Gambling Legislation In India

According to a Deloitte India report, Online gaming is worth around INR 20,500 crore. In fact, a report by KPMG estimates that the Indian betting market can be valued at INR 9,50,000 crore. Some reports also estimate that the gambling industry in India will be worth almost INR 250 billion by 2024.

What is the reason for this immense growth ?

The use of mobile phones, easy access to the internet and mobile data, higher disposable incomes, better internet speed, and affordable devices have all contributed to easier access to online games.

But here's the catch! While the gaming industry grows, the legality of the industry is still uncertain. Historically, gaming, especially gambling, has a bad reputation in the country. The perception that gambling will most certainly cause your ruin is widespread. Along with a law inherited from the British Empire, the regulations around gambling are difficult to understand clearly.

The Current Gambling Legislation in India

Gambling or betting in India is regulated by the Public Gambling Act, 1867. While the law is a federal law, betting and gambling are found in part II of the State list. The Seventh Schedule of the Constitution of India gives states the right to legislate and make policies on gambling. This means that state governments have the full right to control betting and gambling practices in their state and draft state-specific laws.

Under most legislation

“Gambling is defined as the act of wagering or betting for money. “

The Public Gambling Act says that it seeks

“To provide for the punishment of public gambling and the keeping of common gaming houses“

In simple words, the Public Gambling Act of 1867 makes gambling illegal. It punishes people breaking the law with a 200 rupees fine or up to 3 months in prison. Having said that, it is essential to see how this legislation is specific to a typical gaming house.

It defines a common gaming house as

“any house, walled enclosure, room or place in which cards, dice, tables or other instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such house, enclosure, room or place, whether by way of charge for the use of the instruments of gaming, or of the house, enclosure, room or place or otherwise howsoever“

Because of how this law is worded, there is very little clarity on online gambling regulation since the internet or mobile phone cannot be classified as a "common gaming house." This is precisely why gambling at online casinos with offices outside India is perfectly okay for Indian players. It is also interesting that gambling is considered acceptable in a household where friends and family gamble indoors during Diwali as it's not considered a common gaming house.

Game of Skill vs Game of Chance

What is also relevant is whether a game is a game of skill or a game of chance. The current act prohibits betting on all games not classified as a game of skill.

Game of Chance

Games of chance are all games whose outcome is based on luck. A person does not need prior knowledge or talent to play these games. Games of chance are considered illegal in India.

Game of Skill

Games of skill are all games whose outcome is based on the player's knowledge, talent, and experience. A person needs an analytical mind and logical thinking ability to play these games. Games of skill are considered legal in most states in India.

Games like Rummy, Bridge, Poker, Chess, Carrom, Horse Racing, Fantasy Sports are classified as Games of Skill. But Slot games, Blackjack, Roulette, Baccarat etc., are considered Games of Chance. ICLG, a leading global platform for legal reference lists the various regulations regarding specific games in their paper.

The Legality of Gambling in the Indian States

While the Public Gambling Act applies to the entire country, some states and union territories have their own laws regarding gambling. While some states ban gambling completely, others have created regulations that allow licensed operators to run on-land casinos. *This list is not exhaustive and is also ever-changing. Please check the laws in your state to confirm current laws.

Online Gambling Laws and the IT Act

Some states in the country regulate gambling and online gaming. These states allow operators a license to enable gambling enthusiasts to access these games within their borders. However, there is no national law that regulates the online gambling industry in India. The current gambling act also does not regulate any online casinos that are based in foreign countries.

The Information Technology Act, though, does have some impact on online casinos and gambling. The act was set up to protect people from digital activity deemed able to "corrupt" them. While the act does not refer to online gambling specifically, it can ban foreign operators by ISP blocking the websites.

Another thing to pay attention to is taxation on gambling winnings. Winnings that you earn at foreign casinos don't fall under the taxation laws in the country. But having said that, this is because there's no easy way to trace winnings at foreign casinos.

If you win at local casinos (the ones in Sikkim, for example), there will be a TDS (Tax Deduction at Source) on your winnings. The Indian income tax law also says that

“Any income, by way of winnings from any lottery or crossword puzzle or card game and other game of any sort, exceeding INR 10,000, is subject to a withholding tax of 30%“

What Lies Ahead

The legal landscape of online gambling is still unclear since there is no proper framework. While currently playing at online casinos outside the jurisdiction of India is possible, there's no surety of what the future could look like. With the growing popularity of fantasy sports and online gambling, India must have a robust, modern framework that regulates the industry with care instead of outright banning it due to unfair and archaic perceptions.