Introduction:
We live in a community where on-line or offline games are played from the source. Online or offline game has some terms and conditions that sometimes bring a person into an illicit gambling operation. However, gambling and betting was a very common entertainment mode in history and the meaning of this practice developed over time.
In India Gambling is considered to be an illegal activity where a person is entirely dependent on his or her luck by betting a definite sum in games, sports, poker or other activities. According to the Indian Contract Act of 1872, if any injury is suffered by the performing parties the court would not entertain such claims for compensation sum. It is an offence under section 294A of the IPC and they were punishable by a fine of 1000 rupees and a six-month gaol term.
What does Gambling Mean?
Gambling is betting something worth, with knowledge of danger and hope of reward, on the outcome of a game, a match, or an uncertain event whose outcome may be decided by chance or accident or have an unintended outcome due to a bettor’s miscalculation.
For example, if a person bets money on an IPL team, it will not be considered illegal if he makes a deal through a legal process set by the central government and the state. There are online sites where anyone in sports such as kabaddi, football, horse racing and so on can bet on a side.
History of Gambling in India
Over time, gambling has been looked down on and is considered to be one of society’s evils – something that is capable of absolutely devouring man. This was also highlighted by India’s Supreme Court where, while referring to the Vedas, it was noted that while the general opinion was that gambling destroys reality, dignity and prosperity, many philosophers such as Kautilya and Yajnavalkya supported state regulation and the possibility of earning revenue from it.
A. Pre-Independence
There was a monopoly on gambling even in the British period, and it enforced stringent sanctions on defaulters. The 1867 Public Gambling Act, originating from the British Gaming Act, 1845 and Betting Act, 1845, had outlawed all forms of public gambling and the establishment of traditional gaming houses. However, this was not relevant to the use of skill in lotteries, racing and matches.
B. Post-Independence
Following the passage of the Law Amendment 1950, the jurisdiction of the Public Gambling Act was limited to Uttar Pradesh, Punjab, Delhi and Madhya Pradesh. Although this Act also provides the aforementioned States with the option of formulating their own guidelines. When betting and gambling are added to the list, however, the Public Gambling Act becomes otiose because each state has the power to create its own betting and gambling laws. The Law Commission, however, had considered this law redundant and recommended that it be repealed, but the government has yet to act on this recommendation.
Legality of Online Gambling in India
- Sikkim was the first state to allow Internet Gambling. By introducing the Sikkim Gambling Law (Amendment) 2005, Sikkim State has legalised gambling. The 2005 Sikkim Gambling Law (Amendment) allows the State Government to inform the designated areas where grant the permission on payment of a prescribed operating fee for casinos. It’s easy to get a state government licence to operate an online gambling game that needs licencing to administer, handle or collect bets from an entity.
- Goa state legalised gambling by enabling the Goa, Daman and Diu Public Gambling Act, 1976. The Goa, Daman and Diu Public Gambling Act, 1976 was allowed the payment of a fixed recurring fee for card rooms in five-star hotels in offshore vessels and slot machines subject to prior approval and state authorisation after amending this provision.
- The Public Gambling Act, 1867, is an old statute which includes no online / internet gaming laws for all online betting firms, including bet365, Ladbrokes, Bet fair, or William Hill, to promote betting. Online gambling today helps Internet Gaming to make profits. It gives the Indians a convenient way to use e-wallet etc. to bet on sports due to the lack of any servers, advertising or any relevant law in India. Even it includes IPL matches.
In today’s world, all are linked with the internet, a person being in India can bet via a foreigner owned website. In India, there were no laws that were directly regulating/banning such activities. In the absence of any particular legislation expressly governing online gaming/gambling via a server located outside India can be controlled by internet intermediary compliance, cyber law due diligence provisions laid down in the Information Technology Act, 2000, which controls foreign exchange earnings and outgoings and strict enforcement of anti-money laundering legislation.
The Payment & Settlement Act, 2008 authorises the Indian Reserve Bank to implement or operate a payment system to regulate all forms of electronic payment mechanisms in order to control and restrict online gambling in India. The FDI Policy also restricted companies’ involvement in the lottery, gambling, and betting activities. We also have IT Regulations (intermediate guidelines) 2011 to limit links to licenced website and page types.
All online or cyber-gambling activities in India are governed by the IT Act, 2000. The act forbids online gambling practises and stipulates a penalty for individuals who engage in such practices, will be fined 100,000 Indian Rupees or faced up to five years in prison.
Interpretation of Gambling -Law Commission Report No.276
India’s Law Commission (Chair: Justice B.S. Chauhan) submitted its July 5, 2018 report investigating whether betting in India can be legalised. The study follows a Supreme Court order in 2016 in which the Court ordered the Commission to look into the possibility of a betting rule. While banning betting and gambling is ideal, the Commission acknowledged that preventing these practises entirely is difficult. Thus it proposed legislation on gaming and betting.
Governing gambling and betting: Under the Constitution, betting and gambling is a State issue. The Commission also said state legislators must pass laws regulating betting and gambling. It noted, however, that Parliament should pass a model law regulating betting and gambling which can be enforced by states. Parliament can also enact legislation in compliance with Articles 249 (in the national interest) or 252 (when two or more States consent). With respect to online gaming and betting, it noted that Parliament has the power to pass a rule.
Regulations governing gambling and betting: Gambling and betting should be permitted only by licenced Indian operators, the Commission has suggested. It proposed for participants that a cap should be placed on the amount of such transactions for a defined period of time, i.e. monthly, half-yearly or annually. It also suggested allowing cashless transactions between operators and users and levying fines on cash transactions.
The Commission recommended that all betting and gambling transactions be connected to the Aadhaar / PAN Card of the operator and the participants in order to protect the public from the ill-effects of such transactions and to enhance transparency and state supervision. Moreover, any betting or gaming income should be taxable under the Income Tax Act (IT Act), 1961, the Goods and Services Tax Act (GST), 2017, and other relevant laws.
Gambling Classification
The Commission proposed dividing gambling activities into two categories: ‘proper gambling’ and ‘small gambling.’ Higher stakes would be listed as ‘proper gambling.'” Only those belonging to higher income classes are entitled to engage in “proper gambling.” Individuals belonging to the lower-income groups can only participate in “mini-gambling.” Stakes for “small gambling” will fall below the number of stakes permitted for “proper gambling.”
Prohibited persons: The Commission recommended banning online or offline gaming sites for certain groups of people. These citizens include (i) children, (ii) those seeking compensation from the government, or (iii) those not protected by the Income Tax Act, 1961, or the Goods and Services Tax Act, 2017.
FEMA Amendments
The Commission recommended that the Foreign Exchange Management Act, 1999, and Foreign Direct Investment Policy be amended to encourage Foreign Direct Investment in the casino / online gaming industry and for other purposes. It felt that this would fuel the growth of the tourism and hospitality industries in those states, and also contribute to higher incomes and job growth.
Amendment to IT Rules: Under the 2011 Rules on Information Technology (Intermediate Guidelines), intermediaries are prohibited from giving or distributing material that associated to promotes gambling. The Commission recommended barring only those gambling-related intermediaries that illegally distribute or host information. This will ensure that intermediaries in states which authorise gambling are not held liable.
Match-fixing and sports fraud: The Commission recommended that match-fixing and sports fraud be committed with substantial penalties as criminal offences.
Game Of Chance and Game Of Skill
Gambling is depicted in its formal form and in modern avatars. Traditional gambling is defined in the sense of unlimited expansion, brick and mortar construction, whereas modern gambling is of computers, mobile phones, internet, etc. that are offline or online. Gambling law exempts ‘professional sports’ from the purview of gambling, which thus does not impose punitive requirements.
Judicial Comments
In the State of Bombay v. R.M.D. Chamarbaugwala, The apex court distinguished between ‘skill games’ and ‘games of chance’ where it held that competitions where the winning is depended heavily on the level of skill exercised but it will not be based on the scope of gambling. In addition, games involving skills may be referred to as commercial activities and are safeguard by Article 19(1)(g) of the Constitution. Under Section 12, the Gaming Act removes ‘position game’ from the jurisdiction of the law.
In Dr R. K. Lakshmanan v. Tamil Nadu State, the SC described ‘skill game’ as ‘one in which winning depends primarily on the superior intelligence, preparation, observation, experience and abilities of the player.’ The Court observed out that a chance game is one in which the element of chance prevails over the essence of ability and similarly a skill game is one in which the essence of ability prevails. The game’s true character is determined by the dominant element- ‘talent “or” chance and the Supreme Court held that horse racing is a game of mere skill within the context set out in the Madras City Police Act of 1888 and the Tamil Nadu Gaming Act of 1930.
In various instances, the Court has explained how horse racing can be called a talent game since betting in horse races is based on evaluative ability and other variables such as jockey and management skills.
Need to Uniform Legislation
The existence of States authority to frame gambling laws has resulted in a multitude of legislation around ability sports concept.
- Effect on FDI
Dream11 has already raised funding from Tencent Holdings and Steadview, valuing it at up to $ 1 billion. In addition, online sports gaming has seen immense growth in recent years, accumulating 43.8 billion Rs in 2018, which is projected to rise to 118.8 billion Rs by 2023. 34 Likewise, companies like MyTeam11, Halaplay, 11Wickets, Fantain and Starpick also have the potential to invest further.
- Need for Uniformity
With the evolution of technology, online gaming does not conform to guidelines. Transacting with a person at the other end of the planet is similar to communicating directly with others. It can not be imposed on the same basis as other limits, as it transgresses national and international borders. The difference in laws between states, however, renders these transactions an unnecessary impediment and prevents companies from recognising their true market potential.
- Legal Uncertainty
Many states prefer to enable laws in support of skill sports, but the law is still in effect that flips the clock around and causes a huge uncertainty. The Public Gambling Act provides no solution, as states remain autonomous. The Public Gambling Act does not serve its purpose, and is now otiose as gambling and betting fall under List II, thus weakening power over this British-era regulation. The misunderstanding will remain as long as this object is listed under the State List.
Conclusion
In India, gambling laws remain vague and uncertain. With the rapid growth witnessed in the gambling industry, central control of gambling was never required any more. A single regulatory system would provide a significant benefit for both domestic and international investors. However, confusion will continue as long as this item remains on the State List as the economic and social factors vary in each state, resulting in various approaches to government. In the end, political parties are going to pass legislation to push their own agenda. The emergence of Goa and Sikkim casinos and a ban on gambling in Telangana and Orissa prove this. Only a constitutional amendment which adds ‘gambling and betting’ to the Union list would permit convergence of law. Given that the ‘Lotteries’ are already listed on the Union board, it would not be a very risky move to bring gambling under the legislative control of the centre.
References:
- www.mondaq.com
- www.legalservices.com
- www.indialawjournal.org
- Indian Penal code,1860
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