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| Image credits: The Times of India |
Introduction
Gambling in India, with its origins dating back to ancient times, has evolved from traditional physical forms to the modern digital age of online gambling. As of 2023, India is the largest gaming market in the world, with 568 million gamers and over 9.5 billion gaming app downloads. This shift reflects how gambling has transitioned from a mere source of entertainment to a potential income-generating activity.
Under the Indian Constitution, federalism grants states the authority to regulate gambling laws, but the distinction between games of skill and games of chance remains blurry. The courts have addressed this issue in various judgments, particularly in the context of games of skill, which may enjoy constitutional protection under Article 19(1)(g).
The question now is: What role is the legislature playing in distinguishing between games of skill and games of chance?
Understanding the Legal Basis: Games of Skill vs. Games of Chance.
The Public Gambling Act of 1867, enacted by the British government before the adoption of the Indian Constitution, acknowledges two types of gaming:
- Games of skill
- Games of chance.
While it prohibits gambling based solely on chance, it permits skill-based games. However, the Act does not define gambling or clarify the distinction between games of skill and chance, leading to legal ambiguities.
In simple terms, games of skill require a player’s ability, knowledge, and strategy to succeed, such as chess or rummy. The outcome is influenced more by the player's expertise than by luck. On the other hand, games of chance rely predominantly on luck or random outcomes, like dice or roulette, where the player has minimal control over the result. This distinction becomes important in the legal context, as games of skill are often exempt from gambling regulations, while games of chance are generally prohibited.
Moreover, the Public Gambling Act of 1867, as a central piece of legislation, is outdated and does not adequately address the complexities associated with online gambling in today's digital landscape.
Following the enactment of the Indian Constitution, gambling regulations became a matter for state governments to address under Entry 34 of List II in the Seventh Schedule, thereby empowering state authorities to create their own laws regarding gambling.
In India, gambling laws vary significantly across states. Goa, Daman, and Diu permit land-based casinos under the Goa, Daman and Diu Public Gambling Act, 1976, with oversight by the Home Department. Sikkim allows both land-based and online gambling under the Sikkim Casinos (Control and Tax) Act, 2002, regulated by the Tourism Department. Nagaland permits online skill-based games like poker and rummy through the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016, which operates under a licensing system. Conversely, Telangana and Andhra Pradesh have laws banning all forms of gambling, including online and skill-based games, with Andhra Pradesh also prohibiting fantasy sports for stakes.
Tamil Nadu enacted the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, banning online gambling and real-money games of chance, although a recent judgment limited the ban to games of chance. Maharashtra enforces the Bombay Wager Act of 1887, prohibiting all forms of gambling, including online, with the law applying to online platforms since 2013.
Karnataka initially banned online gambling in 2021, but in 2022, the Karnataka High Court ruled that games of skill like rummy and poker could not be banned, allowing these platforms to resume operation while other forms of gambling, particularly games of chance, remain prohibited. In Delhi, there is no specific legislation addressing online gambling, creating a legal grey area. Although the Public Gambling Act of 1867 is applicable, its outdated provisions do not explicitly address online gambling.
The Supreme Court has significantly influenced the legal understanding of this distinction through its rulings on the matter. In the case of the judgment in 'Dr. K.R Lakshmanan v. State of Tamil Nadu', the Court held that horse racing was a game of skill and, therefore, was exempted from the provisions of the Public Gambling Act of 1867.
“We have no hesitation in reaching the conclusion that the horse-racing is a sport which primarily depends on the special ability acquired by training. It is the speed and stamina of the horse, acquired by training, which matters. Jockeys are experts in the art of riding. Between two equally fast horses, a better-trained jockey can touch the winning post.”
A similar interpretation was given in 'State of Andhra Pradesh v. K. Satyanarayana', where the Court held that activities where skill is superior to chance cannot be regarded as gambling.
“Rummy, on the other hand, requires a certain amount of skill because the fall of the cards has to be memorized 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.”
Likewise, the Punjab and Haryana High Court, the Bombay High Court, and the Rajasthan High Court have all acknowledged daily fantasy sports (like Dream11) as skill-based games.
Why is this a Matter of Concern?
According to a report by the Digital India Foundation, illegal online betting and gambling in India have seen a sharp rise, with four major platforms collectively registering 1.6 billion visits within a span of three months.
In 2024, India's online gaming sector was valued at USD 3.7 billion, and by 2029, it is projected to reach USD 9.1 billion. Real Money Gaming (RMG) continues to dominate, contributing 85.7% of the sector's revenue, valued at USD 3.2 billion, and growing at 18% during 2024.
UNICEF approximates that children in India spend more than $1,000 each day on online gambling, and research in South India indicated that 19.5% of college students engage in gambling, with 7.4% exhibiting signs of addiction
Based on the World Health Organization (WHO) fact sheet regarding gambling, it is noted that for every individual who engages in high-risk gambling, approximately six other people, typically non-gamblers experience negative repercussions.
Research suggests that individuals who gamble are more likely to develop substance abuse issues, including drug addiction. This correlation highlights the increased vulnerability of gamblers to other addictive behaviors.
The rapid rise of illegal online gambling in India, particularly among vulnerable groups like children and young adults, has serious social and psychological implications. The lack of a clear distinction between games of chance and skill adds complexity to the issue. Hence, the urgent implementation of strong regulatory measures and targeted interventions is essential to safeguard public health and well-being.
A Look at the Measures Needed for Effective Regulation
The Public Gambling Act, being a Union law, does not provide a clear definition of what constitutes gambling. While it excludes games of skill, it fails to explicitly define what qualifies as a game of skill or a game of chance. Although the judiciary has interpreted this distinction in various cases, it is crucial for the legislature to establish a clear and precise definition. The line between luck and skill is increasingly blurred, especially in the digital age, creating ambiguity and loopholes that online gamblers exploit by claiming their activities are based on skill rather than chance.
Regulation is urgently needed because the Public Gambling Act was enacted long before the emergence of digital technology, at a time when online gambling was an unknown concept. As discussed, the variations in state legislation regarding online gambling create significant issues. A uniform, nationwide legislation is essential, as the internet is not confined to any single state. Online gambling advertisements are unrestricted, making it even more critical to have a standardized legal framework to ensure consistency and accountability across the country.
The heavy promotion of online gambling by celebrities is worsening the issue by glamorizing it and enticing vulnerable individuals, especially youth. Such endorsements mislead the public, making gambling seem like a harmless activity. Regulating these promotions is crucial to reducing the harmful societal impact of online gambling.
Banning online gambling completely would be an effective solution considering its negative impacts, but if the government finds this difficult, it should at the very least implement stricter regulations. These could include age restrictions, loss limits, maximum bet sizes, mandatory breaks, and controls on the amount of money spent. Such steps would help create a safer and more regulated environment for online gambling.
Despite the implementation of a 28% Goods and Services Tax (GST) on online gaming, many operators continue to evade taxes by utilizing illegal or offshore websites. The Directorate General of Goods and Services Tax Intelligence (DGGI) has flagged approximately 700 offshore e-gaming companies for potential tax violations. In response, the government has blocked 357 illegal websites and frozen around 2,400 bank accounts linked to these operations. Therefore, stricter regulations and their effective enforcement are crucial to addressing this issue, ensuring compliance with tax laws, and preventing further revenue loss.
While the online gambling market contributes to revenue and economic growth, the problems it presents cannot be overlooked. Its expansion should not come at the cost of societal harm, addiction, and legal challenges.
Any regulations or interventions should be backed by thorough research and statistical analysis. States must provide clear and updated data on gambling trends, addiction rates, and financial impacts to the government, ensuring that policy decisions are evidence-based and effectively address the issue.
Online gambling knows no borders, crossing international boundaries. There is a need for a global agreement to establish standardized regulations, ensuring consistent enforcement and better coordination across nations.
Conclusion
A uniform and research-based legal framework is essential to address the complexities of online gambling in India. The current regulatory gaps and inconsistent enforcement have allowed exploitation, making it imperative to clearly define the distinction between games of skill and chance. Mere reliance on outdated laws is inadequate; legislation must be data-driven, ensuring strict oversight, responsible gaming measures, and penalties to curb illegal activities. Without a well-structured law, online gambling will continue to thrive in a legal grey area, posing financial and social risks to individuals and society at large.
Qamer Unnisa
Third Year Student of 5YDC
Pendekanti Law College
