Why Gambling Is Illegal In India
The general consensus by millions of Indians is that gambling is banned throughout the country. If you ask them to share information about the gambling laws and regulations in India, they will not be in a position to do so because a lot of them don’t know where to find information relating to gambling laws and regulations.
Some of them know where to look but find it too time-consuming and confusing to read legal jargon and interpret what it means for them. Thus they are content to accept the general consensus that gambling is banned in India and any form of gambling that takes place is illegal gambling.
Why is gambling banned? Gambling is banned in India because of an outdated act that was passed by the British in 1867. This Act, called the Public Gambling Act, was applied to the regions now known as India, Pakistan, and Bangladesh.It is quite unbelievable to think that this same Act is still in force in India and prevents the government from collecting hundreds of crores of rupees in legal. The reason most Indians believe that gambling is illegal in India is because you will not find any casinos or gambling houses in the country with the exception of three states. Goa, Sikkim and Daman are the three states in India to have a legalized casino industry. Indian law prohibits physical gambling, but there are no laws that make online betting illegal activity. However, making sportsbooks is banned in India. It means that if a gambling site is situated in India, it will not be legal for use. To make it more specific, the Public Gambling Act 1867 prohibits any gambling activity in India.
BettingGuru wanted to bring more light to gambling laws and regulations in India, so our team of experts has researched and studied Indian gambling laws and simplified them into modern day language that makes it easy for everybody to understand them clearly.
Current State Of Gambling Legislation in India
The current state of gambling legislation in India is archaic to say the least. Gambling legislation is outdated in India and is in urgent need of an overhaul. The reason most Indians believe that gambling is illegal in India is because you will not find any casinos or gambling houses in the country with the exception of three states.
Goa, Sikkim and Daman are the three states in India to have a legalized casino industry. Sikkim and Daman are very small states and the average Indian on the street may not even list them as states.
Goa on the other hand is one of the most popular states in India and has a thriving land based and offshore casino industry. However, the state government is Goa has been under pressure for the last few years to shut down the gambling industry and recently yielded to some of that pressure by not allowing locals to enter these casinos from Feb 2020.
The Indian gambling industry is governed by The Public Gambling Act of 1867 and pro-gambling groups are pushing for legislators to change this law. The Information Technology Act 2000 regulates online websites in India but does not specifically use the word gambling or betting in its list of prohibited sites.
The Public Gambling Act of 1867
The Public Gambling Act of 1867 prevents casinos and gambling houses from operating in India. If a company or a business if found violating this law, they will be subject to a fine of ₹200 or go to prison for a period of 3 months.
The law is also applicable to players who visit these illegal gambling establishments. If they are found inside these illegal establishments, they will be subject to a fine of ₹100 or face prison for a period of 1 month.
Gambling advocates have tried for years to get the central government to review the Public Gambling Act of 1867 and amend it so that it is appropriate for the times that we now live in. However, legislators have been reluctant to review this gambling act and make changes for a number of reasons.
The most sensitive reason for not meddling with the Public Gambling Act of 1867 is because gambling is considered taboo in India and offensive to multiple religions. Since India is a very religious nation, the ruling party wants to make sure that it does not offend the religious feelings of millions of Indians as it could end up hurting their vote bank.
Some of the other reasons for sticking with the Public Gambling Act of 1867 include considering gambling a social evil and forbidding players to engage with games of chance.
Games of Skill vs. Games of Chance
The Public Gambling Act of 1867 prohibits games of chance from taking place because games of chance are based on luck. Games of skill, on the other hand, are allowed as these are based on the mental faculties and physical abilities of the players involved.
So a game of cricket can take place in front of thousands of cricket fans and be broadcasted to millions at home because it is ruled a game of skill. A game of rummy or poker on the other hand cannot be played for money as the law considers card games as games of chance i.e. based purely on luck.
During the last few years, there has been a special push by a number of groups like the National Indian Gaming Association (NIGA) to educate legislators on the differences between games of skill and games of chance. The game of poker has been used as an example to prove that it is a mind sport just like the game of chess.
While the campaign to push for certain games like poker to be reclassified as a game of skill has gained momentum, it has not brought about any results. Legislators are more open to the possibility today but are hesitant to pull the trigger and legalize gambling due to a potential backlash.
State Legislation
While the Public Gambling Act of 1867 governs gambling throughout the country, each state has the authority to form their own legislation and legalize gambling. This is why Goa, Daman and Sikkim have a legalized gambling market.
There are a number of states including Mumbai and Kerala who are considering legalize gambling in their respective states. State governments have realized that legalizing gambling would create a very lucrative industry as it would generate employment opportunities, bring in huge financial investment, increase tourism numbers and provide a steady stream of gambling taxes for the state coffers.
Nagaland, a small state in the north-east of India decided that it would pass a new law that would allow online games to be legalized. Bettors are allowed to place bets on online casino games as long as they fall under the category of games of skills. The Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act, 2016 (Gaming Act) updated the terms and conditions for games of skill and games of chance – thereby opening a new stream of revenue in the state.
For land based or online gambling to spread throughout India, it will require one of the four big states to make a decision and pave the way for the rest of India. Maharashtra, Karnataka, Tamil Nadu and Delhi have toyed with the idea but have put it on the back burner for now.
Online Gambling
Since land based gambling is banned throughout India with a few exceptions, most Indians automatically assume that online gambling is also banned. This is not true and in effect, the online gambling industry in India is growing at a rapid pace with every passing year. There are a number of offshore iGaming operators who have entered the Indian market and are offering a variety of online betting services which include online casino games, lottery games, sports betting, e-sports, daily fantasy sports and live dealer casino games.
The key point is, that it is not illegal to register and place bets at these online gaming websites as long as they are not based in India. Just remember that there are a lot of good online casinos out there but there are a lot of bad casinos out there as well. By bad, we mean unscrupulous casinos that prey on players and take advantage of them.
BettingGuru has a great list of online casino websites that are safe for Indian players. Our team has reviewed these sites and use strict selection criteria to ensure that we offer safe and secure online casino recommendations to our Indian players.
The Information Technology Act, 2000
The Information Technology Act 2000 is a central act that governs all online activities in India. The Act does not specifically use the word gambling or betting and hence a number of iGaming providers have entered the market due to the language used in the Act. The language allows both pro-gambling and anti-gambling groups to interpret this law based on their own assumptions.
The Supreme Court was approached to make a decision and bring clarity to the language used in the ACT but the Court decided to pass on the matter. So the decision is now left to individual states to determine whether they want to allow online casino games and betting or not.
The state of Maharashtra took the decision to pass its own gambling legislation to clear things up. The “Bombay Wager Act” was passed and it specifically stated that online gambling is an offense in the state.
If a company is caught offering online gambling services in India, they will slapped with a fine of 90,000 rupees. This rule has been in place since 2009.
Offshore Gaming Sites Flourishing
There are a number of reputed and licensed online gambling sites currently catering to the Indian market. BettingGuru features the best of these online casino sites as they are legal and safe for Indian bettors to play at. This is because we list only offshore casino sites as they are not based in India. We look for offshore casinos and sportsbooks that are licensed by reputed regulators like the UK Gambling Commission and the Malta Gaming Authority.
You will not find any online casinos or sportsbooks licensed by an Indian gaming regulator as none exists. If you find a site claiming to be licensed by an Indian gaming regulator, you need to be careful as it is a false claim.
BettingGuru’s list of recommend online casinos allows Indian bettors to make their deposits and withdrawals in Indian rupees (INR) in keeping with the Foreign Exchange Management Act 1999. This ensures that players do not violate any laws either on the gaming front or the foreign currency front.
The Legal Status For Games Like Poker And Rummy
Since each individual state has the option to legalize or ban land based and online gambling, there is some confusion as to what games are allowed and which states allow them. Some of the common questions of Indian players include: is rummy legal in India, is cricket betting legal in India, is poker legal in India, is sports betting legal in India and are online casino games legal in India.
We decided to put together a quick overview to help you understand what games you can play and in which states you can play them:
- Casino games are allowed in Goa, Daman, Sikkim
- Poker is permitted in Karnataka, West Bengal, Nagaland
- Fantasy sports betting is permitted in most states as they are viewed as games of skill
- Lottery is banned in most states but a few states have a state wide lottery such as Sikkim. Punjab has a licensed online lottery.
Online casino games and online sports betting are permitted as long as players are betting at offshore casinos who allow players to deposit and withdraw funds in Indian rupees.
Frequently Asked Questions
The Information Technology Act 2000 does not have the words gambling or betting included when it comes to prohibiting internet activities. Hence, offshore casinos have used this ambiguous language to launch online casino and sports betting services for the Indian market. Players who bet at these offshore casinos are not breaking the law or committing a crime.
There is a huge push at state level and central level to get legislators to rethink archaic laws such as the Public Gambling Act of 1867 and the Information Technology Act 2000. Gambling advocates are pushing for both land based and online gambling to be legalized. The latest push came from MP Shashi Tharoor in 2018 when he introduced the Sports (Online Gaming & Prevention of Fraud) Bill, 2018 to the Lok Sabha.
You do not need to pay any taxes to the online casino or sportsbook. However, you will have to pay taxes on your income and it will be up to you to declare and file your taxes accordingly. Do note that some payment providers like PayPal will be without a GST fee when doing your transfer.
Gambling for money is prohibited in India and the few states that permit gambling allow the activity to be done only at licensed premises. So technically you should not play a real money poker game in India. However, a lot of families play poker and bingo for small stakes to pass their time and do not get in trouble with the law. If you start hosting regular real money poker games and inviting people apart from the members who reside in your house, you could end up getting in trouble with the law.
This will depend upon the terms and conditions followed by each sportsbook. There are limits in place as some sites have reported suspicious activity when large sums of cash where bet on certain cricket games. They found that bookies in India were placing bets on behalf of hundreds of bettors from one account. The minimum amount can be from 100 to 500 rupees while the max amount can go up to 50,000 to 100,000 rupees.
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.
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.
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.
Is Online Gambling Illegal
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.
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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:
(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.
Why Gambling Is Illegal
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.