at ending the involvement of organized crime
in the gambling industry. This law states that any gambling operation that is in
violation of state or local law that has five or more people conducting its
operation, and remains in continuous operation for 30 days or makes more than
$2,000 in revenue in a days' time can be prosecuted.
This law doesn't include
the bettor as a person that can be found guilty under this law, however anyone
who works for the gambling business itself can be. This means that anyone from
the owner of the business down to the runners can fall under this law.
In the United Kingdom (UK), the basic legislation that applies to gambling of
all forms is the Gambling Act 2005. It is legal for residents and visitors
and is regulated by the United Kingdom Gambling Commission (UKGC), which
oversees all forms of gambling in the country. Every legal online gambling
platform must have a license from the UKGC. Six types of gambling are clearly
defined by the Act, all of which are the only allowed types.
In South Africa, the Gambling Regulators Africa Forum (GRAF) is a body
representative of gambling regulators within the African Continent, who aspire
to be effective and credible in their regions and continentally. In Africa,
gambling is legal, however, the online form of it is not. The GRAF oversees
illegal gambling and combats it through cooperation between states and
sub-divisions of GRAF.
The idea of having an overseeing regulatory board as seen in the case of the
above-mentioned countries is good and has a significance. Having such a board
will ensure that there is lesser burden of duty on the state governments, and
will transfer the duty on a board of experts who can adeptly handle the same,
throughout the country and not limiting it to a state-wise regulation.
The way forward and concluding remarks
The countries like the US and UK have legislations in place to regulate all
kinds of online gambling. It is draconian for India to ban online gambling
especially when the online gambling industry is booming in the country and could
be instrumental in boosting the economy of the nation.
Further, although there are different states with laws banning online gambling,
foreign online gambling websites are easily accessible to everyone in India.
Furthermore, such websites are not regulated by Indian laws. These websites are
regulated by international regulatory bodies such as the UKGC, the Malta Gaming
Authority, Gaming Curacao, etc.
Since there is a ban imposed on online
gambling games by several state governments, people tend to use more and more
foreign websites for the purpose of playing online gambling games. The
intention of banning online gambling games is to protect individuals who are
susceptible to the vulnerabilities such as addiction and financial losses in
such games. Banning indigenous online gambling websites does not achieve the
goal of curbing access to such websites as there is open access to foreign
online gambling websites.
Such foreign online gambling websites are using the
ban as an opportunity and generating huge amounts of profits from the lucrative
Indian online gambling market. Therefore, the authors contend that imposing a
blanket ban on online gambling games on Indian websites is counter-productive as
foreign online gambling websites are always open. It not only defeats the
purpose of the ban but also prevents India from making money from the
flourishing online gambling industry.
A recent petition in the Delhi High Court sought the government regulation
of online gaming including gambling activities. The Centre's response to the
petition stated that it was the state governments' responsibility to regulate
the same and that the Ministry of Electronics and Information Technology (MeitY)
is in no way responsible to regulate it. The authors contend that considering
the colossal growth in the online gambling industry, the Constitution must be
amended to make regulation of online gambling a subject in the Union List so
that a central level legislation on online gambling can be enacted.
Furthermore, the authors contend that it is unfair to ban games of skill even if
it is played for money as they can be considered as business activities under
Article 19(1)(g) of the Constitution of India.
Also, the income from online gambling is taxed under Section 115BB of the
Income Tax Act, 1961 wherein winnings from all sorts of gaming or gambling of
any form are taxed at a flat rate of 30% of the winnings. This generates income
for the government. The fantasy sports platform Dream11 recently became India's
first unicorn in the online gambling sector. More players are entering the
said sector due to the growth prospect and it generates employment to several
Therefore, a strong central-level legislative framework of online
gambling that regulates online gambling platforms, and at the same time can
guarantee the safety of an individual's money is a necessity. Such legislation
must also ban foreign online gambling websites in India in order to promote
indigenous online gambling platforms.
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