Online Gambling In India – A study by KPMG India in September 2019 estimated that the Indian online gaming industry will be a Rs 250.3 billion industry by 2024.

Gambling is banned in India. The Public Gambling Act, 1867 and several local acts passed by states make it a legally prohibited activity, with penalties ranging from fines to years in prison. Despite this law, the Federation of Indian Chambers of Commerce and Industry (FICCI) estimates the illegal betting market in India at more than Rs 3,00,000 crore, which is roughly the size of India’s defense budget in 2019. This amount exceeds the total. the amount India spends on agriculture, education and health is 10 billion dollars or 7.5 thousand rupees.

Online Gambling In India

Online Gambling In India

The CBI report on “cricket match-fixing and related irregularities” speaks of the emergence of betting syndicates and cartels, run on the ground by bookies and punters, and suggests the involvement of the underworld. That was almost 20 years ago and bets on any One Day International anywhere in the world ran into hundreds of millions, according to the report.

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Today, betting has been online with a neat interface, a built-in payment system, an odds calculation dashboard, alert notifications and mobile apps.

There is some ambiguity regarding the application of gambling statutes in the online space, as the law is better suited to act on physical gambling houses and related equipment. Complicating this situation is the designation of certain games as “games of skill” where “success depends on the superior knowledge, training, attention, experience and skill of the players” and players can trade, bet and trade the same play money. It is important to demystify the basic puzzle of gambling, especially in the online space, as it can be used as an opportunity for harm prevention as well as a possible revenue gain.

Regulation 3(2)(b) of the Information Technology (Guidelines for Intermediaries), 2011 read with section 87(2)(zg) read with section 79(2) of the Information Technology Act, 2000 imposes “intermediaries” such as the Internet . service providers, network service providers, search engines, telecommunication operators, etc. not host or transmit any content that, among other things, relates to or promotes gambling.

According to the Constitution of India, betting/gambling is a state subject and each state has the exclusive legislative competence to enact domestic laws. Much of the state legislation and the Gaming Act of 1867 were passed before the advent of online gambling.

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Gambling legislation is prescriptive as most states prohibit gambling/gambling but make exceptions for games of skill. Therefore, the prohibition in the Gambling Act will not apply if the game qualifies as a game of skill. In RMD Chamarbaugawala v. Union of India, the Apex court relied on the ‘qualifying test’ to decide whether an activity is gambling or not. The court ruled that a competition involving a great deal of skill is not a gambling activity, but a commercial activity, protected by art. 19 paragraph (1) letter (g).

To understand the current legal status of online gambling/gambling, we need to look at the following categories: Fantasy Sports, Betting, Casinos, Lottery and Poker.

A. Fantasy Sports: Skill-based games are exempt from the Gaming Act. The Nagaland Prohibition of Gambling and Promotion and Online Gaming Act 2016 clearly recognizes virtual team selection games and virtual fantasy league games as games of skill such as chess, sudoku, quizzes, binary options, bridge, poker, rummy, nap, spades. , auction, solitaire, virtual golf and virtual racing games. A license is mandatory if such games are to be offered online in the state of Nagaland.

Online Gambling In India

Recently, the fantasy sports format Dream 11 was upheld as a game of skill by the Punjab and Haryana High Court. Even the Bombay High Court in the case of Gurdeep Singh Sachar v. Union of India recognized this fantasy sports format as a game of skill.

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B. Betting: The Supreme Court in the case of Dr K.R. Lakshmanan v. State of Tamil Nadu held that betting on horse racing is a game of skill and therefore exempt from prohibition under most gambling acts. Exemption in the implementation of this game is subject to certain conditions, and in the case of online horse racing it is difficult to meet these conditions. But the argument that horse racing is a game of skill can always stand regardless of these exceptions.

C. Casinos: Casinos fall under the category of gambling and betting and are prohibited by most regulations. Certain sub-categories of casino games under the Sikkim Online Gaming (Regulation) Act, 2008 and the Sikkim Online Gaming (Regulation) Rules, 2009 may be offered through the state level intranet only in the State of Sikkim.

D. Poker: In several states in India, poker is recognized as a game of skill either by: (1) enactments/regulations, such as the state of West Bengal has specifically exempted poker from the definition of “game of chance ” according to West Bengal Gaming and Awards. Competition Act, 1957; The Nagaland Act specifically classified poker as a game of skill; and

(2) Courts like the Karnataka High Court have also held that a license under the Karnataka Police Act, 1963 (“Karnataka Act”) is not required when poker is played as a game of skill.

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On the other hand, in the case of Dominance Games Pvt. Ltd v. State of Gujarat, the Gujarat High Court recently held that poker is a game of chance and a gambling activity under the Gujarat Prevention of Gambling Act, 1887 and is therefore now prohibited in Gujarat (an appeal challenging the same is pending. ) .

The question whether sports betting is a game of skill is before the Supreme Court in Geeta Rani v. Union of India and Ors. If the ruling concludes that sports betting is a game of skill, it will be exempt from most gambling provisions and can be offered in most Indian states that recognize exemptions for games of skill.

Although the aforementioned legislations declare gambling as an illegal activity, there are offshore betting sites that illegally offer websites to Indian citizens and accept bets from India in violation of the Information Technology Act, 2000 and the Foreign Exchange Management Act, 1999 .

Online Gambling In India

Governments around the world have varied in regulating gambling as a licensed and regulated activity due to social, ethical, moral and religious considerations. However, lotteries and horse races and certain “games of skill” were allowed to continue in a limited way. Instead, the state monopolized gambling and used it to generate non-tax revenue and tourism profits.

Laws In India For Online Casinos

However, the Internet is disrupting this model by breaking down jurisdictional barriers, and now players and organizers of these activities can take advantage of jurisdictional arbitrage to freely place bets, exchange currencies locally or internationally, transfer money digitally across borders, and even to enable the conversion of digital money into physical money. all in real time.

Legitimate regulatory and policy problems arise in the form of conflicting goals and suboptimal solutions that range from unavoidable hazards to abdication of jurisdiction. Although on the one hand anti-money laundering (AML) and player authentication (Know Your Customer) must be strictly enforced, any authentication can also lead to human and economic degradation around increased social costs. Problem gamblers and new addicts can cause harm to society in the form of crime and bankruptcy costs, while issues of damage to quality of life and social fabric can pose serious challenges to any government legalization of gambling activities for economic purposes. . The 276th report of the law commission examines these issues in detail.

Gambling/internet gambling bans have led to the creation of Indian internet gambling sites in other countries with little or no bans. Despite restrictions on internet gambling in India, Indians are gambling online. A blanket ban on cyberspace is impossible and thus internet gambling will continue to grow in popularity among Indians despite the restrictions. Therefore, creating an effectively regulated internet gambling climate is essential. The introduction of internet gambling policies and regulatory standards will also pave the way for the country to protect its citizens by preventing under-age gambling, controlling the generation and circulation of black money, enforcing responsible gambling environment/regulations good luck and ensuring transparency in the market. In addition, the revenue generated by the regulation and taxation of betting and gambling can be a good source of income, which in turn can be used for public welfare.

A study by KPMG India in September 2019 pegged India’s online gambling industry to become a Rs 250.3 billion industry by 2024. India loses about $1.5 billion annually in lost revenue because it does not there is a regime of regulation or taxation of online gambling. It is time to calibrate and balance conflicting goals to maximize the public good. As it is not possible to completely prevent internet gambling, effective regulation of it remains the only viable option. India can learn from the experience of several countries and jurisdictions that have regulated online gambling in various forms and have always grown with great success. Especially in the post-Covid reconstruction phase, where other drivers

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