The Public Gambling Act, 1867 ("Gambling Act") is the general law governing gambling in India. However, the state legislatures, under the Constitution of India, have been entrusted with significant regulatory leeway to form state specific gambling laws. The Gambling Act is the central enactment which has been adopted by certain states in India and other states have enacted their own legislation to regulate and govern gaming/gambling activities within their territory ("Gambling Legislations"). Most of the Gambling Legislations have been enacted prior to the advent of virtual or online gambling and hence these Gambling Legislations primarily refer to gaming/gambling activities at the physical premises.
Regardless of the mounting popularity and the revenue generated by gambling and betting in India, the Indian laws and the Courts in India have been averse to any game of chance and probability, except in States of Goa and Sikkim. Since the advent of British rule, many Indian states have enforced the Gambling Act prohibiting all forms of gambling and betting in their respective states. Goa and Sikkim are the only exceptions which have allowed gambling and betting in their state, subject to regulation of their respective state Governments. List II of Seventh Schedule of the Indian Constitution, endows the state Governments with the power to legislate on matters concerning gambling and betting. India continues to enforce the pre-independent gambling legislations enacted by the British rulers, but it is interesting to note that UK has changed its gambling laws by allowing almost all forms of gambling in UK in light of the changing societal norms of their country.
The state of Goa has allowed gambling by enacting the Goa, Daman and Diu Public Gambling Act, 1976. The Goa, Daman and Diu Public Gambling Act, 1976 was amended to allow card-rooms in offshore vessels and slot machines in five star hotels subject to prior approval and authorisation of the State Government on payment of a specified recurring fee. The state of Sikkim has also legalised gambling by enacting Sikkim Regulation of Gambling (Amendment) 2005. The Sikkim Regulation of Gambling (Amendment) 2005 authorises the State government to notify the specified areas where permission can be granted for running of casinos on payment of a specified fee.
This gives us an overview of the gambling laws in India and it is clear from the same that there are extensive restrictions on any kind of gambling or wagering activities in India. However, all the Gambling Legislations in India have excluded 'games of skill' from the purview of gaming activities in India. There have been numerous debates all over the world as to which games or activities can be considered as 'games of skill' and which games or activities are based predominantly on luck in which a person's intellect has been very little roles to play.
'Gambling' is not defined under the Gambling Legislations. The dictionary meaning of gambling is "to stake something on a contingency; take a chance". The gambling under the Gambling Legislations does not include (i) betting on a horse race (subject to the legal regulations); (ii) games of skill (excluded under the Gambling Act and by the court's judgments); and (iii) lotteries (regulated by lottery laws of India).
Game Of Chance And Game Of Skill
Gambling is understood both under its traditional form as well as modern avatar. The traditional gambling is understood in the context of physical space, brick and motor format, whereas modern gambling consists of computers connected offline or online, mobile phones, internet, etc. The Gambling Legislations exclude 'games of skill' from the purview of gambling and hence doesn't attract the penal provisions.
In State of Andhra Pradesh v K. Satyanarayana and Ors [AIR 1968 SC 825], the Court held that:
"The game of Rummy is not a game entirely of chance like the 'three-card' game mentioned in the Madras case to which we were referred. The 'three card' game which goes under different names such a 'flush', 'brag' etc. is a game of pure chance. Rummy, on the other hand, requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards. We cannot, therefore, say that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge."
In Manoranjitham Manamyil Mandram v State of Tamil Nadu [AIR 2005 MAD 261], the Court held that:
"Therefore, while it is the right of the appellant to have recreational activities which are not prohibited, the respondent's right to take appropriate proceedings against illegal games of betting, wagering, etc. is also provided for under the Act. Therefore, there cannot be a blanket direction as prayed for by the appellant. The question whether a particular game is a game of skill or chance is to be decided on the facts and circumstances of each case. As and when proceedings are; initiated against the appellant in accordance with law, the appellant shall always have the right to question the same or challenge the action of the respondents if it is not in accordance with law."
The Gambling Act, by virtue of Section 12, excludes 'game of skill' from the purview of law. Supreme Court in the case of Dr. R. K. Lakshmanan v. State of Tamil Nadu [AIR 1996 SC 1153] defined 'game of skill' as "one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player". The Court pointed out that a game of chance is one in which the element of chance predominates over the element of skill and similarly a game of skill is one in which the element of skill predominates over the element of chance. It is the dominant element – "skill" or "chance" that determines the true character of the game.
The Supreme Court in Dr. R. K. Lakshmanan (supra) held that horse racing is a game of mere skill within the meaning envisaged under the Madras City Police Act, 1888 and Tamil Nadu Gaming Act, 1930. The Court explained through various instances how horse racing can be considered a game of skill as the betting in horse races are based on evaluative skills and various other factors like skill and management of the jockey.
The State of Sikkim enacted the Sikkim Online Gaming (Regulation) Act, 2008, which was passed on 28th June 2008 by the Sikkim Legislative Assembly with dual object of controlling and regulating online gaming through electronic and non-electronic formats and to impose tax on the same within its territory. The Sikkim Online Gaming (Regulation) Rules, 2009 has been subsequently enacted and the same has been amended from time to time.
The Sikkim Online Gaming (Regulation) Act, 2008 was amended on August 19, 2015 restricting the offering of "online games and sports games" under the licenses issued under the said Act to the physical premises of the game parlours within the geographical boundaries of the State of Sikkim through intranet gaming terminals. Initially, the wording of the Sikkim Online Gaming (Regulation) Act, 2008 envisaged that the license shall allow the licensee to offer its games across India without restricting it to the territory of Sikkim.
The Government of Nagaland has enacted the Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act, 2016. The said Act provides for regulation and promotion of "games of skill" through the issuance of licenses. This Act provides that the license holders under the same can operate from any State in India where gambling is allowed.
Sikkim has framed legislation regulating the virtual or online gaming activities within its territory. Except for the Sikkim Online Gaming (Regulation) Act, 2008 and Nagaland Prohibition of Gaming and Promotion and Regulation of Online Games of Skill Act, 2016, none of the other Central or State gambling legislation specifically mentions online gambling which puts online gambling involving 'game of skill' in a grey area.
In the present world where everyone is connected through internet, a person sitting in India can bet through a foreign owned website. There is no law which directly regulates/prohibits such activities in India. In the absence of any specific law directly regulating the online gaming/gambling through a server located outside India, these can be regulated through the internet intermediary compliances, cyber law due diligence requirements prescribed under the Information Technology Act, 2000, restrictions on foreign exchange earnings and outgoes and strict enforcement of anti-money laundering laws.
The gambling laws in India continue to be confusing and unclear. The judiciary time again through various decided case laws have tried to clear the air and provide clarity on the subject. However, the recent technological changes have thrown open the sector and have allowed the masses to participate in activities which lie in the border line of gambling laws in India. These activities are yet to be scrutinized and tested through the courts in India. It is advisable that before someone ventures into any gambling activity in India, he/she may take a sound legal advice in respect of the same so as to avoid any unnecessary legal implications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.