India Gambling Laws

Supreme Court of IndiaWhile the debate about what gambling is legal and what isn’t continues among gambling experts, in India courts, and between States and the Central government, one things is for certain – Indians love to gamble. A recent news report sized the Indian gambling market at Rs. 3 lakh crore ($60 billion USD) annually.

Although a good percentage is wagered legally on horse racing and lottery, a large amount is wagered on cricket and other sports via illegal and “technically illegal” channels. In this article I’ll tackle the complex Indian gambling laws, including what forms of gambling are prohibited, which are explicitly allowed, and what grey areas still exist.

The Public Gambling Act of 1867

The primary legislative document that makes gambling in India a ‘grey’ legality is the Public gambling act. This is an old law created during British rule. While Pakistan has since abolished this rule, our own government has affirmed their commitment to keeping it on the books on many occasions. This 145 year old law makes operating a gambling house, assisting in the operation of a gambling house, visiting a gambling house (whether gambling or not), financing gambling and being in possession of gambling devices a crime. The penalty is a fine not exceeding 200 rupees or up to three months in prison.  No person betting in India has ever been charged or sought after…

Skill Games Are Allowed

The Public Gambling Act explicitly states “nothing in this Act shall apply to games of mere skill wherever played” which means, in absence of other laws against them, wagering on games of skill is legal. While the Act itself doesn’t define gambling, in 1996 the Supreme Court of India defined games of mere skill as follows:

The competitions where success depends on substantial degree of skill are not “gambling” and despite there being an element of chance if a game is preponderantly a game of skill it would nevertheless be a game of “mere skill”

An early ruling came in 1957 where Horse Race Betting was determined a skill:

“The expression “gaming” in the two Acts has to be interpreted in the light of the law laid-down by this Court in the two1957 cases, wherein it has been authoritatively held that a competition which substantially depends on skill is not gambling. Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. “Gaming” in the two Acts would, therefore, mean wagering or betting on games of chance. It would not include games of skill like horse racing”.

In 1968 Rummy (also known as Paplu) was determined to be a skill game:

“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.”

Grey Area: Poker is a major grey area in Indian law. It’s quite interesting that games such as Teen Patti (flush) and Texas Hold ‘em are banned while Rummy is allowed. Perhaps even more interesting – horse racing (one of the easiest games to fix) is legal to wager on based it being a skill game, yet cricket betting which requires the same sort of skill set is banned?!!

Source Credit for this section: Games 24×7

Lottery is Legal in Many India States

The Central Lotteries (Regulation) Act of 1998 gave state governments the authority to hold lotteries, but stipulated this was restricted to a maximum of one draw per week. Today in most Indian states there are lottery terminals excessively available and some lotteries are drawn every 15 minutes. Also Sikkim licensed PlayWin Lotto is highly popular and Indians from any state can purchase tickets online, or via terminal. The reason the one draw per week is not followed is because most states believe fully, they already had the right to create their own laws for all forms of gambling, and didn’t need the Central Lotteries Act to do so. This is a right given to them by the Constitution of India. What is interesting is that Satta Matka gambling, which is a simple form of lottery is strictly forbidden.

States Have Authority to Make Gambling Laws

Drafted in 1949, the Constitution of India explicitly gives states the right to legislate and make policies related to “gambling and betting”. It is quite clear in the Seventh Schedule Entry 34 List II that states could legalize gambling should they choose to do so. To date most states have only made laws against gambling, while 13 states have legalized lottery, and 2 states (Goa and Sikkim) have legalized many other forms of gambling.

Legal Casino Gambling in Goa

Goa has made two amendments to the Goa, Daman and Diu Public Gambling Act, 1976 to legalize certain forms of gambling. The relevant section from that act is listed below:

26[13A. Authorised Game.– (1) Notwithstanding anything contained in this Act, the Government may authorised any game of electronic amusement/slot machines in Five Star Hotels 27{and such table games and gaming on board in vessels offshore as may be notified} subject to such conditions, including payment of such recurring and non-recurring fees, as may be prescribed.

26 Inserted by the Amendment Act 11 of 1992.
27 Inserted by the Amendment Act 13 of 1996.

As of October 2011 there are 7 land based casinos and several offshore casinos that operate legally in Goa.

Legal Gambling In Sikkim

Sikkim is a second Indian State that has legalized gambling. According this post at glaws.in:

1) The Sikkim Casino Games (Control and Tax Rules), 2002 gives the Sikkim Government the authority to grant licenses to individual and business interested in operating casinos.

2) The Sikkim Regulation of Gambling (Amendment) Act, 2005 gives the Sikkim Government the authority to authorise gambling on certain days and to make specific gambling houses legal at their own discretion by way of a license.

Sikkim also became the first Indian State to legalize internet gambling.

Sikkim Online Gaming Licenses

As this is a complex topic I wrote a separate article titled Sikkim Gambling Licenses that is worth reading. The short of it is that the state of Sikkim has begun taking applications to license online gambling where the servers are located within the state. This includes casino gambling, lottery and sports betting. Many believe that once these licensed sports betting sites come online that players located in states where there are no gambling laws will be able to use them legally. This has caused popular online gambling sites such as William Hill and Betfair to eye India as the next major market to expand to. This however has a major challenge – foreign investments involving gambling are illegal under Indian law.

Online Gambling Sites Indians Use

Internet gambling is a truly global business. For example www.bet365.com is a United Kingdom based gambling company, but they have customers in over 200 countries for a combined 4 million registered accounts. Their betting site is available in dozens of languages and currencies (including Indian Rupee – INR). Although gambling at their website is technically illegal, to our knowledge no has ever been arrested for gambling in India when their wagers were placed online, with a company located abroad. As far as Bet365 is concerned, Indian laws don’t apply to them as they operate under a legal UK gambling license which they’ve held since 1974. With no servers, advertising or anything else going on in India, the authorities can’t do much to stop Bet365 from servicing Indian punters. This makes it easy for Indians to use an e-wallet and gamble on matches including IPL cricket at sites such as Bet365 and Canbet.

Central Government Actions Against Online Gambling

Although the Central Government has no jurisdiction over UK licensed bookmakers whom operate legally under European and International Law, they have taken some action to make using these sites more difficult. This comes in the form of two laws, neither of which has been highly effective.

Payment and Settlement Act, 2007

Madame President Patil signed the Payment and Settlement Systems Act, 2007 on 20th December 2007 and it went into effect on 12th August 2008. This act gives authority to the Reserve Bank of India (RBI) to regulate all forms of electronic payment. Section 4 is key which in part states:

Payment system not to operate without authorisation : (1) No person, other than the Reserve Bank, shall commence or operate a payment system except under and in accordance with an authorisation issued by the Reserve Bank under the provisions of this Act:

The act goes on to say any payment system or clearing house with less than 51% of the equity held by an Indian bank requires authorization to operate in India. Much the rest of this 14 page Act, gives RBI all sorts of authority over all aspects of payment processing in India, as well as the rights to enter and inspect with or without notice and access to all financial and customer data upon request.

The most important factor here is RBI has the right to make policies almost on demand (in concordance with this Act) for all things involving payment processing. They have exercised this authority numerous times. This is what caused the PayPal in India fiasco, and also what caused Neteller to stop issuing Neteller plus cards, and EntroPay to stop issuing Plastic MasterCard branded debit cards. So in short, RBI has the full right to instruct banks to decline or refuse and payments or deposits involving any particular payment processor, e-wallet or clearing house. While they seem more concerned with going after businesses and freelancers who might be evading tax, should they in the future decide to go after gambling processors, the legal framework and authority for them to do so already exists. Again to be clear, at the current time this does not seem to be a priority for them.

Internet Service Providers (ISPs)

On 14 April 2011, the Gazette of India published the Information Technology (Intermediaries guidelines) Rules, 2011. This legal document is issued under authority granted in Information Technology Act, 2000. In short this act instructs Internet Service Providers and Website Hosts, to block access to certain types of websites and content. While the majority of this is for areas of National Security, things that would shine India in an improper light, things that are blasphemous, illegal, pornographic etc., Section 2 item B includes anything “relating or encouraging money laundering or gambling”.

The addition of gambling to the IT Act of 2000 is in conflict where much the rest of India is headed. Again, the Sikkim Government has legalized sports betting and casino gambling, Goa has legal casinos, and 13 states have legalized lottery. Even Mr. Haroon Lorgat, the CEO of the International Cricket Council (ICC), has urged Indian officials to make cricket betting sites legal, as he feels this is the best way to prevent corruption and match fixing in the sport. So while the push for legal gambling in India is strong and has made some progress, the Central Government is still taking action in an attempt to make it more difficult.

Conclusion

At the current time – most gambling in India is illegal. However, legal gambling does exist for horse racing, lottery, and rummy (paplu). There is also a high number of betting sites legal in the UK which service Indians with only minor hassle. The law at this time seems more concerned with scaring Indians not to gamble, than it does much to prevent it. It seems highly likely fully legal gambling will come to India at some point – how far away that is, is anyone’s guess. In the meantime stay tuned to this page where we’ll publish Indian Gambling Law updates as we receive them.

Translation: भारतीय द्युत कानून

Related: Laws in the UAE