Is there punishment for gambling in India?

28 July 2020
Reading Time: 9 minutes
Online gambling

Online gambling in India is heavily limited, but no laws are stating the same, except for horse betting and lotteries. Skill-based gambling games are also legal, but game concepts remain elusive, and platforms often operate under the radar. Yet, as you may know, gambling is present everywhere in India, culturally and historically, and mostly underground and untaxed. Regular examples vary from card games, animal battles, national cricket matches to even Pro Kabaddi League betting.

Despite massive developments in the field of gambling, driven by technology and the rise in the number of betting enthusiasts in the country, old gambling laws from 150 years ago continue to govern gambling both online and physical and leave many topics unregulated and unclear. Online betting and casino gaming fall under this category and they are not explicitly regulated and legal. It is a grey area. Those who do it access foreign-based platforms and pay through E-wallets. No-one is persecuted. From the general trends, our law system is more interested in catching the culprits who gamble physically like bookies, underground clubs, and so on.

Game of chance and skill

Gambling is understood both under its traditional form as well as a modern avatar. The traditional gambling is understood in the context of physical space, land-based format, whereas modern gambling consists of computers connected online via mobile phones, internet, etc. The gambling legislations exclude ‘games of skill’ from the purview of gambling and hence, doesn’t attract penal provisions.

The money involved in gambling

An industry lobby body has estimated in a 2013 report that the underground market for betting on cricket (only) is roughly worth $40 billion. The total Indian gambling market is being quoted in various sources as being worth around $60 billion, with more than 75% of this coming from unregulated markets. Still, these are the same numbers from 2009, and considering growth in various channels, economy and inflation, the current total is at least double that. State Lotteries make up for about $12 to $15 billion, while the largest turnover is generated by horse racing.

Is gambling legal in India?

Gambling legal

It is a tough question to answer. The Indian government’s outlook towards gambling and betting remains in a grey area. A few sports revel in complete approval from the authorities while others (though sharing the same characteristics) are completely shunned. Horse racing and rummy are considered games of skill and thus free to bet on, while cricket and poker don’t share the same distinction in the eyes of Indian lawmakers. Poker is a major grey area in Indian law. It is quite interesting that games such as Teen Patti (flush) and Texas Hold ’em are banned while Rummy is allowed. Nowadays, you can only bet on a few sports/games, that too in particular states. Currently, horse racing, online poker, online rummy, lottery, and a few casinos are legal in India. To understand the convoluted stance of each state on the legality of these sports will take time and patience for the reader.

Legal framework

Gambling has been outlawed since 1867 (Public Gaming Act) but punishments are mild, such as 100-200 rupees or moderate, 1-3 months in jail. In other words, we are still regulated by gambling laws over 100 years ago, but then again, a lot of our society is still dominated by old traditions and regulations. The key consequences of illegality are based on the distinction between “games of skill” and “games of chance.” Current gambling laws also require exceptions to so-called ‘skill-centric’ gambling, i.e. horse racing (which is entirely legal in AP), poker, rummy, fantasy sports betting, etc. This has paved the way for the lawmakers themselves to recommend that “other skill-centric games” should be granted similar exemptions.

Besides, the Information Technology Act (2000) controls cyber operations in India and forbids the publication or transmission of information that can corrupt citizens. Moreover, there is no clause as such that directly addresses online gaming. It involves online gaming, and punishment for these activities is even more severe than for offline gambling – a fine of up to 100,000 or imprisonment for up to 5 years. Explicitly, online gaming is a forbidden activity only in the state of Maharashtra under the Bombay Wager Act.

The legality of casino gambling

Casino Gaming

Casino Gaming is an umbrella word that includes slots, table games, etc. Poker and rummy, along with sports and fantasy gaming laws are assigned to the independent State Governments and their legislators. Such games are considered to be games of skill and, as such, have clauses in the law that make them legal to be played online. Land-based casinos are located in Goa, Sikkim, and Daman. Initially, according to the Goa, Daman and Diu Public Gambling Act, 1976, casinos could only be set up in five-star hotels or offshore vessels with prior government approval. Nowadays, things are changing, but not in a uniform way. Lotteries are governed by the Central Government (Lotteries Act, 1988), with additional dispositions by State Governments.

The legality of online casinos in India

Online gaming is at an early stage in India. The three states that allow gambling primarily focus regulations on land-based casinos. The fourth state began the planning of gambling laws in 2016. Sikkim had intended to offer three online gambling licenses in 2010. They have delayed the procedure several times, despite the enormous interest of the operators. Sikkim also allows an online lottery that takes bets from players around India.

International gaming sites used by Indian players

Internet gambling is a truly global business. Although the Central Government has no jurisdiction over UK licensed bookmakers who 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. As far as international sites are concerned, Indian laws do not apply to them directly as they operate under a legal gambling license in other jurisdictions. With no servers, advertising or anything else going on in India, the authorities cannot do much to stop them from servicing Indian customers. This makes it easy for Indians to use an e-wallet and bet on matches including IPL cricket at sites.

The IT Act of 2000

The IT Act of 2000 made provisions for various offences relating to online activity, although there is no specific mention of online casino gambling being illegal. It does give the Indian government the power to block foreign websites but the Government has used this power to instruct ISP providers to prevent Indian residents from accessing certain foreign betting and gaming sites, but it is not known for sure how effective this has been or which sites have been blocked.

For the most part, it is the operator itself that blocks the website in India. That is, if you were to visit such a site, you would see a message along the lines of ‘our platform is not available in your geography.’ So far, there are plenty of online casinos who are offering online gambling services to Indian players. They can be accessed rather easily and you can play any game of your choice. There is no law applicable if you are betting at online websites based outside India. And no law explicitly makes online betting and gambling an illegal activity. It means that theoretically, you can bet on these leading casino platforms online, without running the risk of getting caught.

Payment options

Payment choices are one of the most important obstacles confronted by players in India. Even if you have trouble trying to deposit money with your card at times, you can resort to E-wallets. It is because of the RBI, which instructed banks and payment gateways not to process transactions linked to gambling and online casino sites. Many users deposit online (sports) bookies using Skrill or Neteller. Attempts to deposit using Visa or MasterCard can fail and the same applies to online bank transfers. E-wallet services have proved to be a robust way to go.

Taxation may be an issue

The reason why a few games are made legal is that they can be taxed easily. The Lotteries (Regulation) Act of 1998 gives the state governments the right to authorise lotteries within their jurisdictions, including laying down the tax clauses. And this happens, despite being a game of pure chance. Even if someone were to gain something out of sheer luck, they will be taxed by the government as they can track the winner easily.

Similarly, when playing poker online at an Indian site, a TDS was automatically deducted on the earnings. The same goes for other ‘legal’ gambling games like Rummy and Dream 11 too, where the gains, if any, are taxed at the source itself. Doing so online where there are a plethora of operators is a bit difficult, at least for the time being. We need to have a more advanced technological framework to support this kind of environment. Furthermore, the reason why online gambling is heavily frowned upon is because of its connection to money laundering and other negative connotations.

Efforts by Law Commission of India

Authorities are aware of widespread illicit gambling throughout the nation. As recently as July 2018, the Law Commission of India (LCI) urged the Government to legalize gambling and betting. The LCI is the executive body of the Government and its role is to work towards legal reform. It was charged with investigating the best way to deal with the “rampant gambling epidemic” of the region. And a comprehensive report recommended that India should legalise sports betting and gambling to collect much-needed government revenue and deal with the issue of gambling behaviour. Among specific recommendations, the LCI distinguished between ‘proper’ and ‘small’ gambling, with ‘proper’ referring to higher gambling stakes, income thresholds should be introduced with those in mind, and people on social assistance or with low income to be barred from all legal gambling.

The boom in the gambling market

With over 460 million internet users, India is the second-largest online market. By 2021, there will be about 635.8 million internet users in India. However, only 26% of the Indian population accessed the internet in 2015. This is a significant increase in comparison to the previous years, considering the internet penetration rate in India stood at about 10% in 2011.

Parting thoughts

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 borderline of gambling laws in India. With the surge in the number of people who have access to the internet and our historical connection to gambling, it is going to be hard to completely make gambling illegal. It is advisable that before someone ventures into any gambling activity in India, he/she may take sound legal advice in respect of the same to avoid any unnecessary legal implications. The legality issue is a grey zone and it is up to you whether you want to play casino online or not. Good luck and remember to always play responsibly!

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